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


                                   FORM 10-QSB


                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2006


                        Commission File Number 333-106839


                     Essential Innovations Technology Corp.
        ----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

               Nevada                               88-0492134
   -------------------------------     ------------------------------------
   (State or other jurisdiction of     (I.R.S. Employer Identification No.)
    incorporation or organization)

                     114 West Magnolia Street, Suite 400-142
                              Bellingham, WA 98225
                    ----------------------------------------
                    (Address of principal executive offices)

                                  360-392-3902
                           ---------------------------
                           (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 June 16, 2006, the issuer had
one class of common stock, with a par value of $0.001 per share, of which
27,616,900 shares were issued and outstanding.

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

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

                          PART I--FINANCIAL INFORMATION

Item 1:   Financial Statements:
            Unaudited Consolidated Balance Sheet as at April 30, 2006..........3
            Unaudited Consolidated Statements of Operations for the
              Three and Six Months Ended April 30, 2006 and 2005...............4
            Unaudited Consolidated Statement of Stockholders' Deficiency and
              Comprehensive Loss for the Six Months Ended April 30, 2006.......5
            Unaudited Consolidated Statement of Cash Flows for the
              Six Months Ended April 30, 2006 and 2005.........................6
            Notes to Consolidated Financial Statements.........................8

Item 2:   Management's Discussion and Analysis or Plan of Operation...........15

Item 3:   Controls and Procedures.............................................17

                           PART II--OTHER INFORMATION

Item 2:   Unregistered Sales of Equity Securities and Use of Proceeds.........18

Item 5:   Other Information...................................................18

Item 6:   Exhibits............................................................18

          Signatures..........................................................19

                                       2
<PAGE>
<TABLE>
<CAPTION>
                          PART I--FINANCIAL INFORMATION

                          Item 1. Financial Statements

ESSENTIAL INNOVATIONS TECHNOLOGY CORP.


Consolidated Balance Sheet
(Expressed in United States dollars)
April 30, 2006
(unaudited)

Assets

Current assets:
<S>                                                              <C>
        Accounts receivable                                      $       729,503
        Due from related company                                          16,080
        Inventory                                                        134,891
        Prepaid expenses                                                  33,717
        -------------------------------------------------------------------------
        Total current assets                                             914,191
Property and equipment, net                                              122,272
Deposits                                                                  14,613
Goodwill                                                               1,912,657
Intangible assets                                                        382,933
---------------------------------------------------------------------------------

Total assets                                                     $     3,346,666
---------------------------------------------------------------------------------

Liabilities and Stockholders' Deficiency

Current liabilities:
        Checks issued in excess of funds on hand                 $        42,835
        Accounts payable                                                 851,454
        Accrued expenses                                                 204,883
        Accrued wages                                                     31,908
        Deferred Revenue                                                  34,396
        Loans payable, related parties                                    11,195
        Tenant inducement                                                  7,523
        Due to shareholders                                               16,929
        Current portion of long term debt                                649,000
---------------------------------------------------------------------------------
        Total current liabilities                                      1,850,123
                                                                   --------------

        Term Loan, net of discount of $537,390                           837,610
        Finance loans                                                     16,933
                                                                   --------------

Total liabilities                                                      2,704,666

Stockholders' Deficiency
       Preferred stock:
        $0.001 par value, authorized 10,000,000 shares
        issued and outstanding nil shares                                      -
       Common stock:
        $0.001 par value, authorized 100,000,000 shares
        issued and outstanding 26,098,680 shares                          26,098
       Additional paid in capital                                     13,667,964
       Accumulated deficit                                           (13,004,186)
       Accumulated other comprehensive loss                              (47,876)
---------------------------------------------------------------------------------
        Total stockholders' deficiency                                   642,000
---------------------------------------------------------------------------------
Total liabilities and stockholders' deficiency                   $     3,346,666
=================================================================================


See accompanying notes to consolidated financial statements.

                                       3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ESSENTIAL INNOVATIONS TECHNOLOGY CORP.

Consolidated Statements of Operations
(Expressed in United States dollars)
For the three and six months ended April 30, 2006 and 2005


                                        Three months ended   Three months Ended   Six months Ended   Six months Ended
                                         April 30, 2006       April 30, 2005       April 30, 2006     April 30, 2005
<S>                                      <C>                  <C>                   <C>               <C>
Revenue                                  $   577,644          $    56,123           $   679,690       $    73,532
Cost of Revenue                              378,480               47,592               474,817            50,616
                                         ------------------------------------------------------------------------------
Gross Profit                                 199,164                8,531               204,873            22,916

Expenses:
General and administrative                 4,306,704              486,541             5,266,926           860,844
                                         ------------------------------------------------------------------------------
                                           4,306,704              486,541             5,266,926           860,844

Other income and expense:
Interest expense                             (35,201)              (4,441)              (39,707)           (9,364)
Interest expense, related parties               (540)                (540)               (1,080)           (1,080)
Interest income                                2,108                    3                 2,116                 5
                                         ------------------------------------------------------------------------------
                                             (33,633)              (4,978)              (38,671)          (10,439)
                                         ------------------------------------------------------------------------------
Net Loss for the period                  $(4,141,173)         $  (482,988)          $(5,100,724)      $  (848,367)
=======================================================================================================================

Net Loss per share-basic and diluted     $     (0.19)         $     (0.04)          $     (0.24)      $     (0.06)
                                         ==============================================================================

Weighted average number of shares
  outstanding                             22,235,885           13,295,000            20,884,355        13,175,162
                                         ==============================================================================

See accompanying notes to consolidated financial statements.

                                                               4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

ESSENTIAL INNOVATIONS TECHNOLOGY CORP.

