Ludlow Energy Report: Essential Innovation Technolgoies

Ludlow Energy Ventures Alternative and Income Energy Investing Home Page	OTC: ESIV	Stock Report Launch July. 15th, 2008 OTC Symbol: ESIV

Sector:	Energy
Sub-Industry:	GeoExchange
Fully Reporting:	Yes

Summary: The company is active in the field of providing geothermal heat exchange solutions for residential, commercial clients


Price at Research Launch:	$0.02	\|	52-Week Range:	$0.04-$0.15


Prepared by: Ludlow Capital Research (Equity Research Analyst - Mark Blackwell)

Business Summary

Essential Innovations Technology Corp. provides cutting-edge Geoexchange solutions for residential, commercial and industrial applications as both a manufacturer of proprietary geothermal heat pump technology and as a Geoexchange energy service company. The Company was incorporated in April 2001, and it has four wholly owned subsidiaries located in British Columbia, Canada and in Hong Kong, SAR, China. For more information, go to www.eitechcorp.com.

Stock Performance

In the past 30 trading days, we have seen some good volume being traded in the stock.

Quantitative Evaluations

Ludlow Capital Rating: B+

B-

B+

A-

A+

Volatility: High

Low

Average

High

Technical Rating: NEUTRAL

Relative Stock Strength: 51

1 Lowest

Highest 99

Key Stock Statistics
As of July 24, 2008

12 Month P/E	NA	\|	Yield	NiL
Shs. outstanding	68.8m		Shareholders	NA
Shs. restricted	UR		Market cap. (M)	$1.44m
Avg. daily vol. (K)	121k		Float	NA

Value of $10,000 invested 1 year ago: N/A

Dividend Data

No dividends have been paid on the common stock.

Revenues/Earnings Data Fiscal year ending December 31

Revenues (thousands $)
	2008	2007	2006	2005	2003	2002
1Q	$221K	UR	UR
2Q	$227K	UR	UR
3Q	UR	UR	UR
4Q	UR	UR	UR
Yr.	N/A	$881K	$2.3M	$227K

Earnings per Share ($)
	2008	2007	2006	2005	2004	2003
1Q	UR	UR	UR
2Q	(0.02)	UR	UR
3Q	UR	UR	UR
4Q	UR	UR	UR
Yr.	UR	UR	UR

Source: Company Press Release, and filings with SEC.

Ludlow Energy Ventures Upgrades Research Opinion on Essential Innovations Technology Corp.

Last Updated: July 18, 2008 - 11:27am EST

(NEW YORK)-- New York based Ludlow Energy Ventures, Inc initiates research coverage on Essential Innovation Technology Corp., (OTC: ESIV), a Canadian Geoexchange company based out of Surrey B.C, with a 'speculative' B+ equity rating.

SUMMARY

Essential Innovations is Western Canada's only geoexchange manufacturer with its unique and cutting edge geothermal heat pump system - the EI Elemental Series - which are high efficiency systems that have the capacity to produce heating, cooling, dehumidification as well as domestic hot water. To date, the company has invested a cumulative $15 million in to the development of this Geoexchange technology as well as distribution and channel market infrastructure to ensure the successful launch of its product line and completion of the companies over 700 geoexchange projects.

Furthermore, ESIV is currently altering it's corporate strategy to focus more resources on the manufacturing side of the business. At current capacity the company only has the capabilities of producing up to 10 units / day in Canada. However the ESIV leadership team recently signed a Letter of Commitment in Vietnam to allow for increased production through the 'Vietnam Joint Venture Group' between Essential Innovations Asia Limited, and Tien Thanh and Ekistics Management Inc. Inc. This move will allow ESIV to reduce production cost and increase output to become a more competitive player in this growing market.

Based upon the company's hopeful manufacturing facility to be built in Vietnam, projected sales and net income are as follows:

Note: Scenario A is projected unit sales, Scenario B is 75% of Scenario A projections and Scenario C is 125% of Scenario A projections. To date, the company has yet to make any major releases on finalized sales contracts, but it is expected within the next 2 quarters that contracts should be coming in to fill.

Note: Under the JV Agreement, Essential Innovations Technology Corp. has a 75% stake in the manufacturing venture and a 60% stake in Geoexchange sales the venture. Due to a conservative estimate of a 25% reduction in materials cost and labour reduction of 97.5%, made by ESIV, under Scenario A expected results would yield a ~$7M net income by 2014. Scenario B is equal to 75% of the expected net income of Scenario A, while Scenario C is equal to 125% the expected net income of Scenario A.

The company also operates as a Geoexchange Energy Service Company which utilizes proprietary geoexchange systems. This division of the company looks at existing and new projects and assists clients in designing, engineering, manufacturing and even managing geoexchange energy solutions. The company therefore is compensated for its services, either on a standard up-front purchase contract, or through a financing or lease-to own value proposition. The reason they have done this is to allow for the end user to reduce open-front capital costs associated with installation and allow for a customer to tailor to pay back through a long term Operating Lease Agreement. The company currently is developing and working on a project based out of British Columbia.

Diamondview Project Highlights:

The company has been given exclusive rights to provide geoexchange heating and cooling systems and ongoing geothermal services to each of the residential properties on the development.
Expansion program is taking place in the project as the project developers have recently applied for district permitting to allow for an additional 225 townhome/condominium units to be built
Projected building out of the project is expected for late 2013 with almost 40% of properties already sold.
This contract is structured as a 25-year operating lease
The company estimates that the Phase I cash-flow from operations, over the duration of the geothermal loop-lease will yield a revenue stream of $4-6MM.

