---

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

FORM 10-QSB

(Mark One)

[X]Quarterly Report Under Section 13 Or 15(d) Of The
Securities Exchange Act Of 1934

For the quarterly period ended March 31, 2007

[   ] Transition Report Under Section 13 Or 15(d) Of
The Exchange Act

For the transition period from  ________ to
________

COMMISSION FILE NUMBER**000-50459**

EXPLORATION DRILLING INTERNATIONAL INC.(Exact name of small business issuer as specified in its
charter)

|NEVADA                                           | 98-0396733                       
|------------------------------------------------ | ---------------------------------
|(State or other jurisdiction of incorporation or | (IRS Employer Identification No.)
|organization)                                    |                                  

810 Peace Portal Drive, Suite 212 Blaine, WA 98230(Address of principal executive offices)

(360) 305-5696(Issuer's telephone number)

N/A(Former name, former address and former
fiscal year, if changed since last report)

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

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

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date: As of May
11, 2007, the Issuer had 106,317,396 Shares of Common Stock outstanding.

Transitional Small Business Disclosure Format (Check one): Yes
[   ] No [X]

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PART I - FINANCIAL INFORMATION

ITEM
1.           FINANCIAL
STATEMENTS.





2

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EXPLORATION DRILLING INTERNATIONAL INC.

(formerly Invision Capital, Inc.)

(A Development Stage Company)





CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)



March 31, 2007
  (Unaudited)



F-1

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EXPLORATION DRILLING INTERNATIONAL INC.(formerly Invision Capital, Inc.) 
  (A Development Stage Company)CONSOLIDATED BALANCE SHEET(Expressed in U.S. Dollars) 
  (Unaudited)

|                                                                         |   | March 31,  |  
|------------------------------------------------------------------------ | - | ---------- | -
|                                                                         |   | 2007       |  
|                                                                         |   |            |  
|                                                                         |   |            |  
|ASSETS                                                                   |   |            |  
|                                                                         |   |            |  
|Current Assets                                                           |   |            |  
|Cash                                                                     | $ | 13,429     |  
|Other receivables                                                        |   | 14,240     |  
|Loans receivable -related party (Note 7)                                 |   | 201,994    |  
|Prepaids                                                                 |   | 25,483     |  
|Deferred
      tax asset, less valuation allowance of $1,850,700         |   | -          |  
|Total Current Assets                                                     |   | 255,146    |  
|                                                                         |   |            |  
|Equipment (Note 4)                                                       |   | 200,580    |  
|Patents
      (Note 4)                                                   |   | 363,498    |  
|                                                                         |   |            |  
|Total Assets                                                             | $ | 819,224    |  
|                                                                         |   |            |  
|LIABILITIES AND STOCKHOLDERS DEFICIENCY                                 |   |            |  
|                                                                         |   |            |  
|Current Liabilities                                                      |   |            |  
|Accounts payable and accrued
      liabilities                           | $ | 369,017    |  
|Accounts payable and accrued liabilities
      related parties (Note 7) |   | 136,132    |  
|Loans payable -current (Notes 5 and
      7)                             |   | 1,350,190  |  
|Total Current Liabilities                                                |   | 1,855,339  |  
|                                                                         |   |            |  
|Loans
      payable (Notes 6 and 7)                                      |   | 779,621    |  
|                                                                         |   |            |  
|Total Liabilities                                                        |   | 2,634,960  |  
|                                                                         |   |            |  
|Commitments (Note 11)                                                    |   |            |  
|                                                                         |   |            |  
|Stockholders Deficiency                                                 |   |            |  
|Common stock (Note 8)                                                    |   |            |  
|Authorized                                                               |   |            |  
|1,000,000,000 common shares, par value $0.001                            |   |            |  
|Issued and outstanding                                                   |   |            |  
|102,706,285                                                              |   | 102,706    |  
|Additional paid-in capital                                               |   | 3,522,818  |  
|Accumulated other comprehensive
      income:                            |   |            |  
|Foreign currency cumulative
      translation adjustment                 |   | 1,978      |  
|Deficit accumulated during the development
      stage                   |   | (5,443,238 | )
|                                                                         |   |            |  
|Total Stockholders Deficiency                                           |   | (1,815,736 | )
|                                                                         |   |            |  
|Total Liabilities and Stockholders Deficiency                           | $ | 819,224    |  

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

F-2

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EXPLORATION DRILLING INTERNATIONAL INC.(formerly Invision Capital, Inc.) 
  (A Development Stage Company)CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(Expressed in U.S. Dollars) 
  (Unaudited)