Consolidated Statement of Stockholders' Deficiency and Comprehensive Loss
(Expressed in United States dollars)
For the six months ended April 30, 2006
(unaudited)
                                                                                                       Accumulated
                                                                                                          other
                                                         Common stock          Additional                compre-        Total
                                               ----------------------------     paid-in   Accumulated    hensive    stockholders'
                                               Number of Shares     Amount      capital    deficit        loss          equity
                                               ----------------    --------  ----------- ----------- -------------- -------------
<S>                                               <C>            <C>        <C>         <C>             <C>          <C>
Balance October 31, 2005                          19,106,921     $19,107    $7,817,808  $(7,903,462)    $(38,672)    $  (105,219)

Loss for the period                                        -           -             -   (5,500,087)           -      (5,500,087)
Foreign currency translation                               -           -             -            -       (9,204)         (9,204)
                                                                                                              ---------------
Comprehensive loss                                         -           -             -            -            -      (5,509,291)

Common stock and warrants issued for cash received
            three months ended January 31, 2006      568,167         568       208,682            -            -         209,250
            three months ended April 30, 2006        488,750         489       178,511            -            -         179,000

Common stock issued to related parties for
  services received
            three months ended January 31, 2006      191,590         192        95,603            -            -          95,795
            three months ended April 30, 2006      2,331,778       2,332       984,702            -            -         987,034

Common stock issued to related parties
  to settle accrued wages and consulting fees
            three months ended January 31, 2006      371,370         371       185,314            -            -         185,685

Common stock issued for services received
            three months ended January 31, 2006      354,465         354       127,146            -            -         127,500
            three months ended April 30, 2006        600,000         600       299,400            -            -         300,000

Common stock issued for acquisition of
  subsidiaries                                     1,171,230       1,171       502,961            -            -         504,132

Warrants issued in connection with financings              -           -     1,230,423            -            -       1,230,423

Common stock issued on exercise of options            25,000          25         6,225            -            -           6,250

Common stock issued in relation to Geo-Site
  Rights                                             225,000         225          (225)           -            -               -

Common stock issued to related parties
  to repay loans and advances                        444,409         444       132,879            -            -         133,323

Common stock issued to repay loans and
  consulting fee                                     220,000         220        65,780            -            -          66,000

Warrants issued to related parties for services            -           -       446,311            -            -         446,311

Warrants issued to settle repayment of loans
  and consulting fees                                      -           -        47,360            -            -          47,360

Options issued to related parties for services received
             three months ended January 31, 2006           -           -       378,813            -            -         378,813
             three months ended April 30, 2006             -           -       753,179            -            -         753,179

Options issued for services received
             three months ended January 31, 2006           -           -        37,474            -            -          37,474
             three months ended April 30, 2006             -           -       169,618            -            -         169,618

                                                  ----------------------------------------------------------------------------------
Balance April 30, 2006                            26,098,680     $26,098  $ 13,667,964  $(13,004,186)   $(47,876)    $   642,000
                                                  ==================================================================================

See accompanying notes to consolidated financial statements.

                                                               5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ESSENTIAL INNOVATIONS TECHNOLOGY CORP.

Consolidated Statement of Cash Flows
(Expressed in United States dollars)
For the six months ended April 30, 2006 and 2005
(unaudited)
                                                         Six months ended   Six months ended
                                                          April 30, 2006     April 30, 2005
<S>                                                      <C>                <C>
Cash provided by (used in):
Operations:
    Net loss for the period                              $   (5,100,724)    $    (848,367)
    Adjustment to reconcile net loss for the period to
    net cash used in operating activities:
       Depreciation of property and equipment                    13,580             7,398
       Amortization of intangible assets                         27,708                 -
       Amortization of debt discount                            442,610                 -
       Gain on tenant inducements                                (5,089)           (4,859)
       Common stock issued for services                         427,500            35,000
       Common stock issued to related parties
          for services                                        1,082,579           247,183
       Options issued for services                              207,092                 -
       Options issued to related parties for services         1,131,992            25,000
       Warrants issued for financings                           270,423                 -
       Warrants issued to related parties for services          446,311                 -
       Warrants issued in settlement of loans and
         consulting fees                                         47,360                 -
       Foreign exchange on loan payable                           5,770                 -
       Changes in assets and liabilities
              Accounts receivable                               (53,866)           (2,810)
              Inventory                                         (17,332)               69
              Prepaid expenses                                  (19,010)           11,193
              Checks issued in excess of funds on deposit        42,835                 -
              Accounts payable                                   40,648           154,789
              Accrued expenses and wages                        100,963           292,825
              Deferred revenue                                  (55,285)            5,857
                                                       -----------------------------------
    Net cash used in operating activities                      (983,935)          (76,722)
                                                       -----------------------------------

Investing:
    Purchase of property and equipment                           (1,564)           (5,510)
    Cash component to acquire subsidiaries                     (952,897)                -
                                                       -----------------------------------
    Net cash used in investing activities                      (983,935)           (5,510)
                                                       -----------------------------------

Financing:
    Issuance of common stock                                    388,250                 -
    Proceeds received from exercise of options                    6,250                 -
    Proceeds of term loan                                     2,000,000                 -
    Proceeds of short term loan                                 258,000                 -
    Repayment of short term loan                               (258,000)                -
    Payout of subsidiary loans on acquisition                  (548,900)                -
    Tenant inducements received                                                     5,574
    Advances from shareholders                                  114,226            68,225
    Repayment of finance loans                                   (2,491)                -
    Repayment of loan payable                                   (30,450)                -
                                                       -----------------------------------
    Net cash provided by financing activities                 1,926,885            73,799
                                                       -----------------------------------

Decrease in cash during the period                              (54,346)           (8,433)
Foreign exchange effect on cash                                   9,204             8,404
Cash at beginning of the period                                   2,307                87
                                                       -----------------------------------
Cash (Deficiency) at end of the period                 $              - $              58
                                                       ===================================

See accompanying notes to consolidated financial statements.

                                       6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ESSENTIAL INNOVATIONS TECHNOLOGY CORP.


