UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549
                            FORM 10-QSB
(Mark One)
[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: January 31, 2006
Or

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

For the transition period from ____________ to _____________



                                  MEGOLA, INC.
             ------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


             Nevada                                         88-0492605
 -------------------------------                       -------------------
 (STATE OR OTHER JURISDICTION OF                         (IRS EMPLOYER
  INCORPORATION OR ORGANIZATION)                       INDENTIFICATION NO.)


SEC File Number:  000-49815


   446 Lyndock St., Suite 102                                N0N 1G0
           Corunna, ON
--------------------------------                           -----------
     (Address of Principal                                 (Zip Code)
       Executive Offices)

Registrant's telephone number, including area code: Tel: (519) 481-0628


                            ------------------------
          (Former Name or Former Address, if Changed Since Last Report)



----------------------------------------                  ------------
(Address of Principal Executive Offices)                   (Zip Code)

                                       1
<PAGE>

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X] No [ ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed
all documents and reports required to be filed by Sections 12, 13 or 15(d) of
the Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court.

Yes [ ] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date: 37,716,029 at March 17,2006















                                       2
<PAGE>


                                  Megola, Inc.

                                Table of Contents

Part I  Financial Information                                                4

Item 1. Unaudited Financial Statements                                       4
--------------------------------------
Item 2. Management's Discussion and Plan of Operation                        8
-----------------------------------------------------
Forward-Looking Statements                                                   8
--------------------------
Item 3. Controls and Procedures                                             10
-------------------------------
PART II - OTHER INFORMATION                                                 11
---------------------------
Item 1.  Legal Proceedings                                                  11
--------------------------
Item 2.  Changes in Securities                                              11
------------------------------
Item 3. Defaults upon Senior Securities.                                    11
----------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders.                11
------------------------------------------------------------
Item 5. Other Information.                                                  11
--------------------------
Item 6. Exhibits                                                            11
----------------


















                                       3

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

                                  MEGOLA, INC.
                                 BALANCE SHEETS
                 January 31, 2006 (unaudited) and July 31, 2005

<TABLE>
<CAPTION>
                                                                         -----------------        --------------
                                                                            Unaudited
                              ASSETS                                     January 31, 2006         July 31, 2005
                                                                         -----------------        --------------
CURRENT ASSETS
<S>                                                                   <C>                      <C>
    Cash                                                              $               -        $       17,183
    Accounts Receivable-Trade                                                   374,503               397,430
    Inventory                                                                    74,434                82,203
    Loan Receivable from Shareholder                                              5,797                 6,653
                                                                         -----------------        --------------
    Other                                                                       143,492               148,601
                                                                         -----------------        --------------
          Total Current Assets                                                  598,226               652,070
                                                                         -----------------        --------------

    Property and Equipment, net of $42,220 and $37,653 accumulated
      depreciation, respectively                                                 31,225                29,311
    Intangible Assets, net of $ 22,200 and $11,100 accumulated
      amortization, respectively                                                 88,800                99,900
                                                                         -----------------        --------------
                                                                                120,025               129,211
                                                                         -----------------        --------------

TOTAL ASSETS                                                          $         718,251        $      781,281
                                                                         =================        ==============

                LIABILITIES & STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Bank Overdrafts                                                   $          45,304        $       34,374
    Current Portion of Installment Note                                               -                 1,302
    Accounts Payable-Trade                                                      107,715               344,456
    Distributor Deposits                                                          4,361                     -
    Accrued Interest                                                              6,338                18,248
    Accrued Expenses                                                             35,782                34,007
    Loans From Investors                                                         67,836               100,000
                                                                         -----------------        --------------

          Total Current Liabilities                                             267,336               532,387
                                                                         -----------------        --------------

          Total Liabilities                                           $         267,336        $      532,387
                                                                         -----------------        --------------

STOCKHOLDERS' EQUITY
    Common Stock-$.001 par value, 50,000,000 shares
      authorized;37,341,029 and 35,017,429 shares issued and
      outstanding, respectively                                                  37,341                35,017
    Paid In Capital                                                           4,125,744             3,763,708
    Accumulated Deficit                                                      (3,692,410)           (3,478,258)
    Other Comprehensive Income:
          Equity Adjustment on Foreign Currency Translation                     (19,760)              (71,573)
                                                                         -----------------        --------------

          Total Stockholders' Equity                                            450,915               248,894
                                                                         -----------------        --------------

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                             $          718,251       $       781,281
                                                                         =================        ==============
</TABLE>

                                       4
<PAGE>

                                  MEGOLA, INC.
                            STATEMENTS OF OPERATIONS
              Three and Six Months Ended January 31, 2006 and 2005
                                   (unaudited)