|                                                           |   | Cumulative         |   |   |             |   |   |            |  
|---------------------------------------------------------- | - | ------------------ | - | - | ----------- | - | - | ---------- | -
|                                                           |   | Amounts            |   |   | Three       |   |   | Three      |  
|                                                           |   | From Inception     |   |   | Months      |   |   | Months     |  
|                                                           |   | (December 7, 2004) |   |   | Ended       |   |   | Ended      |  
|                                                           |   | to March 31,       |   |   | March 31,   |   |   | March 31,  |  
|                                                           |   | 2007               |   |   | 2007        |   |   | 2006       |  
|                                                           |   |                    |   |   |             |   |   |            |  
|EXPENSES                                                   |   |                    |   |   |             |   |   |            |  
|                                                           |   |                    |   |   |             |   |   |            |  
|Amortization                                               | $ | 93,313             |   | $ | 15,375      |   | $ | 11,570     |  
|Management fees                                            |   | 724,421            |   |   | 81,595      |   |   | 72,125     |  
|Professional fees                                          |   | 955,196            |   |   | 49,216      |   |   | 161,272    |  
|Selling, general and administrative                        |   | 2,012,646          |   |   | 299,834     |   |   | 236,581    |  
|Stock compensation expense                                 |   | 1,570,472          |   |   | -           |   |   | -          |  
|Foreign
      currency loss                                |   | 3,077              |   |   | 488         |   |   | -          |  
|                                                           |   |                    |   |   |             |   |   |            |  
|LOSS BEFORE OTHER ITEMS AND INCOME TAXES                   |   | 5,359,125          |   |   | 446,508     |   |   | 481,548    |  
|                                                           |   |                    |   |   |             |   |   |            |  
|OTHER ITEMS                                                |   |                    |   |   |             |   |   |            |  
|                                                           |   |                    |   |   |             |   |   |            |  
|Interest income                                            |   | (15,222            | ) |   | (2,769      | ) |   | (2,954     | )
|Interest expense                                           |   | 93,958             |   |   | 29,829      |   |   | 3,005      |  
|Loss
      on disposal of capital assets                   |   | 5,377              |   |   | 2,963       |   |   | -          |  
|                                                           |   |                    |   |   |             |   |   |            |  
|LOSS BEFORE INCOME TAXES                                   |   | 5,443,238          |   |   | 476,531     |   |   | 481,599    |  
|                                                           |   |                    |   |   |             |   |   |            |  
|Provision
      for income taxes                           |   | -                  |   |   | -           |   |   | -          |  
|                                                           |   |                    |   |   |             |   |   |            |  
|NET LOSS                                                   |   | 5,443,238          |   |   | 476,531     |   |   | 481,599    |  
|                                                           |   |                    |   |   |             |   |   |            |  
|OTHER COMPREHENSIVE INCOME                                 |   |                    |   |   |             |   |   |            |  
|                                                           |   |                    |   |   |             |   |   |            |  
|Foreign
      currency translation adjustment              |   | 1,978              |   |   | 24,870      |   |   | 29,179     |  
|                                                           |   |                    |   |   |             |   |   |            |  
|COMPREHENSIVE LOSS                                         | $ | 5,441,260          |   | $ | 451,661     |   | $ | 452,420    |  
|                                                           |   |                    |   |   |             |   |   |            |  
|BASIC AND DILUTED
      NET LOSS PER SHARE                 |   |                    |   | $ | (0.00       | ) | $ | (0.01      | )
|                                                           |   |                    |   |   |             |   |   |            |  
|WEIGHTED AVERAGE
      NUMBER OF COMMON SHARES OUTSTANDING |   |                    |   |   | 102,706,285 |   |   | 50,000,000 |  

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

F-3

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EXPLORATION DRILLING INTERNATIONAL INC.(formerly Invision Capital, Inc.) 
  (A Development Stage Company)CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in U.S. Dollars) 
  (Unaudited)

|                                                                              |   | Cumulative         |   |   |           |   |   |           |  
|----------------------------------------------------------------------------- | - | ------------------ | - | - | --------- | - | - | --------- | -
|                                                                              |   | Amounts            |   |   | Three     |   |   | Three     |  
|                                                                              |   | From Inception     |   |   | Months    |   |   | Months    |  
|                                                                              |   | (December 7, 2004) |   |   | Ended     |   |   | Ended     |  
|                                                                              |   | to March 31,       |   |   | March 31, |   |   | March 31, |  
|                                                                              |   | 2007               |   |   | 2007      |   |   | 2006      |  
|                                                                              |   |                    |   |   |           |   |   |           |  
|                                                                              |   |                    |   |   |           |   |   |           |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                          |   |                    |   |   |           |   |   |           |  
|                                                                              |   |                    |   |   |           |   |   |           |  
|Net loss for the period                                                       | $ | (5,443,238         | ) | $ | (476,531  | ) | $ | (481,599  | )
|Adjustments to reconcile net loss to cash used in operating
      activities: |   |                    |   |   |           |   |   |           |  
|Amortization                                                                  |   | 93,313             |   |   | 15,375    |   |   | 11,570    |  
|Stock compensation expense                                                    |   | 1,570,472          |   |   | -         |   |   | -         |  
|Loss on disposal of capital
      asset                                       |   | 5,377              |   |   | 2,963     |   |   | -         |  
|Change in operating assets and liabilities:                                   |   |                    |   |   |           |   |   |           |  
|Decrease (increase) in
      other receivables                                |   | 50,418             |   |   | 30,023    |   |   | (62,139   | )
|Increase in accrued interest receivable                                       |   | (15,312            | ) |   | (2,769    | ) |   | (10,819   | )
|Decrease (increase) in
      prepaid expenses                                 |   | (24,412            | ) |   | 1,552     |   |   | -         |  
|Increase in accounts payable and accrued
      liabilities                    |   | 429,600            |   |   | 60,113    |   |   | 3,998     |  
|Increase in accrued interest payable                                          |   | 93,179             |   |   | 29,561    |   |   | -         |  
|                                                                              |   |                    |   |   |           |   |   |           |  
|Net cash used in operating activities                                         |   | (3,240,603         | ) |   | (339,713  | ) |   | (538,989  | )
|                                                                              |   |                    |   |   |           |   |   |           |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                          |   |                    |   |   |           |   |   |           |  
|                                                                              |   |                    |   |   |           |   |   |           |  
|Loans receivable                                                              |   | (264,614           | ) |   | -         |   |   | 18,859    |  
|Disposal (acquisition) of equipment                                           |   | (275,055           | ) |   | 5,504     |   |   | (65,093   | )
|Acquisition of patents                                                        |   | (340,094           | ) |   | (4,847    | ) |   | (106,954  | )
|                                                                              |   |                    |   |   |           |   |   |           |  
|Net cash provided by (used in) investing
      activities                     |   | (879,763           | ) |   | 657       |   |   | (153,188  | )
|                                                                              |   |                    |   |   |           |   |   |           |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                          |   |                    |   |   |           |   |   |           |  
|                                                                              |   |                    |   |   |           |   |   |           |  
|Cash acquired from Invision
      Capital, Inc.                               |   | 81,587             |   |   | -         |   |   | -         |  
|Issuance of capital stock for cash                                            |   | 546,833            |   |   | -         |   |   | -         |  
|Contributed capital                                                           |   | 1,475,540          |   |   | -         |   |   | 301,190   |  
|Proceeds
      from loans payable, net of repayment                           |   | 2,029,951          |   |   | 330,700   |   |   | 277,883   |  
|                                                                              |   |                    |   |   |           |   |   |           |  
|Net
      cash provided by financing activities                               |   | 4,133,911          |   |   | 330,700   |   |   | 579,073   |  
|                                                                              |   |                    |   |   |           |   |   |           |  
|EFFECT OF FOREIGN CURRENCY TRANSLATION ON                                     |   |                    |   |   |           |   |   |           |  
|CASH DURING THE PERIOD                                                        |   | (116               | ) |   | (2,092    | ) |   | 1,345     |  
|                                                                              |   |                    |   |   |           |   |   |           |  
|NET INCREASE (DECREASE) IN CASH                                               |   | 13,429             |   |   | (10,448   | ) |   | (111,759  | )
|                                                                              |   |                    |   |   |           |   |   |           |  
|CASH, BEGINNING OF PERIOD                                                     |   | -                  |   |   | 23,877    |   |   | 128,894   |  
|                                                                              |   |                    |   |   |           |   |   |           |  
|CASH, END OF PERIOD                                                           | $ | 13,429             |   | $ | 13,429    |   | $ | 17,135    |  