Consolidated Statement of Cash Flows (continued)
(Expressed in United States dollars)
For the six months ended April 30, 2006 and 2005
(unaudited)



Supplementary Information:

                                                                                           2006           2005
                                                                                       -------------  -------------
<S>                                                                                 <C>             <C>
     Interest paid                                                                  $             - $            -
     Income taxes paid                                                                            -              -
     Non-cash transactions:

         Common shares issued to settle accrued wages and consulting fees                   510,219              -
         Common shares issued for deposit on land                                                 -         10,000
         Common shares issued to acquire subsidiaries                                       504,132              -
         Warrants issued to secure term loan                                                960,000              -
         Additional common shares issued for geo-rights                                     225,000              -
         Common shares issued to settle loans and advances                                  444,409              -
         Common shares issued to related parties to repay loans and advances                133,323              -
         Common shares issued to repay loans and consulting fees                             66,000


See accompanying notes to consolidated financial statements.

                                       7
</TABLE>
<PAGE>

          NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Description of Business and Summary of Certain Accounting Policies

Organization

Essential Innovations Technology Corp. (the "Company") was incorporated under
the laws of the state of Nevada on April 4, 2001. The Company's subsidiary,
Essential Innovations Corporation ("EIC") is engaged in the manufacturing,
installation, and distribution of the "EI Elemental Heat Energy System" family
of geothermal heat products and technology in Canada, the United States, and
Mexico, though its sales to date are primarily in western Canada. Until January
31, 2005, the Company was in the development stage and substantially all of the
Company's efforts had been directed towards product and distribution chain
development primarily in western Canada. Effective as of February 1, 2005, the
Company had sales of these products and management determined that the Company
had emerged from the development stage.

Future Operations

The Company's consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States applicable to
a going concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. As discussed above, the Company
recently emerged from the development stage and it has not yet generated
positive cash flows from operations. It is the Company's intention to borrow and
to raise additional equity to finance the further development of a market for
its products until positive cash flows can be generated from its operations.
However, there can be no assurance that such additional funds will be available
to the Company when required or on terms acceptable to the Company. Such
limitations could have a material adverse effect on the Company's business,
financial condition or operations and these consolidated financial statements do
not include any adjustment that could result. Failure to obtain sufficient
additional funding would necessitate the Company reduce or limit its operating
activities.

Basis of Consolidation

The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information, with the instructions to Form 10-QSB, and with Regulation
S-B. Accordingly, they do not include all the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The results of operations reflect interim adjustments, all of which are of a
normal recurring nature and which, in the opinion of management, are necessary
for a fair presentation of the results for such interim period. The results
reported in these interim consolidated financial statements should not be
regarded as necessarily indicative of results that may be expected for the
entire year. Certain information and note disclosure normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the Securities and
Exchange Commission's rules and regulations. These unaudited interim
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements included in the Company's Annual Report on
Form 10-KSB for the year ended October 31, 2005.

These consolidated financial statements include the accounts of Essential
Innovations Technology Corp. and its wholly-owned subsidiaries, Essential
Innovations Corporation, Essential Innovations Asia Limited, Pacific Geo
Exchange Inc., and Earth Source Energy Inc. All significant inter-company
balances and transactions have been eliminated.

                                       8
<PAGE>

Intangible Assets

Intangible assets consist of geo-site rights, intellectual property, and option
rights agreements. Intangible assets with definite lives or bases for
productivity are recorded at cost and are amortized over the expected life of
the asset. Intangible assets with indefinite lives are not amortized but are
evaluated periodically for impairment. Management tests intangible assets for
impairment at least annually.

Revenue Recognition

Revenues from the sales of geothermal products are recognized as the sales are
made, the price is fixed and determinable, collectibility is probable, and no
significant Company obligations with regard to the products remain.

Revenues from installation contracts are recognized on the percent of completion
method, measured by the percentage of costs incurred to date to estimated total
costs for each contract. Because of the inherent uncertainties in estimating
costs, it is at least reasonably possible that the estimates used may change in
the near term. If estimated costs to complete a contract indicate a loss based
on management analysis, provision is made in the current period for the total
anticipated loss. The lives of these contracts are typically twelve months or
less, but performance may occur in two separate years.

Net Loss per Share

Basic net loss per share is calculated by dividing the net loss attributable to
common stockholders by the weighted average number of shares of common stock
outstanding in the period. Diluted loss per share takes into consideration
shares of common stock outstanding (computed under basic loss per share) and
potentially dilutive securities. The potentially dilutive equity instruments
described more completely in Notes 5 and 6 outstanding during the six months
ended April 30, 2006 and 2005, are anti-dilutive due to the Company's losses.

Use of Estimates

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the fiscal year. Actual results may differ from
those estimates.

Foreign Operations and Currency Translation

The Company translates foreign assets and liabilities of its subsidiaries, other
than those denominated in U.S. dollars, at the rate of exchange at the balance
sheet date. Revenues and expenses are translated at the average rate of exchange
throughout the year. Gains or losses from these translations are reported as a
separate component of other comprehensive income (loss), until all or a part of
the investment in the subsidiaries is sold or liquidated. The translation
adjustments do not recognize the effect of income tax because the Company
expects to reinvest the amounts indefinitely in operations.

Transaction gains and losses that arise from exchange rate fluctuations on
transactions denominated in a currency other than the local functional currency
are included in "general and administrative expenses" in the statements of
operations, which amount was not material for six months ended April 30, 2006,
and 2005.

                                       9
<PAGE>

Stock-Based Compensation

Prior to November 1, 2005, the Company accounted for stock-based compensation in
accordance with Accounting Principles Board ("APB") Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations, as permitted by
Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for
Stock-Based Compensation. In December 2004, SFAS No. 123(R), Share-Based
Payment, which addresses the accounting for employee stock options, was issued.
SFAS No. 123(R) revises the disclosure provisions of SFAS No. 123 and supersedes
APB Opinion No. 25. SFAS 123(R) requires that the cost of all employee stock
options, as well as other equity-based compensation arrangements, be reflected
in the financial statements over the vesting period based on the estimated fair
value of the awards. The Company adopted SFAS No. 123(R) as of November 1, 2005,
using the modified prospective application. Adopting SFAS No. 123(R) resulted in
additional compensation of $1,251,016 being recorded in the six months ended
April 30, 2006, which resulted in a net effect on basic and diluted earnings per
share of $(0.06). There was no impact on cash flows.