<TABLE>
<CAPTION>
                                          3 Months Ended January 31        6 Months Ended January 31
                                         ----------------------------    ----------------------------
                                             2006            2005            2006           2005
                                         ------------    ------------    ------------    ------------
<S>                                      <C>             <C>                  <C>        <C>
INCOME-SALES                             $     24,616    $     31,046         186,803    $     77,682

INCOME-ROYALTIES                              250,000            --           290,000            --
                                         ------------    ------------    ------------    ------------


TOTAL REVENUE                                 274,616          31,046         476,803          77,682
                                         ------------    ------------    ------------    ------------

COST OF SALES                                  14,994           5,464         124,672          19,075


SELLING, GENERAL AND ADMINISTRATIVE           128,669         141,109         550,114         205,766

DEPRECIATION AND AMORTIZATION                    (348)          2,420          13,136           4,510

INTEREST                                        2,570          22,578           3,033         293,938

                                         ------------    ------------    ------------    ------------

          Total Expenses                      145,885         171,571         690,955         523,289
                                         ------------    ------------    ------------    ------------


NET INCOME (LOSS)                        $    128,731    $   (140,525)       (214,152)   $   (445,607)
                                         ============    ============    ============    ============

CHANGE IN FOREIGN CURRENCY TRANSLATION
ADJUSTMENT                               $       (447)   $     16,784    $     51,813    $    (29,885)

COMPREHENSIVE INCOME (LOSS)              $    128,284        (123,741)   $   (162,339)   $   (475,492)

Basic and diluted loss per share         $       0.00           (0.00)   $      (0.01)          (0.01)

Weighted average share outstanding         37,341,029      31,639,682      36,883,090      31,755,248
</TABLE>


                                       5

<PAGE>

                                  MEGOLA, INC.
                            STATEMENTS OF CASH FLOWS
                   Six Months Ended January 31, 2006 and 2005
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                             2006             2005
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                     <C>               <C>
     Net Loss                                                            $  (214,152)      $ (445,607)
     Adjustments to Reconcile Net Income (Loss)
          to Net Cash Provided by (Used in)
          Operating Activities:
             Amortization of Beneficial Conversion Feature                         -          272,656
             Depreciation and Amortization                                     9,186            6,822
             Shares Issued for Service                                       252,000            1,500
             Change in:
             Accounts Receivable                                            (267,123)          28,149
             Prepaid Expenses                                                  5,109                -
             Loan Receivable                                                     856                -
             Inventory                                                         7,769          (32,606)
             Other Assets                                                          0          (27,065)
             Accounts Payable                                                 53,309           34,866
             Bank Overdraft                                                   10,930           17,380
             Accrued Expenses                                                (10,135)          (1,350)
             Deferred Revenue                                                  4,361                -
             Stock Payable                                                         -           32,250
                                                                          -------------     -----------
                  Net Cash (Used in) Operating Activities                   (147,890)        (113,005)
                                                                          -------------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Capital expenditures                                                          -           (2,543)
                                                                          -------------     -----------
                  Net Cash (Used in) Investing Activities                          -           (2,543)
                                                                          -------------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES
        Proceeds from Issuance of Common Stock                                 2,324                -
        Proceeds from Notes Payable                                           67,836          112,500
     Payments on Notes Payable                                                (1,302)          (3,182)
     Deposit from Investor                                                         -          100,000
                                                                          -------------     -----------
                  Net Cash Provided by Financing Activities                   68,858          209,318
                                                                          -------------     -----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                       61,849          (33,777)
                                                                          -------------     -----------

NET (DECREASE) IN CASH                                                       (17,183)          59,993

BEGINNING CASH BALANCE                                                        17,183              441

                                                                          -------------     -----------
ENDING CASH BALANCE                                                      $         0       $   60,434
                                                                          =============     ===========

SUPPLEMENTAL DISCLOSURES:
Cash paid for interest                                                   $                 $
Cash paid for income taxes                                               $                 $

     Non-cash Transactions:
         Offset of Royalty Income Receivable with Accounts Payable       $   290,050       $        -
         Debt exchange for 1,123,600 shares of common stock              $   112,360       $        -
         Debt exchange for 5,052,879 shares of common stock              $         -       $  403,966
</TABLE>

                                       6
<PAGE>

                                  MEGOLA, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of MEGOLA, Inc.
("MEGOLA") have been prepared in accordance with accounting principles generally
accepted in the United States of America and the rules of the Securities and
Exchange Commission ("SEC"), and should be read in conjunction with the audited
financial statements and notes thereto contained in MEGOLA's Annual Report filed
with the SEC on Form 10-KSB. In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim periods
presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year. Notes to the financial statements which would substantially duplicate
the disclosure contained in the audited financial statements for fiscal 2005 as
reported in the 10-KSB have been omitted.