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

F-4

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|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

|1. | HISTORY AND ORGANIZATION OF THE COMPANY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Exploration Drilling International Inc. (formerly Invision
        Capital, 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. 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 unaudited 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. Effective October 16, 2006, the Company changed its name from
        Invision Capital, Inc. to Exploration Drilling International Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | These financial statements have been prepared in conformity
        with generally accepted accounting principles in the United States of
        America for interim financial information. The accompanying consolidated
        financial statements do not include all information and footnote disclosures
        required for an annual set of financial statements prepared under United
        States of America generally accepted accounting principles. In the opinion
        of management, all adjustments (consisting solely of normal recurring
        accruals) considered necessary for a fair presentation of financial position,
        results of operations and cash flows as at March 31, 2007 and for all
        periods presented, have been included. Interim results for the period
        ended March 31, 2007 are not necessarily indicative of the results that
        may be expected for the fiscal year as a whole.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2. | GOING CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | These unaudited 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.                                                                                                                                                                                                                                                                                                                                      

F-5

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|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

|2. | GOING CONCERN (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | 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.                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3. | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The 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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | 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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | 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 foreign subsidiary. 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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

F-6

---

|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

|3. | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                              
|   | (d)                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                              
|   | Prepaid expenses consist primarily of prepaid
        vehicle lease and travel expenses and a refundable vehicle lease deposit.                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                              
|   | (e)                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                              
|   | Other receivables consist primarily of Value
        Added Tax in Germany.                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                              
|   | (f)                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                              
|   | 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

(g)        Patents

Patents and patent applications are recorded
  at cost. Capitalized amounts relate solely to legal and advisory costs incurred
  in registration of the patents. Depreciation is calculated using the straight-line
  method over the useful lives of the assets. No depreciation is provided for
  as the patents have not yet been awarded and/or begun to generate revenues.

(h)        Goodwill and intangible
  assets

The Company has adopted 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.

F-7

---

|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

|3. | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | (j)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | 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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company's financial instruments consist
        of cash and cash equivalents, loans receivable, other receivables, accounts
        payable and accrued liabilities 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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Effective January 1, 2006, the Company accounts
        for stock-based compensation issued to employees in accordance with the
        provisions of Statement of Financial Accounting Standards (SFAS)
        123R, Share- Based Payment.which superseded Accounting
        Principles Board (APB) Opinion 25, Accounting for
        Stock Issued to Employees.                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | 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.                                                                                                                                                                                                                                                                                                  

F-8

---

|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

|3. | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | (m)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | 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 March 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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | 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.                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | (o)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | 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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | 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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | In July 2006, the Financial Accounting Standards
        Board (FASB) issued FASB Interpretation No. (FIN)
        48, Accounting for Uncertainty in Income Taxes. FIN
        48 clarifies the accounting and reporting for uncertainties in income
        tax law. FIN 48 prescribes a comprehensive model for the financial statement
        recognition, measurement, presentation, and disclosure of uncertain tax
        positions taken or expected to be taken in income tax returns. FIN 48
        is effective for fiscal years beginning after December 15, 2006.                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | In September 2006, the SEC issued Staff Accounting
        Bulletin (SAB) No. 108, Considering the Effects of
        Prior Year Misstatements when Quantifying Misstatements in Current Year
        Financial Statements. SAB No. 108 provides guidance on how prior
        year misstatements should be taken into consideration when quantifying
        misstatements in current year financial statements for purposes of determining
        whether the current years financial statements are materially misstated.
        SAB No. 108 is effective for fiscal years ending on or after November
        15, 2006.

F-9

---

|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

|3. | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (q)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company does not expect that the adoption
        of these new accounting pronouncements will have a significant effect
        on its financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (r)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Certain amounts reported in the prior periods
        have been reclassified to conform to the current periods presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4. | EQUIPMENT AND PATENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

March
        31,2007Well system
      $
      2,000Technical equipment and machinery
      
      268,093Office and other equipment
      
      17,748287,841Accumulated amortization
      
      (87,260
      )Net book value
      $
      200,581


F-10

---

|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

|4. | EQUIPMENT AND PATENTS (continued)
      Patents
|-- | -----------------------------------------------

March
        31,2007Patents
      $
      363,498Accumulated amortization
      
      -Net book value
      $
      363,498


During the three months ended March
  31, 2007, the Company did not amortize its patents as the patents have not yet
  been awarded and/or they have not begun to generate revenues.

In the event that facts and circumstances
  indicate that the carrying amount of an asset may not be recoverable and an
  estimate of future undiscounted cash flows is less than the carrying amount
  of the asset, an impairment loss will be recognized. Management's estimates
  of revenues, operating expenses, and operating capital are subject to certain
  risks and uncertainties which may affect the recoverability of the Company's
  investments in its assets. Although management has made its best estimate of
  these factors based on current conditions, it is possible that changes could
  occur which could adversely affect management's estimate of the net cash flow
  expected to be generated from its operations.