The following table illustrates the effects on net loss if the fair value method
had been applied to all outstanding and vested awards for the six months ended
April 30, 2005:

                                                                  2005
                                                            ------------------
        Net loss, as reported
                                                                  $(848,367)
        Add stock-based employee compensation expense
          included in reported net loss, net of tax                 272,981
        Deduct total stock-based employee compensation
          expense determined under the fair-value
          method, net of tax                                       (308,075)
                                                            ------------------
        Pro forma net loss
                                                                  $(883,461)
                                                            ==================
        Pro forma net loss per share
                                                                  $  (0.07)
                                                            ==================

Note 2. Acquisition of Subsidiaries

The Company has purchased 100% of the issued and outstanding shares of Pacific
Geo Exchange Inc. and its wholly-owned subsidiary Earth Source Energy Inc. The
purchase price of $1,457,030 was paid in cash of $952,897 and 1,171,230 common
shares of the Company with a fair value of $504,133. In addition, the Company
paid out $548,900 of debt of the acquired companies.

The acquisition was effective as of March 6, 2006. The operations of the
acquired subsidiaries are consolidated as of that date.

Of the sums paid, $100,920 (Cdn $116,000) and 279,209 common shares of the
Company are being held in escrow pending a final accounting of the acquired
companies. These amounts have been included in the purchase consideration.

The acquisition has been recorded as a purchase and the Company has recorded
goodwill of $1,907,761 in relation to this acquisition.

                                       10
<PAGE>
<TABLE>
<CAPTION>
A summary of the assets and liabilities acquired, as follows:

Assets
<S>                                                                       <C>         <C>
Accounts receivable                                                                   $   541,220
Inventory                                                                                  65,136
Prepaid expenses                                                                           10,362
Due from related parties                                                                   15,718
Fixed assets                                                                               91,874
Intangible assets recorded in connection with purchase                                  1,912,657
                                                                                     ------------
Total assets                                                                            2,636,967

Liabilities

Bank indebtedness                                                                         389,937
Accounts payable and accrued expenses                                                     473,475
Deferred revenue                                                                           89,681
Due to related parties                                                                    110,115
Long-term debt                                                                            116,729
                                                                                     ------------
                                                                                        1,179,937
                                                                                     ------------
Net assets acquired                                                                     1,457,030

Acquisition paid
              Cash                                                        952,897

              Shares                                                      594,133
                                                                       ----------
Excess of consideration paid over net book value of assets             $1,457,030


Pro-forma results of the Company for the six months ended April 30, 2006, as if
the acquisition occurred on November 1, 2005:
<CAPTION>
                                                                     Pacific Geo
                                                                     Exchange Inc.
                                         Essential Innovations    Earth Source Energy         Pro-forma
                                             Technology Corp              Inc.               Consolidated
--------------------------------------- ------------------------ ---------------------- ----------------------
<S>                                           <C>                 <C>                       <C>
Revenue                                       $   163,987             $1,288,441            $ 1,452,428
Cost of  revenue                                  148,950                736,382                885,332
                                                  -------                -------                -------

Gross Profit                                       15,037                552,059                567,096
                                                   ------                -------                -------

Expenses:
   General and administrative                   5,593,439                229,750              5,823,189
                                                ---------                -------              ---------
Other income and expense:
    Interest expense                              (38,974)                (2,697)               (41,671)
    Interest expense, related parties              (1,080)                (1,187)                (2,267)
    Interest income                                 2,116                    124                  2,240
                                                    -----                    ---                  -----
                                                  (37,938)                (3,760)               (41,698)
                                                 --------                -------               --------
Net loss for the period                       $(5,616,340)            $  318,549            $(5,297,791)
                                              ===========             ==========            ============
</TABLE>

Note 3. Intangible Assets

 Geo-Site Rights

The Company acquired the exclusive rights to provide a geo-field operating lease
and to supply its heating and cooling units to a new residential subdivision in
Westbank, British Columbia, for 225,000 shares of the Company's common stock
with a fair value of $225,000 and 150,000 warrants, with a fair value of
$47,468, exercisable until 2010, for 150,000 shares of the Company's common
stock, 75,000 at $0.75 per share and 75,000 at $1.00 per share. The Company
guaranteed that the 225,000 shares of the Company's common stock would have an

                                       11
<PAGE>

aggregate fair market value of at least $225,000 one year after issuance, and if
the aggregate fair market value is less that $225,000 the Company will issue
additional shares of common stock to make the aggregate value $225,000. The
225,000 shares had an aggregate value of $112,500 and the Company has issued an
additional 225,000 shares of the Company's common stock to make up the deficit.
The cost will be amortized on a pro rata-per-unit basis as residential units are
sold. As of April 30, 2006, no amortization has been taken.

 Intellectual Property

The Company acquired certain proprietary information that provides the basis for
the effective implementation and operation of the Geo-Utility business concept
in return for 75,000 fully paid and non-assessable shares of the Company's
common stock and 150,000 options to purchase 150,000 shares of its common stock,
37,500 at $0.75 per share and 37,500 at $1.00 per share exercisable until July
31, 2009 and 37,500 at $1.25 per share and 37,500 at $1.50 per share exercisable
until July 31, 2010. These have been recorded at the fair value of $57,496. In
addition the vendor is entitled to a royalty of 2.5% from gross revenue of
Geo-Utility projects which the Company is directly involved and 0.5% of gross
fees from Geo-Utility projects where the Company provides project management.
This intangible asset has an indefinite life. Management evaluates the asset for
impairment on at least an annual basis.