NOTE 2 - SEGMENT REPORTING

Megola sells in the U.S. and China as well as in Canada and has two reportable
geographic segments, with summary information as follows:

Combined                             North America         China         Total
--------                             -------------     -------------    --------
Six months ended January 31, 2006
Revenues                              $ 186,803         $ 290,000      $ 476,803
Net loss                              $ 274,616         $       0      $ 274,616

Six Months ended January 31, 2005
Revenues                              $  77,882         $       0      $  77,882
Net loss                              $ 445,607         $       0      $ 445,607

NOTE 3 - COMMON STOCK

On August 29, 2005, one of Megola's former officers exercised his option to
convert $100,000 notes payable, plus accrued interest of $12,360 due to him,
into 1,123,600 shares of Megola's common stock at a price of $.10 per share. On
September 14, 2005, Megola issued 1,200,000 shares of its common stock, to a
vendor under an agreement for services, valued at $252,000.

NOTE 4 - ROYALTY INCOME

One of the company's manufacturers also sells certain Megola products directly
throughout Asia. By agreement, Megola is entitled a royalty payment for each of
these units. Megola recognizes royalty revenue upon fulfillment of its
contractual obligations and upon sale by the manufacturer of royalty-bearing
products. During the quarter ended January 31, 2006, Megola offset $290,050 of
receivables related to the royalty payments against an amount owed to the
manufacturer.

                                       7

<PAGE>

NOTE 5 - RELATED PARTY TRANSACTIONS

Megola has extended an interest-free loan of $6,653 to one of its original
shareholders. The loan is not subject to a written agreement and is due on
demand. On November 9, 2005, Megola borrowed $12,895 from one of its
shareholders. The loan is payable on demand and has no stated interest rate.
During the quarter ended Jan 31, 2006, Megola borrowed $ 39,941 from one of its
shareholders. The loan is payable on demand and has no stated interest rate. On
Jan 9, 2006, Megola borrowed $15,000 from one of its officers. The loan is
payable on demand and has no stated interest rate.

Item 2. Management's Discussion and Plan of Operation

Forward-Looking Statements

This Quarterly Report contains forward-looking statements about Megola, Inc.'s
business, financial condition and prospects that reflect management's
assumptions and beliefs based on information currently available. We can give no
assurance that the expectations indicated by such forward-looking statements
will be realized. If any of our management's assumptions should prove incorrect,
or if any of the risks and uncertainties underlying such expectations should
materialize, Megola's actual results may differ materially from those indicated
by the forward-looking statements.

The key factors that are not within our control and that may have a direct
bearing on operating results include, but are not limited to, acceptance of our
services, our ability to expand our customer base, managements' ability to raise
capital in the future, the retention of key employees and changes in the
regulation of our industry.

There may be other risks and circumstances that management may be unable to
predict. When used in this Quarterly Report, words such as, "believes,"
"expects," "intends," "plans," "anticipates," "estimates" and similar
expressions are intended to identify forward-looking statements, as defined in
Section 21E of the Securities Exchange Act of 1934, although there may be
certain forward-looking statements not accompanied by such expressions.

The safe harbors of forward-looking statements provided by Section 21E of the
Exchange Act are unavailable to issuers of penny stock. As we issued securities
at a price below $5.00 per share, our shares are considered penny stock and such
safe harbors set forth under the Reform Act are unavailable to us.

General

Megola, Inc. was incorporated in Ontario, Canada on August 28, 2000 as
Corporation No. 1375595. It was renamed Megola, Inc. on December 21, 2001.
Megola was formed to sell physical water treatment devices to commercial
end-users in the United States, Canada and other international locations under a
license granted by the German manufacturer, Megola GmbH. Initial operations and
sales began in October 2000.

                                       8
<PAGE>

Results of Operations

Three months ended January 31, 2006 vs. Three months ended January 31, 2005.

Our revenues for the three months ended January 31, 2006 vs. three months ended
January 31, 2005 increased 784.55% from $31,046 to $274,616 due to continued
sales of our air purification and water treatment devices in North America and
to increased sales into Asia.

Our cost of sales for the three months ended January 31, 2006 vs. three months
ended January 31, 2005 increased 173.94% from $5,464 to $14,994. The overall
increase in the cost of sales during this period is directly attributable to the
increase in revenues.

Our general and administrative expenses for the three months ended January 31,
2006 vs. three months ended January 31, 2005 decreased 8.8% from $141,109 to
$128,669 because of the decrease costs of legal and accounting professional fees
for this period.