F-11

---

|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

|5. | LOANS PAYABLE -CURRENT                                                                                                                                                                                                                                                                         
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                
|   | During the three months ended March 31, 2007, two loans
        were granted from a third party individual for Euro 33,000 (US -$44,000)
        and Euro 50,000 (US -$66,667). The loans bear interest at 6% per annum
        and are due February 19, 2008 and March 14, 2008, respectively.
|   |                                                                                                                                                                                                                                                                                                
|   | During the year ended December 31 2006, several loans
        were granted from a third party individual totaling Euro 400,000 (US -$533,334).
        The loans bear interest of 6% per annum and are due as follows:                                                                         

Principal
      Due DateEuro 125,000 (US -$166,667)
      March 31, 2008Euro 125,000 (US -$166,667)
      March 31, 2008Euro 100,000 (US -$133,333)
      June 13, 2007Euro 50,000 (US
        -$66,667)
      December 7, 2007


During the year ended December 31, 2006,
  a loan was granted from a third party individual for Euro 23,000 (US -$30,667).
  The loan bears interest at 7% per annum and is due July 7, 2007. 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.

During the year ended December 31, 2006,
  several loans were granted from a third party individual totaling Euro 53,000
  (US -$70,667). The loans bear interest at 5% per annum and were due December
  31, 2006. The loans have been extended and are due as follows.

Principal
      Due DateEuro 20,000 (US -$26,667)
      June 22, 2007Euro 15,000 (US -$20,000)
      June 26, 2007Euro 18,000 (US -$24,000)
      June 30, 2007


During the three months ended March 31,
  2007, a loan was granted from a third party company for Euro 40,000 (US -$53,333).
  The loan bears interest at 5% per annum and is due September 28, 2007.

During the year ended December 31, 2006,
  two loans were granted from a third party company for Euro 30,000 (US -$40,000)
  and Euro 25,000 (US -$33,333). The loans bear interest at 5% per annum and are
  due November 2, 2007 and November 23, 2007 respectively.

During the year ended December 31, 2006,
  a loan was granted from a third party company for $100,000. The loan bears interest
  at 8% per annum, compounded annually, and is due March 20, 2008.

F-12

---

|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

|6. | LOANS PAYABLE                                                                                                                                                                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                        
|   | During the year ended December 31, 2006, several loans
        were granted from a third party company totaling $550,000. The loans bear
        interest at 8% per annum, compounded annually, and are due as follows:

Principal
      Due Date$250,000
      May 15, 2008$100,000
      July 17, 2008$200,000
      July 28, 2008


|   | The loans including principal
        and interest were repaid in full subsequent to the quarter ended March
        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 -$1,320). The loan bears interest at 3% per annum and is due January
        5, 2008.                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | 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 -$20,533). 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.                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | During the year ended December
        31, 2005, a loan was granted to a former shareholder of EDI for Euro 10,000
        (US -$13,333). 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.                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | 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 -$153,333). 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 loan is currently in default.

F-13

---

|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

|7. | RELATED PARTY TRANSACTIONS (continued)                                                                                                                                                                       
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                              
|   | Loans Payable Current                                                                                                                                                                                       
|   |                                                                                                                                                                                                              
|   | During the three months ended March 31, 2007, several
        loans were granted from EDI Holding totaling Euro 61,960 (US -$82,614).
        The loans bear interest at 5% per annum and are due as follows:

Principal
      Due DateEuro 21,000 (US -$28,000)
      January 22, 2008Euro 39,160 (US -$52,213)
      February 26, 2008Euro 1,800 (US -$2,400)
      February 26, 2008


During the year ended December 31, 2006,
  several loans were granted from EDI Holding totaling Euro 26,400 (US -$34,828).
  The loans bear interest and are due as follows:

Principal
      Interest
      Due DateEuro 20,000 (US -$26,385)
      5%
      July 18, 2007Euro 3,400 (US -$4,485)
      6%
      November 3, 2007Euro 2,000 (US -$2,639)
      5%
      December 31, 2007Euro 1,000 (US
        -$1,319)
      6%
      December 31, 2007


During the three months ended March 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
  -$76,667). The loan bears interest at 5% per annum and is due February 5, 2008.

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 -$120,000) and Euro 11,600 (US -$15,467). On October 4, 2006, Euro 30,000
  (US -$40,000) of the first loan granted was repaid. The first loan bears interest
  at 6% and was due March 31, 2007. On January 4, 2007, the loan was extended
  to September 30, 2007. The second loan bears interest at 5% per annum and is
  due November 30, 2007.

During the three months ended March 31,
  2007, a loan was granted from an individual related to an officer and director
  of the Company and a managing director of EDI, for Euro 10,000 (US -$13,333).
  The loan bears interest at 6% per annum and is due June 30, 2007.

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 -$6,667). During
  the year ended December 31, 2006, a second loan was granted by the same individual
  for Euro 12,000 (US -$16,000). The first loan bears interest at 6% per annum
  and the second loan bears interest at 5%. The loans were due December 31, 2006.
  During the year ended December 31, 2006, the first loan was extended to December
  31, 2007 and the second loan was extended to June 22, 2007.

F-14

---

|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

|7. | RELATED PARTY TRANSACTIONS (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Loans Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | During the year ended December 31, 2006, a loan was
        granted from EDI Holding for Euro 75,000 (US - $98,944). The loan bears
        interest at 5% per annum and is due on December 21, 2009.                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | 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 -$48,000). During the year ended December
        31, 2006, an additional loan for Euro 50,000 (US -$66,667) was granted.
        On December 31, 2006, two loans receivable, including principal and interest,
        totaling Euro 29,446 (US -$39,261) were posted as a payment against the
        second loan payable. The loans bear interest at 5% per annum and are due
        December 31, 2007 and May 4, 2008.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | 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 -$10,667). The loan
        bears interest at 7% annum and is due on December 31, 2009.                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | At March 31, 2007, included in accounts payable and
        accrued liabilities related parties is Euro 95,601 (US -$127,468)
        owed to managing directors of EDI for management fees. Amounts due to
        officers and directors are unsecured, non-interest bearing and due on
        demand.                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | At March 31, 2007, included in accounts payable and
        accrued liabilities related parties is Euro 6,498 (US - $8,664)
        owed to a managing director of EDI for the company use of his private
        vehicle. 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 three months ended March 31, 2007 and 2006 totaled $3,000 and $Nil.
        Management fees paid to the managing directors of EDI for the three months
        ended March 31, 2007 and 2006 totaled Euro 60,000 (US -$78,595) and Euro
        60,000 (US -$72,125) respectively.                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|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 December 7, 2004, the Company issued 51,992,000 shares
        of common stock for total proceeds of Euro 35,750 (US -$46,833).                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