 Option Rights Agreement

During 2005, and modified in April 2006 to reduce the cost to exercise the
option, the Company obtained the exclusive rights to acquire, from a director of
the Company and his partner who is the father of the Company's Chief Executive
Officer, to a new technology within the geothermal heating and cooling and any
other HVAC related application. The Company paid for this option by issuing
50,000 fully paid and non-assessable shares of its common stock and 50,000
options to acquire 50,000 shares of the Company's common stock at a price of
$0.75 per share exercisable for five years. These have been recorded at the fair
value of $55,156. The Company has a period of 12 months from the signing of the
agreement to determine whether it will exercise the option. The cost to exercise
the option is an additional 250,000 shares of the Company's common stock and
options to acquire 250,000 shares of the Company's common stock at $0.75 per
share exercisable for five years from the date of exercising the option. In
addition the Company will be obligated to pay a royalty of 2.5% of gross revenue
related to the revenue generated from the technology. The cost is being
amortized over one year on a straight-line basis.

Note 4. Related Party Transactions and Balances

 Loans Payable, Related Parties

During 2003, a director and officer of the Company made an unsecured loan to the
Company in the amount of $30,600, due on demand, payable monthly as to interest
only at 8%, with the principal to be repaid in full on or before April 1, 2004.
In connection with this loan, options were granted which entitle the holder to
purchase 50,000 shares of the Company's common stock until 2012: 25,000 at $0.25
per share and 25,000 at $0.50 per share. The fair value of the options of
$37,978 was recorded as interest expense during 2003. During 2004, the loan was
extended and the Company agreed to pay an additional $6,511 in refinancing
costs. The balance remaining, including accrued interest, at April 30, 2006, is
$11,195.

Due to Stockholders

Amounts due to stockholders at April 30, 2006, are unsecured, without specific
terms of repayment and non-interest bearing. The balance remaining due at April
30, 2006, is $16,941.

                                       12
<PAGE>

Other Related Party Transactions

During the six months ended April 30, 2006 and 2005, the Company incurred
consulting fees and related expenses to a company controlled by an officer and
director of the Company in the amount of $75,000 and $75,000. During the six
months ended April 30, 2006, $112,500 of the amount owing was converted into
208,333 shares of the Company's common stock based on the fair value of the
common stock at the transaction dates. In addition 208,333 warrants to purchase
the Company's common stock at $0.30 per share until 2011 were also issued. The
balance remaining due at April 30, 2006, is nil.

Note 5. Term Loan

The Company arranged term financing of $2 million to complete the acquisition of
Pacific Geo Exchange Inc. and Earth Source Energy Inc. This loan is secured
against all assets of the Company and bears interest, payable monthly, at the
rate of prime plus 3%, with a minimum interest rate of 8%. The loan is repayable
in 32 monthly payments of $62,500 commencing August 2006.

The Company also arranged a $4 million revolving line of credit with an interest
rate of prime plus 2%. To date, the Company has not closed on this loan.

The Company issued 8,586,754 warrants, exercisable at $0.001 per share until
2050, in connection with these two loans. If the Company does not close on the
$4 million revolving loan 5,667,258 warrants will be returned to the Company.

The Company has recorded a discount against the loan based on the relative fair
value of the 2,919,496 warrants related to the $2 million term loan in the
amount of $960,000. As the lender has agreed not to hold more than 4.99% of the
Company's stock at any one time only that portion of the debt discount
equivalent to the exercising of warrants which would equate to 4.99% of the
Company's outstanding stock as at the date of funding have been expensed as
interest in the amount of $391,000. The balance of the debt discount is being
amortized over 36 months.

Note 6. Share Capital

Preferred Stock

The Company's authorized capital includes 10,000,000 shares of preferred stock
of $0.001 par value. The designation of rights including voting powers,
preferences, and restrictions shall be determined by the Board of Directors
before the issuance of any shares.

No shares of preferred stock are issued and outstanding as of April 30, 2006.

 Common Stock

During the six months ended April 30, 2006, the Company:

         o        issued 44,000 shares of common stock and warrants to purchase
                  44,000 shares of common stock of the Company at $0.50 per
                  share until 2010 for $22,000.
         o        issued 616,250 shares of common stock and warrants to purchase
                  616,250 shares of common stock of the Company at $0.40 per
                  share until 2010 for $246,500.
         o        issued 15,000 shares of common stock and warrants to purchase
                  15,000 shares of common stock of the Company at $0.35 per
                  share until 2011 for $5,250.
         o        issued 381,667 shares of common stock and warrants to purchase
                  381,667 shares of common stock of the company at $0.30 per
                  share until 2011 for $114,500.
         o        issued 954,465 shares of common stock for payment of services
                  with a fair value of $427,500.

                                       13
<PAGE>

         o        issued 371,370 shares of common stock to certain employees for
                  payment of accrued wages and consulting fees in the amount of
                  $185,685.
         o        issued 191,590 shares of common stock to related parties for
                  payments of services with a fair value of $95,795.
         o        issued 1,171,230 shares of common stock with a fair value of
                  $504,133 in connection with acquisition of subsidiaries.
         o        issued 225,000 shares of common stock with a fair value of
                  $112,500 to settle the short fall in value of shares issued in
                  2005 with regards to acquisition of geo-site rights.
         o        issued 25,000 shares of common stock upon options being
                  exercised to purchase shares of common stock at $0.25 per
                  share.
         o        issued 1,250,000 shares of common stock to certain management
                  of the Company for contract renewals with a fair value of
                  $662,500.
         o        issued 979,166 shares of common stock to certain employees for
                  payment of accrued wages in the amount of $293,750.
         o        issued 102,612 shares of common stock to certain employees for
                  payments of services with a fair value of $30,784.
         o        issued 444,409 shares of common stock and warrants to purchase
                  444,409 shares of common stock at $0.30 per share until 2011
                  to related parties to settle repayment of loans and advances
                  of $133,323.
         o        issued 220,000 shares of common stock and warrants to purchase
                  116,667 shares of common stock at $0.30 per share until 2011
                  to settle repayment of loans and consulting fees.