QUARTERLY REVIEW

In last quarter results the company experienced a decrease in both revenue and costs of revenue, compared to the same quarter last year, which the company says is a result of ESIV putting a special focus on manufacturing activities and altering the companies effort for the design and installation services over the past year. In addition this, the company incurred a net loss of $1,107,557, or $0.02 per share which is a reduction of net loss by ~56%, compared to the same quarter in 2007 due to a $2.0 million impairment loss charge incurred. The company also, as of April 2008, had accounts receivable totaling $161,229 that were in disputes at which the company has filed legal claims to attempt to recover that amount, which is almost double the allowance for doubtful accounts.

EARTH SOURCE ENERGY INC.

Subsidiary Highlights:

Earth Source Energy is a wholly owned subsidiary of ESIV and a leader in geothermal installation within the North American market. To date the company has installed more that 700 Geoexchange systems for a multiplicity of building and is a true asset to Essential's long-term growth strategy of providing it customers with additional services and expertise in combination with their manufacturing division.

Earth Source Energy been responsible for the design and installation of some of the largest and most advanced geothermal energy systems in North America.
They have completed more than 500,000 metres of holes drilled through every kind of soil. ESE’s immense experience is setting the standard for quality innovative Geoexchange system installations.
Developed the geothermal applications for a major structure in downtown Vancouver with more than 8,000 meters of geothermal loop and an advanced thermal management system.
Is now collaborating with a large development Company in Seattle with plans to develop over the course of years on a 20-block project on Lake Union in Seattle, Washington, that they purchased, a series of “green”, eco-sustainable buildings.

TECHNOLOGY OVERVIEW

The EI Elemental geoexchange technology, which the company is seeking a potential patent on, harnesses the thermal energy in the earth below the surface or in large bodies of water for purposes of heating, cooling, domestic hot water, and/or dehumidification. Some of the main competitive advantages over its competitors is that the company's technology is designed for R410 refrigerant and integrates the an integrated proprietary control package, Although ESIV has being recognized a leader in this area, the company is ensuring that their technology is to the latest standards and will therefore will be upgrading its control package, which is expected to take approx. 6-9 months. Another distinctive feature with the El Elemental geoexchange technology is the LCD interface. This special feature allows the user to view current and past data and was specifically designed to provide up to date notifications that will let the users know of any alternations in the installed system. The LCD interface and can also be attached to personal computer that will display information that can be modified to the users preferences.

RESEARCH OPINION

Mark Blackwell, Research Analyst with Ludlow Energy Ventures commented, "Although Essential Innovations Technology only has a market cap of $1.44 million and incurred a net loss of $1,107,557 last quarter, of which a large amount was non-cash, the company has a strong and sustained stream of revenue, it has redefined its efforts to focus more on manufacturing activities and it is now establishing a quality JV partnership in Vietnam to increase such manufacturing capacity. This joint venture is going to give the company an extreme competitive advantage due to the reduction of labor costs by ~97.5% and material cost reduction by ~25%.

If the company moves forward and continues to secure on-going private placement equity as it has in the past, I am extremely confident that the management team of Essential will allocate the resources effectively to execute on the company's strategy of increasing revenue and growth from the manufacturing division.

In my opinion, the stock is heavily undervalued, and when compared to competitors on the market it has a strong competitive advantage that will allow the company to grow and differentiate itself against competitors. Furthermore, when looking at the two major players in this distinctive market, LSB Industries (“ClimateMaster”) and WaterFurnace Renewable Energy Inc. (“WaterFurnace”), these two companies are trading at a multiplier of 30 - 35 times EPS.

Thus, Ludlow Energy Ventures has commenced research coverage on ESIV, with a 'speculative' B+ rating and, pending that the company is able to move forward with the manufacturing facility in the Vietnam."

To receive the full version of this research report, or wish to request an investor packet on ESIV

ABOUT LUDLOW ENERGY VENTURES, INC.

Based in New York City, Ludlow Energy Ventures is a venture capital and research advisory firm with a specific focus on the renewable and alternative energy markets. The goal of the firm is to promote investments into alternative and renewable energy projects and ventures worldwide. Ludlow Energy Ventures owns and operates the Ludlow Energy Indices, which tracks a wide basket of US traded large and small cap alternative energy stocks. www.ludlowenergy.com

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Contact:

Ludlow Energy Ventures, Inc.
Sarah Kapchinske

Managing Director
(212)-233-2864
sarah@ludlowenergy.com

Disclosure: This is NOT a solicitation to Buy or Sell any security, but rather is for research purposes only. Content contained herein includes facts, views, opinions and recommendations of individuals and organizations deemed of interest. Ludlow Energy ventures does not guarantee the accuracy, completeness or timeliness of, or otherwise endorse these views, opinions or recommendations, or give investment advice. Ludlow Energy Ventures, its affiliates, or directors, may or may not hold a position in the above security from time to time, and investors are encourage to consider this as a possible conflict of interest when reviewing this information. In Compliance with SEC Rule 17B Ludlow Energy was NOT compensated for the distribution of this research material, but may hold a position in the above securities in the Ludlow Energy fund, and should thus be considered a possible conflict of interest when reviewing this report and information.