F-15

---

|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

|8. | COMMON STOCK (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|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       | 
| | ---------------------------------------------------------------------------------- |  | ---------- |  | - | -------------- | 
| |                                                                                    |  |            |  |   | Average        | 
| |                                                                                    |  | Number     |  |   | Exercise Price | 
| |                                                                                    |  |            |  |   |                | 
| | Options outstanding, beginning of the period                                       |  | 11,000,000 |  | $ | 1.00           | 
| | Granted                                                                            |  | -          |  |   |                | 
| | Exercised                                                                          |  | -          |  |   |                | 
| | Expired                                                                            |  | -          |  |   |                | 
| | Options outstanding, March 31, 2007                                                |  | 11,000,000 |  | $ | 1.00           | 
| | Options exercisable,
      March 31, 2007                                          |  | 2,180,000  |  | $ | 1.00           | 
| | Weighted average fair value of options granted
      during the three months ended |  |            |  |   |                | 
| | March 31, 2007                                                                     |  |            |  | $ | 0.00           | 

F-16

---

|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

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

Outstanding Options
      
      Exercisable
        OptionsWeightedAverage
      Weighted
      
      WeightedRemaining
      Average
      
      AverageExercise Price
      Number
      Contractual Life
      Exercise Price
      Number
      Exercise Price$         
        1.00
      4,200,000
      8.08
      $         
        1.00
      840,000
      $         
        1.00$         
        1.00
      500,000
      8.08
      $          1.00
      100,000
      $          1.00$         
        1.00
      2,000,000
      8.08
      $         
        1.00
      400,000
      $         
        1.00$         
        1.00
      1,190,000
      8.08
      $          1.00
      240,000
      $          1.00$         
        1.00
      500,000
      8.08
      $         
        1.00
      100,000
      $          1.00$         
        1.00
      500,000
      5.08
      $          1.00
      250,000
      $          1.00$         
        1.00
      250,000
      7.08
      $          1.00
      -
      $         
        1.00$         
        1.00
      250,000
      7.08
      $          1.00
      -
      $          1.00$         
        1.00
      250,000
      7.08
      $          1.00
      -
      $          1.00$         
        1.00
      200,000
      7.08
      $          1.00
      -
      $          1.00$         
        1.00
      200,000
      7.08
      $          1.00
      -
      $         
        1.00$         
        1.00
      200,000
      5.08
      $          1.00
      100,000
      $          1.00$         
        1.00
      200,000
      5.08
      $          1.00
      100,000
      $         
        1.00$         
        1.00
      100,000
      7.08
      $          1.00
      -
      $          1.00$         
        1.00
      100,000
      5.08
      $          1.00
      50,000
      $         
        1.00$         
        1.00
      80,000
      7.08
      $          1.00
      -
      $          1.00$         
        1.00
      50,000
      7.08
      $          1.00
      -
      $         
        1.00$         
        1.00
      30,000
      5.08
      $          1.00
      -
      $          1.00$         
        1.00
      200,000
      9.08
      $          1.00
      -
      $          1.00


Warrants

Date
      Issued
      Outstanding
      Exercise Price
      Expiry DateSeptember 28, 2006
      714,285
      714,285
      $          0.70
      September 28, 2007


F-17

---

|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

|10. | SEGMENT INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | The Companys operations following the acquisition
        of EDI were 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 and patents
        are in Germany.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|11. | COMMITMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | 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 -$1,680).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | On May 29, 2006, EDI entered into a managing service
        contract with a managing director of EDI effective August 1, 2006 to pay
        monthly management fees of Euro 5,600 (US -$7,467). 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 July 1, 2005, EDI entered into a consulting agreement
        with an individual effective July 1, 2005 to pay monthly consulting fees
        at Euro 100 per hour. The contract terminates 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 per hour. The contract terminates 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 -$800) plus taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | On March 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 491 (US -$655) plus taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | 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 -$10,667). The contract may be terminated at the end
        of each calendar quarter by giving written notice of six months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | 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 -$13,333) 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 -$25,333) 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 -$13,333) per month.

F-18

---

|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

|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 -$13,333) 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 -$21,333) 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 -$13,333) per month.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|12. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| |                |   | Cumulative         |  |   |           |  |   |           | 
| | -------------- | - | ------------------ |  | - | --------- |  | - | --------- | 
| |                |   | Amounts from       |  |   | Three     |  |   | Three     | 
| |                |   | Inception          |  |   | Months    |  |   | Months    | 
| |                |   | (December 7, 2004) |  |   | Ended     |  |   | Ended     | 
| |                |   | to March 31,       |  |   | March 31, |  |   | March 31, | 
| |                |   | 2007               |  |   | 2007      |  |   | 2006      | 
| |                |   |                    |  |   |           |  |   |           | 
| | Cash paid for: |   |                    |  |   |           |  |   |           | 
| | Interest       | $ | -                  |  | $ | -         |  | $ | -         | 
| | 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) to March 31, 2007, the Company issued 50,000,000 common shares for
  the acquisition of EDI.

During the three months ended March 31,
  2007 and 2006, there were no non-cash transactions.

F-19

---

|EXPLORATION DRILLING INTERNATIONAL INC.       
|----------------------------------------------
|(formerly Invision Capital, Inc.)             
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in U.S. Dollars)                   
|March 31, 2007                                
|(Unaudited)                                   
|                                              
|                                              

|13. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | 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.                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | On April 2, 2007, the Company issued 1,736,111 units
        at a price of Euro 0.288 (US -$0.384) per unit, for total proceeds of
        Euro 500,000 ($666,667) in a private placement transaction with a corporate
        investor. 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 -$0.384) per share for a period of
        one year from the date of closing.

F-20

---

ITEM
2.           MANAGEMENTS
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this Quarterly Report
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 this caption Managements
Discussion and Analysis or Plan of Operation and elsewhere in this Quarterly
Report. We do not intend to update the forward-looking information to reflect
actual results or changes in the factors affecting such forward-looking
information. 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 Annual Reports on Form 10-KSB, our Quarterly Reports on
Form 10-QSB and our Current Reports on Form 8-K.