 Stock Purchase Warrants

At April 30, 2006, the Company had outstanding warrants to purchase 12,402,373
shares of the Company's common stock as follows:

    Number of warrants           Exercise Price                 Expiry
    ------------------           --------------                 ------

          100,000                    $0.35                       2007
           75,000                     0.75                       2010
           75,000                     1.00                       2010
          417,500                     0.40                       2010
          270,000                     0.50                       2010
        1,921,909                     0.30                       2011
           15,000                     0.35                       2011
          323,750                     0.40                       2011
          317,460                     0.63                       2011
          300,000                     0.01                       2011
        8,586,754                     0.001                      2050

At April 30, 2006, 12,402,373 shares of common stock were reserved.

Included in the 8,586,754 warrants exercisable to purchase the Company's common
stock at $0.001 is 5,667,258 warrants which, although they have been issued,
will be returned to the Company if the Company does not close on the $4 million
revolving loan. The fair value of these warrants has not been accounted for in
these financial statements as it is not determinable until such time as the
Company closes on the $4 million revolving loan.

Note 7. Stock-based Compensation

Although the Company does not have a formal stock option plan, during the six
months ended April 30, 2006, the Company issued stock options to directors,
employees, advisors, and consultants.

                                       14
<PAGE>

A summary of the Company's stock options is as follows:
<TABLE>
<CAPTION>
                                                                             Number of           Weighted Average
                                                                              Options             Exercise Price
                                                                       --------------------    ---------------------
<S>                                                                          <C>                       <C>
Outstanding at October 31, 2005                                              6,515,000                 $0.78
     Options exercised                                                         (25,000)                (0.25)
     Options issued:
                         to consultant                                         100,000                  0.40
                         to employees and directors                          1,350,000                  0.30
                         to employees                                          250,000                  0.63
                         to consultant                                         250,000                  0.50
                         to employees and directors                          1,250,000                  0.53
                         to consultant                                         200,000                  0.30
                                                                       --------------------
Outstanding at April 30, 2006                                                9,890,000                  0.66
                                                                       ====================

The following table summarizes stock options outstanding at April 30, 2006:
<CAPTION>
                                                                   Average Remaining                 Number
                                   Number Outstanding at           Contractual Life              Exercisable at
       Exercise Price                 April 30, 2006                    (Years)                  April 30, 2006
-----------------------------    --------------------------     ------------------------    -------------------------
<S>                                     <C>                             <C>                          <C>
         $0.25                              379,750                       2.50                         379,750
          0.30                            1,550,000                       4.75                       1,550,000
          0.40                              100,000                       5.00                         100,000
          0.50                            1,087,250                       4.50                       1,087,250
          0.53                            1,250,000                       5.00                       1,250,000
          0.63                              250,000                       5.00                         250,000
          0.75                            1,835,500                       7.50                       1,835,500
          1.00                            3,051,250                       6.50                       3,051,250
          1.25                               87,500                       5.50                          50,000
          1.50                              282,500                       6.00                         245,000
          2.00                               16,250                       4.75                          16,250
                                 --------------------------                                 -------------------------
                                          9,890,000                                                  9,815,000
                                 ==========================                                 =========================
</TABLE>

The fair value of each option granted is estimated at the date of grant using
the Black-Scholes option-pricing model. The assumptions used in calculating the
fair value of the options granted were risk-free interest rate of 5.0%, a 5-year
expected life, volatility of 160% and a dividend yield of 0.0%.

Note 8. Letter of Intent

The Company has entered into a non-binding letter of intent to acquire all of
the issued and outstanding shares of two drilling companies for a combined price
of $4,614,650 (Cdn $5,185,000) payable, in cash on closing as to $1,557,500 (Cdn
$1,750,000); a one year promissory note in the amount of $445,000 (Cdn $500,000)
with interest of 8% per annum payable monthly; a five year term note in the
amount of $1,054,650 (Cdn $1,185,000) payable monthly as to principal of Cdn
$20,567 and interest calculated at 8% per annum; an amount of $1,557,500 (Cdn
$1.75 million) to be paid at closing by issuing shares of the Company's common
stock at an agreed value of US $0.50 per share with the exact number of shares
to be determined at closing dependent on the exchange rate of the Canadian
dollar. In addition the vendors will be issued Cdn $1.5 million worth of
warrants to purchase shares of the Company's common stock, the exact number and
exercise price to be determined at closing dependent on the exchange rate of the
Canadian dollar and weighted average trading price of the Company's common

                                       15
<PAGE>

stock. The Company will also refinance approximately $2,225,000 (Cdn $2,500,000)
of secured debt of the acquired companies. This acquisition is expected to close
during the third fiscal quarter of 2006.

In addition, the Company has agreed to enter into five year consulting
agreements with two senior managers of the acquired companies. These agreements
will have annual remuneration of Cdn $150,000 and Cdn $125,000 together with an
option package.

Note 9. Subsequent Events

Subsequent to April 30, 2006, the Company:

         o        issued 1,158,333 shares of its common stock and warrants to
                  purchase 1,158,333 shares of its common stock at $0.30 per
                  share until 2011 for total proceeds of $347,500
         o        issued 79,887 shares of its common stock and options to
                  purchase 79,887 shares of its common stock at $0.30 per share
                  until 2011 to a company for services received with a fair
                  value of $23,966.
         o        issued 220,000 shares of its common stock for services
                  received with a fair value of $79,200.
         o        issued 60,000 shares of its common stock to certain employees
                  for services received with a fair value of $22,200
         o        issued options to certain employees to purchase shares of its
                  common stock until the year 2011 at a price of $0.37 per share

        Item 2. Management's Discussion and Analysis or Plan of Operation

         The following discussion should be read in conjunction with the
accompanying condensed consolidated financial statements for the three and six
month periods ended April 30, 2006 and 2005, and our annual report on Form
10-KSB for the year ended October 31, 2005, including the financial statements
and notes thereto.