Our interest expense for the three months ended January 31, 2006 vs. three
months ended January 31, 2005 decreased 88.61% from $22,578 to $2,570 because of
the company's decreased accrued interest on shareholder notes. Accordingly, our
net gain for the three months ended January 31, 2006 vs. three months ended
January 31, 2005 was $176,111.

Six months ended January 31, 2006 vs. Six months ended January 31, 2005

Our revenues for the six months ended January 31, 2006 vs. six months ended
January 31, 2005 increased 513.79% from $77,682 to $476,803 due to higher sales
of our air purification and water treatment devices in North America and because
of the increase in direct sales royalties from Asia as a result of relocating
the manufacturing and assembly of our products into China.

Our cost of sales for the six months ended January 31, 2006 vs. six months ended
January 31, 2005 increased 553.59% from $19,075 to $124,672. The overall
increase in the cost of sales during this period is directly attributable to the
increase in revenues.

Our general and administrative expenses for the six months ended January 31,
2006 vs. six months ended January 31, 2005 increased 167.35% from $205,766 to
$550,114 because of the increase in legal and accounting professional fees.

Our depreciation and amortization expense for the six months ended January 31,
2006 vs. six months ended January 31, 2005 increased 191..26% from $4,510 to
$13,136 due to amortization of intangible assets.

                                       9
<PAGE>

Our interest expense for the six months ended January 31, 2006 vs. six months
ended January 31, 2005 decreased 98.97% from $293,938 to $3,033 due to decrease
of loans and note payables. The six months interest expense incurred in 2005
resulted from conversion features included on agreements notes in excess of
$227,000.

Accordingly, our net loss for the six months ended January 31, 2006 vs. six
months ended January 31, 2005 decreased 51.94% from $445,607 to $214,152.

Liquidity and Capital Resources

At January 31, 2006, we had a shareholder deficit of $450,915. We had a bank
overdraft of $45,304 at January 31, 2006. We also had $374,503 of accounts
receivable as of that date. Assuming we collect all receivables, we believe that
we can continue operations for approximately 6 months. Thereafter, we will need
to generate further operating revenues or secure other funding on or before
August 2006 in the amount of $175,000 to remain operational until March, 2007.

In order to become profitable, we will still need to secure additional debt or
equity funding. We hope to be able to raise additional funds from an offering of
our stock in the future. However, this offering may not occur, or if it occurs,
may not raise the required funding. There are no preliminary or definitive
agreements or understandings with any party for such financing. We cannot
predict when, if ever, that will happen.

We have a line of credit with the Bank of Montreal in the amount of $40,000.
This line of credit is guaranteed by our CEO Joel Gardner and Director Todd
Clark. This line of credit is callable at the end of each year on December 31.
At the end of January 31, 2006 there was no amount due on this line of credit.

Item 3. Controls and Procedures

The Corporation maintains disclosure controls and procedures designed to ensure
that information required to be disclosed in reports filed under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the specified time periods. As of the end of the period covered
by this report, the Corporation's Chief Executive Officer and Chief Financial
Officer evaluated the effectiveness of the Corporation's disclosure controls and
procedures. Based on the evaluation, which disclosed deficiencies with respect
to the Company's internal control procedures over financial reporting, the
Corporation's Chief Executive Officer and Chief Financial Officer concluded that
the Corporation's disclosure controls and procedures are ineffective as of the
end of the period covered by this report due to limited resources and personnel.

A review of the financial statements was conducted by the Company's independent
accounting firm and significant reporting deficiencies have been addressed in
this report.

There were no changes in the Corporation's internal control over financial
reporting that occurred during the Corporation's most recent fiscal quarter that
have materially affected, or are reasonably likely to materially affect, the
Corporation's internal control over financial reporting.

                                       10
<PAGE>

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

None

Item 2.  Changes in Securities

On August 29, 2005, one of Megola's former officers exercised his option to
convert $100,000 notes payable, plus accrued interest of $12,360 due to him,
into 1,123,600 shares of Megola's common stock at a price of $.10 per share.

On September 14, 2005, Megola issued 1,200,000 shares of its common stock, to a
vendor under an agreement for services, valued at $252,000.

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                     Name and/or Identification of Exhibit
Number
-----------------------------------------------------------------

MEGOLA INC                    SB-2                    11/21/2005


31 Certification

32 Certification


                                       11

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                  Megola, Inc.
                         ------------------------------
                                  (Registrant)

By: /s/ Joel Gardner
   -----------------------
Joel Gardner
President, CEO, Principal Financial Officer and Principal
Accounting Officer


Date: March 21, 2006
























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