As used in this Quarterly Report, the terms we, us,
  our, the Company and EDI USA mean Exploration
  Drilling International Inc. unless otherwise indicated. All dollar amounts in
  this Quarterly Report are in U.S. dollars unless otherwise stated.

INTRODUCTION

We were incorporated in the State of Nevada on January 24,
2003.

Effective on April 26, 2006, we completed the acquisition of
EDI Exploration Drilling International GmbH (EDI Germany). Upon completing the
acquisition of EDI Germany, we abandoned our mineral property acquisition and
exploration activities. We are now in the business of providing exploration
drilling, well construction, water management, and ground water monitoring
services using our proprietary technologies.

The following discussion and analysis summarizes our plan of
operation for the next twelve months, our results of operations for the three
month period ended March 31, 2007 and changes in our financial condition from
our fiscal year ended December 31, 2006. This discussion should be read in
conjunction with the Managements Discussion and Analysis or Plan of Operation
included in our Annual Report on Form 10-KSB for the year ended December 31,
2006.

RECENT CORPORATE DEVELOPMENTS

The following significant developments have occurred since the
end of our December 31, 2006 fiscal year:

|1. | In April, 2007, we completed a private placement sale of
      1,736,111 units at a price of EUR 0.288 per unit (approximately US $0.39),
      for total proceeds of EUR 500,000 (approximately $670,000). Each unit was
      comprised of one share of our common stock and one share purchase warrant
      entitling the holder to purchase one additional share of our common stock
      at a price of EUR 0.288 per share for a period of one year from the date
      of issuance. The private placement was completed pursuant to the
      provisions of Regulation S promulgated under the Securities Act of 1933
      (the Securities Act). The investor represented that it was not a US
      person as defined in Regulation S, and has provided representations
      indicating that it was acquiring our securities for investment purposes
      only and not with a view towards distribution.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | We paid a finder's fee of 10% of the proceeds in
      connection with this private placement. We are using the funds provided by
      the private placement as general working capital and to finance our
      business operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

3

---

|2. | On May 4, 2007, we completed a private placement sale of
      1,875,000 units at a price of $0.32 per unit, for total proceeds of
      $600,000. Each unit was comprised of one share of our common stock and one
      share purchase warrant entitling the holder to purchase one additional
      share of our common stock at a price of $0.32 per share for a period of
      one year from the date of issuance. The private placement was completed
      pursuant to the provisions of Regulation S promulgated under the
      Securities Act of 1933 (the Securities Act). The investor represented
      that it was not a US person as defined in Regulation S, and has provided
      representations indicating that it was acquiring our securities for
      investment purposes only and not with a view towards
  distribution.                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | We paid a finder's fee of 10% of the proceeds in
      connection with this private placement. We are using the funds provided by
      the private placement as general working capital and to finance our
      business operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3. | In May, 2007, we completed three additional drilling
      projects in Namibia through our wholly owned subsidiary, EDI Southern
      Africa (Pty.) Ltd. These projects involved the construction of a well on a
      farm in Northern Namibia and two exploratory drillings conducted for the
      purpose of analyzing a geological formation on behalf of the Namibian
      Ministry for Agriculture and Forestry. As a result of the successful
      completion of these drilling projects, we have secured an additional six
      drilling projects in Namibia. These drilling projects will be carried out
      in co-operation with Shali Drilling Group, based in Oshakati in Northern
      Namibia. These drilling projects will involve the drilling of two bore
      holes to explore water levels on behalf of the Ministry for Agriculture
      and Forestry, the locating and construction of a well on a large farm, and
      three bore holes to be drilled in Etosha National
Park.

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 and India and on further
pursuing the business opportunities that we have developed in Namibia.

|(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 attempt to obtain access to geothermal pilot projects in an effort to
      market the benefits of our Fluid Finder and Medium Changer technology to
      the geothermal energy process and will also work on adapting our
      technologies for use in the field of geothermal energy. Due to the
      financial costs involved, we may seek to enter into cooperation agreements
      with academic institutions to adapt and develop our technologies to
      geothermal energy processes.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(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.                                                                                                                                                                                                                                                                                                                                                                                   

4

---

|(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 has commissioned us
      and a local drilling company to work together on three additional drilling
      projects. These projects will involve 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 have secured an
      additional six drilling projects in Namibia. We expect to commence work on
      these drilling projects within the next several weeks. We are also seeking
      out drilling projects in neighboring countries.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(e) | India: 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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 3,000,000
(approximately $4,000,500) 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 has been accounted for as a recapitalization and EDI Germany has
been 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.

|Three Months Summary        |                                   |            |                      
|--------------------------- | --------------------------------- | ---------- | ---------------------
|                            | Three
      Months Ended March 31
|                            |                                   |            | Percentage           
|                            | 2007                              | 2006       | Increase / (Decrease)
|Revenue                     | $ --                              | $ --       | n/a                  
|Expenses                    | (446,508)                         | (481,548)  | (7.3)%               
|Net Loss Before Other Items | $(446,508)                        | $(481,548) | (7.3)%               

5

---

Revenues

We did not earn any revenues during the three months ended
March 31, 2007. We are currently working on drilling projects in Namibia, 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.

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

Our operating expenses for the quarterly periods ended March
31, 2007 and 2006 consisted of the following:

|                                    | Three Months EndedMarch 31
|----------------------------------- | --------------------------
|                                    |                           
|                                    | 2007                      
|Amortization                        | $15,375                   
|Management Fees                     | 81,595                    
|Professional Fees                   | 49,216                    
|Selling, General and Administrative | 299,834                   
|Foreign currency loss               | 488                       
|Total Expenses                      | $446,508                  

Management Fees

Management fees paid during the period are comprised of amounts
paid or earned by our officers and directors and the general manager of drilling
operations for EDI Germany during the three months ended March 31, 2007.