Forward-Looking Information May Prove Inaccurate

         This report contains statements about the future, sometimes referred to
as "forward-looking" statements. Forward-looking statements are typically
identified by the use of the words "believe," "may," "could," "should,"
"expect," "anticipate," "estimate," "project," "propose," "plan," "intend" and
similar words and expressions. Statements that describe our future strategic
plans, goals, or objectives are also forward-looking statements. We intend the
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934.

         Readers of this report are cautioned that any forward-looking
statements, including those regarding our management's current beliefs,
expectations, anticipations, estimations, projections, proposals, plans or
intentions are not guarantees of future performance or results of events and
involve risks and uncertainties. The forward-looking information is based on
present circumstances and on our predictions respecting events that have not
occurred, that may not occur, or that may occur with different consequences from
those now assumed or anticipated. Actual events or results may differ materially
from those discussed in the forward-looking statements as a result of various
factors. The forward-looking statements included in this report are made only as
of the date of this report. We are not obligated to update such forward-looking
statements to reflect subsequent events or circumstances.

                                       16
<PAGE>

Introduction

         Management believes the most significant features of our financial
condition are that (i) we have closed on a $2 million term loan which permitted
us to finalize the acquisition of Pacific Geo Exchange Inc. and Earth Source
Energy Inc.; (ii) the acquisition of Pacific Geo Exchange Inc. and Earth Source
Energy Inc. has permitted us to increase the speed of expanding the
manufacturing, sales and installation the EI Elemental Heat Energy System; and
iii) we have a revolving credit line of $4 million now contractually available
to the Company that, if closed, would enable us to acquire and vertically
integrate an additional group of companies operating within the geo-thermal
drilling and environmental industry.

Results of Operations

         Comparison of the Three and Six Months Ended April 30, 2006,
         with the Three and Six Months Ended April 30, 2005

         We have generated gross revenue of $679,690 and $577,644 with related
costs of revenue of $474,817 and $378,480 in the six and three month periods
ended April 30, 2006, respectively as compared to gross revenues of $75,532 and
$56,123 and cost of revenue of $50,616 and $47,592 for the six and three months
ended April 30, 2005. This is primarily due to our acquisition of Earth Source
Energy Inc. and the inclusion of its gross revenues, and cost of sales, for the
period of ownership commencing March 7, 2006.

         Our operating expenses for the six and three months ended April 30,
2006, were $5,266,926 and $4,306,704 as compared to $860,844 and $486,541 for
the comparable periods in 2005, an increase of 511% and 785% respectively. This
reflects investor relations costs of $591,307 and $463,807 for the six and three
months respectively; $1,272,245 ($929,797 of which is non-cash), for both the
six and three months ended April 30, 2006, for financing costs related to the
acquisition and conversion of certain debt; $1,397,899 and $1,019,086 recorded
in accordance with the Company's adoption of SFAS 123 (R) for options issued to
employees and directors for the six and three months ended April 30, 2006, as
compared to $25,000 for both the six and three months ended April 30, 2005.

         We had 28 full-time employees as of April 30, 2006, as compared to 10
full-time employees at April 30, 2005.

                                       17
<PAGE>

Liquidity and Capital Resources

         As of April 30, 2006, our current assets stood at $914,191, as compared
to $193,472 at October 31, 2005. As of April 30, 2006, our current liabilities
were $1,225,123, as compared to $763,551 at October 31, 2005. As at April 30,
2006, our long-term liabilities were $1,479,543 as compared to nil at October
31, 2005. Net cash used in operating activities increased to $983,935 for the
six months ended April 30, 2006, as compared to $76,722 for the six months ended
April 30, 2005.

         Net cash spent on investing activities increased to $954,461, including
the cash component of $952,897 paid as part of the acquisition of Pacific Geo
Exchange Inc., for the six months ended April 30, 2006, as compared to net cash
spent during the six months ended April 30, 2005, of $5,510.

         Net cash of $1,926,885 provided by financing activities during the six
months ended April 30, 2006, consists of proceeds from the term loan of $2
million; the issuance of common stock for $388,250; net advances from
stockholders of $83,776 and a repayment of financial obligations of Pacific Geo
Exchange Inc in the amount of $548,900 as compared to net cash of $73,799 during
the comparable six months ended April 30, 2005, which was derived primarily from
advances by stockholders.

         Our current balances of cash will not meet our working capital and
capital expenditure needs for the whole of the current year. Because we are not
currently generating sufficient cash to fund our operations, we will need to
rely on external financing to meet future capital and operating requirements.
Any projections of future cash needs and cash flows are subject to substantial
uncertainty. Our capital requirements depend upon several factors, including the
rate of market acceptance, our ability to get to production and generate
revenues, our level of expenditures for production, marketing and sales,
purchases of equipment, and other factors. We can make no assurance that
financing will be available in amounts or on terms acceptable to us, if at all.
Further, if we issue equity securities, stockholders may experience additional
dilution or the new equity securities may have rights, preferences or privileges
senior to those of existing holders of common stock, and debt financing, if
available, may involve restrictive covenants that could restrict our operations
or finances. If we cannot raise funds, when needed, on acceptable terms, we may
not be able to continue our operations, grow market share, take advantage of
future opportunities, or respond to competitive pressures or unanticipated
requirements, all of which could negatively impact our business, operating
results, and financial condition.


                         Item 3. Controls and Procedures

         We maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed by us in the reports that we
file or submit to the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified by the Securities and Exchange
Commission's rules and forms, and that information is accumulated and
communicated to our management, including our principal executive and principal
financial officers (whom we refer to in this periodic report as our Certifying
Officers), as appropriate to allow timely decisions regarding required
disclosure. Our management evaluated, with the participation of our Certifying
Officers, the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Securities Exchange Act) as of April 30,
2006, pursuant to Rule 13a-15(b) under the Securities Exchange Act. Based upon
that evaluation, our Certifying Officers concluded that, as of January 31, 2006,
our disclosure controls and procedures were effective.