Professional Fees

Professional fees for the three months ended March 31, 2007 and
2006 consisted of the following:

|                        | Three
      Months Ended March 31
|----------------------- | ---------------------------------
|                        | 2007                             
|                        |                                  
|Accounting and Tax Fees | $20,063                          
|Consulting Fees         | 20,350                           
|Legal Fees              | 8,803                            
|Total                   | $49,216                          

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. 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.
Legal fees include amounts paid in connection with meeting our reporting
obligations under the Exchange Act and for general legal services incurred in
connection with the operation of our business.

6

---

Professional fees for the three months ended March 31, 2006 were
  significantly greater than professional fees for the three months ended March
  31, 2007. The difference in professional fees relates primarily to professional
  fees associated with completing the transaction between EDI Germany and EDI
  USA. Also included in consulting fees for the period ended March 31, 2006 were
  consulting fees of $18,031 paid in connection with the preparation of architectural
  plans for the construction of an office building by EDI Germany. EDI Germanys
  plans to construct this office building were ultimately abandoned.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three
months ended March 31, 2007 and 2006 consisted of the following major
components:

|                        | Three
      Months Ended March 31,
|----------------------- | ----------------------------------
|                        | 2007                              
|                        |                                   
|Marketing and Promotion | $32,240                           
|Travel                  | 25,959                            
|Wages and Benefits      | 127,995                           
|Miscellaneous           | 113,640                           
|Total                   | $299,834                          

Included in marketing and promotional expenses for 2007 are
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. Travel expenses are particularly high as we have chosen to focus on
developing an international market for our products and services, which requires
us to send personnel to various locations around the world. Wages for the three
months ended March 31, 2007 were significantly higher as we hired new
administrative and technical personnel subsequent to our March 31, 2006 fiscal
quarter.

LIQUIDITY AND CAPITAL RESOURCES

|Working Capital         |                         |                            |                      
|----------------------- | ----------------------- | -------------------------- | ---------------------
|                        |                         |                            | Percentage           
|                        | At
      March 31, 2007 | At
      December 31, 2006 | Increase / (Decrease)
|Current Assets          | $255,146                | $292,050                   | (12.6)%              
|Current Liabilities     | (1,855,339)             | (925,299)                  | 100.5%               
|Working Capital Deficit | $(1,600,193)            | $(633,249)                 | 152.7%               

|Cash Flows                                     |                                   |           
|---------------------------------------------- | --------------------------------- | ----------
|                                               | Three
      Months Ended March 31
|                                               | 2007                              | 2006      
|Cash Flows used in Operating Activities        | $(339,713)                        | $(538,989)
|Cash Flows from (used in) Investing Activities | 657                               | (153,188) 
|Cash Flows from Financing Activities           | 330,700                           | 579,073   
|Effects of Foreign Currency Translations       | (2,092)                           | 1,345     
|Net Decrease in Cash During Period             | $(10,448)                         | $(111,759)

During our three months ended March 31, 2007, we received EUR
129,460 (approximately $172,614) in loans from the following related parties:

7

---

| | (a) | Loans totaling EUR 61,960 (approximately $82,614) from
      EDI Holding GmbH, our majority stockholder:
| | --- | --------------------------------------------------------------------------------------------------------

Principal
    Interest Rate
    Grant Date
    Due DateEUR 21,000 ($28,000)
    5%
    January 19, 2007
    January 22, 2008EUR 40,960
      ($54,613)
    5%
    February 23, 2007
    February 26, 2008


| | (b) | A loan for EUR 10,000 (approximately $13,333) 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.                                                
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                  
| | (c) | A loan of EUR 57,500 (approximately $76,667) 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.

We received an additional EUR 123,000
(approximately $164,000) in loans from unrelated third parties as follows:

| | (a) | Loans totaling EUR 83,000 (approximately $110,996),
      bearing interest at a rate of 6% per annum and payable as
  follows:
| | --- | ------------------------------------------------------------------------------------------------------------------------------

EUR 33,000 (approximately $44,000) on
or before February 19, 2008 EUR 50,000 (approximately $66,667) on or before
March 14, 2008

The amounts due and owing under these
loans are secured by accounts receivable and have been personally guaranteed by
Mr. Rotthaeuser and Mr. Thiemann.

| | (b) | A loan for EUR 40,000 (approximately $53,333), bearing
      interest at a rate of 5% per annum and payable on or before September 28,
      2007. The amounts due and owing under this loan are secured by accounts
      receivable.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Subsequent to our three months ended
March 31, 2007, we completed two private placements. One private placement was
completed for 1,736,111 units at a price of EUR 0.288 per unit, for total
proceeds, less commissions of EUR 450,000 (approximately $603,000). The second
private placement was completed for 1,875,000 units at a price of $0.32 per
unit, for total proceeds, less commissions, of $540,000.

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 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 debt financing in the future. Any
long-term financing that we obtain is expected to come from sales of our equity
securities. If we are successful in completing any equity financings, of which
there is no assurance, 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. We do not have any specific alternatives to our current plan of
operation and have not

8

---

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 financial statements for the three months ended March 31, 2007.

RISKS AND UNCERTAINTIES

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 3,000,000 ($4,000,500) 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

9

---

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.

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 have been granted patents for our technologies in one of the
jurisdictions in which we have filed applications; however, there are no
assurances that final patents will be granted in any other jurisdiction for any
of our technologies. If we are not able to obtain patents for our technologies,
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.

10

---

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 Haltern Am See,
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.

ITEM
3.           CONTROLS AND
PROCEDURES.

Under the supervision and with the participation of our
management, including the Chief Executive Officer and Chief Financial Officer,
we have evaluated the effectiveness of our disclosure controls and procedures as
required by Exchange Act Rule 13a-15(b) as of the end of the period covered by
this report. Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that these disclosure controls and procedures
are effective.

There were no changes in our internal control over financial
reporting during the three months ended March 31, 2007 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

11

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PART II - OTHER INFORMATION

ITEM
1.           LEGAL
PROCEEDINGS.

None.

ITEM
2.           UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

In April, 2007, we completed a private placement sale of
1,736,111 units at a price of EUR 0.288 per unit (approximately US $0.39), for
total proceeds of EUR 500,000 (approximately $670,000). Each unit was comprised
of one share of our common stock and one share purchase warrant entitling the
holder to purchase one additional share of our common stock at a price of EUR
0.288 per share for a period of one year from the date of issuance. The private
placement was completed pursuant to the provisions of Regulation S promulgated
under the Securities Act. The investor represented that it was not a US person
as defined in Regulation S, and has provided representations indicating that it
was acquiring our securities for investment purposes only and not with a view
towards distribution.

On May 4, 2007, we completed a private placement sale of
1,875,000 units at a price of $0.32 per unit, for total proceeds of $600,000.
Each unit was comprised of one share of our common stock and one share purchase
warrant entitling the holder to purchase one additional share of our common
stock at a price of $0.32 per share for a period of one year from the date of
issuance. The private placement was completed pursuant to the provisions of
Regulation S promulgated under the Securities Act. The investor represented that
it was not a US person as defined in Regulation S, and has provided
representations indicating that it was acquiring our securities for investment
purposes only and not with a view towards distribution.

We paid a finder's fee of 10% of the proceeds in connection
with each of these private placements. We are using the funds provided by these
private placements as general working capital and to finance our business
operations.

ITEM
3.           DEFAULTS UPON
SENIOR SECURITIES.

None.

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

None.

ITEM
5.           OTHER
INFORMATION.

None.

---

ITEM
6.           EXHIBITS.

|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)                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                  
|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 Exploration Drilling
      International GmbH and Frank Rigney, dated for reference the 5th day of
      April, 2006.(4)                                                              
|        |  |                                                                                                                                                                                                                                                                                                  
|10.4    |  | Agreement and Deed of Transfer between EDI Exploration
      Drilling International Holding GmbH and the Company dated for reference as
      of the 26thday of April, 2006.(5)                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                  
|10.5    |  | 2006 Stock Option Plan.(6)                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                  
|10.6    |  | Joint Operating Agreement Between A. Abuynayyan Trading
      Corporation and EDI Exploration Drilling International GmbH.(7)                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                  
|10.7    |  | Managing Director Contract between EDI Exploration
      Drilling International GmbH and Rainer Rotthaeuser dated effective as of
      the 1stday of January, 2005 (translated from German to
      English).(10)                                                                               
|        |  |                                                                                                                                                                                                                                                                                                  
|10.8    |  | Managing Director Contract between EDI Exploration
      Drilling International GmbH and Guenter Thiemann dated effective as of the
      1stday 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 Exploration Drilling International GmbH (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 Exploration Drilling International GmbH (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 Exploration Drilling International GmbH (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 Exploration Drilling International GmbH (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 Exploration Drilling International GmbH (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 Exploration Drilling International Holding GmbH (as the
      lender) and EDI Exploration Drilling                                                                                                                 

13

---

|Exhibit |  |                                                                                                                                                                                                                                                                                                                
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description of Exhibit                                                                                                                                                                                                                                                                                         
|        |  | International GmbH (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 Exploration Drilling International Holding GmbH (as the
      lender) and EDI Exploration Drilling International GmbH (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 Exploration Drilling International Holding GmbH (as the
      lender) and EDI Exploration Drilling International GmbH (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 Exploration Drilling International Holding GmbH (as the
      lender) and EDI Exploration Drilling International GmbH (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 Exploration Drilling International Holding GmbH
      (as the lender) and EDI Exploration Drilling International GmbH (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 Exploration Drilling
      International GmbH (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 Exploration Drilling
      International GmbH (as the borrower), providing for interest at a rate of
      6% per annum, dated July 1, 2006 (translated from German to
      English).(10)                
|        |  |                                                                                                                                                                                                                                                                                                                
|10.21   |  | Addendum to Loan Agreement dated June 8, 2005 between
      Guenter Thiemann (as the lender) and EDI Exploration Drilling
      International GmbH (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 Exploration Drilling
      International GmbH (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 Exploration Drilling
      International GmbH (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 Exploration Drilling
      International GmbH (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 Exploration Drilling
      International GmbH (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 Exploration Drilling International
      GmbH (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                                                                                                                                                                                                                      

14

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|Exhibit |  |                                                                                                                                                                                                                                                                                                                  
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description of Exhibit                                                                                                                                                                                                                                                                                           
|        |  | (as the lender)
        and EDI Exploration Drilling International GmbH (as the borrower) dated
        September 20, 2006 (translated from German to English).(10)                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                  
|10.28   |  | Addendum to
        Addendum to Loan Agreement dated September 20, 2006 between Dieter Thiemann
        (as the lender) and EDI Exploration Drilling International GmbH (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 Exploration Drilling International GmbH (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 Exploration Drilling International GmbH (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 Exploration Drilling International GmbH (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 Exploration Drilling
        International Holding GmbH (as the lender) and EDI Exploration Drilling
        International GmbH (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 Exploration Drilling
        International Holding GmbH (as the lender) and EDI Exploration Drilling
        International GmbH (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 Exploration Drilling
        International Holding GmbH (as the lender) and EDI Exploration Drilling
        International GmbH (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 Exploration Drilling International GmbH (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 Exploration Drilling International GmbH (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 Exploration Drilling International GmbH
        (as the borrower) dated July 6, 2006 (translated from German to English).(10)                                            
|        |  |                                                                                                                                                                                                                                                                                                                  
|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.                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                  
|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.                                                                                                                                           

15

---

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.                       

16

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SIGNATURES

In accordance with the requirements 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: | May 21, 2007 |  | By: | /s/ Rainer Rotthaeuser                       
|      |              |  |     | RAINER ROTTHAEUSER                           
|      |              |  |     | President and Chief Executive
      Officer  
|      |              |  |     | (Principal Executive Officer )               
|      |              |  |     |                                              
|      |              |  |     |                                              
|      |              |  |     |                                              
|      |              |  |     |                                              
|Date: | May 21, 2007 |  | By: | /s/ Guenter Thiemann                         
|      |              |  |     | GUENTER THIEMANN                             
|      |              |  |     | Chief Financial Officer                      
|      |              |  |     | (Principal Financial Officer )               
|      |              |  |     |                                              
|      |              |  |     |                                              
|      |              |  |     |                                              
|      |              |  |     |                                              
|Date: | May 21, 2007 |  | By: | /s/ John Boschert                            
|      |              |  |     | JOHN BOSCHERT                                
|      |              |  |     | Secretary                                    

---