         There were no changes in our internal control over financial reporting
that occurred during our most recently completed fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

                                       18
<PAGE>

                           PART II--OTHER INFORMATION

       Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Sales of Unregistered Securities

         In March 2006, we agreed to issue 118,750 common shares and warrants to
purchase 118,750 common shares at $0.40 per share expiring March 2011 for total
cash consideration of $47,500, or $0.40 per share to a company controlled by an
officer and director of the Company. The investor has represented that it is not
a resident of the United States, acknowledged that the securities will
constitute restricted securities, and consented to restrictive legends on the
certificates to be issued.

         In April 2006, we agreed to issue 25,000 common shares upon the
exercise of options to purchase 25,000 common shares at $0.25 per share.

         In April 2006, we agreed to issue 600,000 common shares to a consultant
for services received with a fair value of $300,000.

         In April 2006, we agreed to issue 1,250,000 common shares and options
to purchase 1,250,000 common shares at $0.53 per share to certain management and
directors for services received with a fair value of $662,500.

         In April 2006, we agreed to issue 1,081,778 common shares and warrants
to purchase 979,166 common shares at $0.30 per share to certain employees and
directors for the conversion of accrued wages in the amount of $324,284.

         In April 2006, we agreed to issue 664,409 common shares and warrants to
purchase 561,076 common shares at $0.30 per share to certain employees,
directors and consultants for the conversion of loans and advances totaling
199,323.

         In May 2006, we agreed to issue 60,000 common shares to certain
employees for services received with a fair value of $22,200.

         In each of the above transactions with our officers, directors,
employees, and consultants, the recipient represented that he or she was not a
resident of the United States, acknowledged that the securities will constitute
restricted securities, and consented to restrictive legends on the certificates
to be issued. These transactions were effected in reliance on Regulation S.

         In May 2006, we agreed to issue 800,000 common shares and warrants to
purchase 800,000 common shares at $0.30 per share expiring May 2011 for total
cash consideration of $240,000, or $0.30 per share. The investor has represented
that it is not a resident of the United States, acknowledged that the securities
will constitute restricted securities, and consented to restrictive legends on
the certificates to be issued. This transaction was effected in reliance on
Regulation S.

         In May 2006, we agreed to issue 166,666 common shares and warrants to
purchase 166,666 common shares at $0.30 per share expiring May 2011 for total
cash consideration of $50,000, or $0.30 per share to an officer and director of
the Company. The investor has represented that he is not a resident of the
United States, acknowledged that the securities will constitute restricted
securities, and consented to restrictive legends on the certificates to be
issued. This transaction was effected in reliance on Regulation S.

                                       19
<PAGE>

         In May 2006, we agreed to issue 220,000 common shares for services
received with a fair value of $79,200. No general solicitation was used, the
terms of the transaction were negotiated directly between the person performing
the services and our executive officers, and the recipient acknowledged that the
securities will constitute restricted securities and consented to restrictive
legends on the certificates to be issued. This transaction was effected in
reliance on the exemption in Section 4(2) of the Securities Act of 1933 as not
involving any public offering.

         In May 2006, we agreed to issue 60,300 common shares and warrants to
purchase 60,300 common shares at $0.30 per share expiring May 2011 for total
cash consideration of $18,090, or $0.30 per share. The investor has represented
that it is not a resident of the United States, acknowledged that the securities
will constitute restricted securities, and consented to restrictive legends on
the certificates to be issued. This transaction was effected in reliance on
Regulation S.

         In May 2006, we agreed to issue 70,000 common shares and warrants to
purchase 70,000 common shares at $0.30 per share expiring May 2011 for total
cash consideration of $21,000, or $0.30 per share. The investor has represented
that it is not a resident of the United States, acknowledged that the securities
will constitute restricted securities, and consented to restrictive legends on
the certificates to be issued. This transaction was effected in reliance on
Regulation S.

         In May 2006, we agreed to issue 61,367 common shares and warrants to
purchase 61,367 common shares at $0.30 per share expiring May 2011 for total
cash consideration of $18,410, or $0.30 per share. The investor has represented
that it is not a resident of the United States, acknowledged that the securities
will constitute restricted securities, and consented to restrictive legends on
the certificates to be issued. This transaction was effected in reliance on
Regulation S.


                            Item 5. Other Information

         See "Item 2: Unregistered Sales of Equity Securities and Use of
Proceeds" for disclosure of issuances of unregistered securities that, in the
aggregate, exceeded 5% of the Company's issued and outstanding common stock.

                                       20
<PAGE>

                                Item 6. Exhibits

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

Exhibit
Number*                   Title of Document                         Location
-------- ---------------------------------------------------------- ------------
Item 31  Rule 13a-14(a)/15d-14(a) Certifications
--------------------------------------------------------------------------------

31.01    Certification of Principal Executive Officer Pursuant to   This filing.
         Rule 13a-14

31.02    Certification of Principal Financial Officer Pursuant to   This filing.
         Rule 13a-14


Item 32  Section 1350 Certifications
--------------------------------------------------------------------------------
32.01    Certification Pursuant to 18 U.S.C. Section 1350, as       This filing.
         Adopted Pursuant to Section 906 of the Sarbanes-Oxley
         Act of 2002 (Chief Executive Officer)

32.02    Certification Pursuant to 18 U.S.C. Section 1350, as       This filing.
         Adopted Pursuant to Section 906 of the Sarbanes-Oxley
         Act of 2002 (Chief Financial Officer)
---------------
*    All exhibits are numbered with the number preceding the decimal indicating
     the applicable SEC reference number in Item 601 and the number following
     the decimal indicating the sequence of the particular document. Omitted
     numbers in the sequence refer to documents previously filed as an exhibit.

                                       21
<PAGE>

                                   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.

                                         Registrant

                                         ESSENTIAL INNOVATIONS TECHNOLOGY CORP.


Date: June 19, 2006                      By: /s/ Jason McDiarmid
                                            ------------------------------------
                                            Jason McDiarmid, President and
                                            Chief Executive Officer


Date: June 19, 2006                      By: /s/ Kenneth G.C. Telford
                                           -------------------------------------
                                           Kenneth G.C. Telford
                                           Chief Financial Officer

                                       22