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

                                   FORM 10-QSB

  [x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

                  For the quarterly period ended March 31, 2005

  [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
       For the transition period from _______________ to _________________

                                    000-29743
                            (Commission file number)

                        INTERNAL HYDRO INTERNATIONAL INC
                   ------------------------------------------
                   (Formerly Home Services International Inc)

        (Exact name of small business issuer as specified in its charter)




        Nevada                                         88-0409143
--------------------------------------------------------------------------------
(State or other jurisdiction                   (IRS Employer Identification No.)
of incorporation or organization)


            607 W. MARTIN LUTHER KING Jr. Blvd., TAMPA, FLORIDA 33603
            ---------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                  813-231-7122
                           (Issuer's telephone number)

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. [X] Yes [ ] No

There is a limited trading market for the registrant's  Common Stock. There were
42,991,417  shares of Common  Stock,  and  8,938,960  shares of preferred  stock
issued and outstanding as of March 31, 2005.

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

None

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

                                       1
<PAGE>



            INTERNAL HYDRO INTERNATIONAL INC.INDEX TO THE FORM 10-QSB
                    FOR THE THREE-MONTHS ENDED MARCH 31, 2005



                                TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION..................................................3

Item 1. Financial Statements...................................................3

Balance Sheet as of March 31, 2005 and 2004(unaudited).........................3

Statements of Operations for the three months ended
   March 31, 2005 and 2004 (unaudited).........................................4

Statements of Cash Flows for the three months ended
   March 31, 2005 and 2004 (unaudited).........................................5

Notes to the Financial Statements........................................6 to 13

Item 2. Management's Discussion and Analysis and Plan of Operation............14

Item 3. Controls and Procedures...............................................18

PART II. OTHER INFORMATION....................................................18

Item 2. Changes in Securities.................................................18

Item 6. Exhibits and Reports on Form 8-K......................................18

SIGNATURES....................................................................19

CERTIFICATIONS................................................................20


                                       2
<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                        INTERNAL HYDRO INTERNATIONAL INC
                   (Formerly Home Services International Inc)

                                  BALANCE SHEET
                                  -------------
                              As of March 31, 2005
                                   (UNAUDITED)



                                       3
<PAGE>

                        INTERNAL HYDRO INTERNATIONAL INC
                   (Formerly Home Services International Inc)

                             STATEMENT OF OPERATIONS
                             -----------------------
                          Quarter ended March 31, 2005
                                   (UNAUDITED)



                                       4
<PAGE>


                        INTERNAL HYDRO INTERNATIONAL INC.

                                   (UNAUDITED)

                            STATEMENTS OF CASH FLOWS




                                       5
<PAGE>

                       INTERNAL HYDRO INTERNATIONAL INC.

    NOTES TO FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2005.

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

The  accompanying   unaudited  financial  statements  have  been  prepared,   by
management,  in accordance with accounting  principles generally accepted in the
United States for interim  financial  information and the  instructions for Form
10-QSB  and  Regulation  S-B.  Accordingly,  they  do  not  include  all  of the
information and footnotes required by accounting  principles  generally accepted
in the United States for complete financial statements. All adjustments that, in
the opinion of management are necessary for a fair  presentation  of the results
of  operations  for the  interim  periods  have been made and are of a recurring
nature unless  otherwise  disclosed  herein.  The results of operations  for the
three months ended March 31, 2005 are not necessarily  indicative of the results
that will be realized for the entire  fiscal year.  These  financial  statements
should be read in  conjunction  with the Company's  Annual Report on Form 10-KSB
for the year ended December 31, 2004.

Background and Nature of Business

INTERNAL  HYDRO  INTERNATIONAL  INC.,(formerly  Internal  Command  International
("ICI")) was incorporated  under the laws of the State of Florida on January 21,
2003 (the "Company").

On  January  2,  2004 the  Company  entered  into a merger  agreement  with Home
Services International, Inc. ("HSI"). HSI issued 27,500,000 shares of its Series
A Preferred stock. The Company is a development stage enterprise.  . The Company
intends to manufacture and distribute its  alternative  energy products that use
water  pressure  flow  to  generate   electricity.   In  connection   with  this
acquisition, the company was re-named INTERNAL HYDRO INTERNATIONAL INC.

As a result of the merger transaction with HSI, the former Company  stockholders
obtained control of HSI's voting stock. For financial accounting  purposes,  the
acquisition was a reverse acquisition of HSI by the Company,  under the purchase
method of accounting,  and was treated as a recapitalization with the Company as
the  acquirer.  Accordingly,  the  historical  financial  statements  have  been
restated after giving effect to the January 2, 2004, acquisition of the Company.
The  financial  statements  have been  prepared  to give  retroactive  effect to
January 21, 2003 (date of inception),  of the reverse  acquisition  completed on
January 2, 2004,  and represent the operations of the Company.  Consistent  with
reverse acquisition  accounting:  (i) all of the Company's assets,  liabilities,
and accumulated deficit, are reflected at their combined historical cost (as the
accounting acquirer) and (ii) the preexisting outstanding shares of the HSI (the
accounting  acquiree)  are  reflected  at their net asset  value as if issued on
Janaury 21, 2003.

Basis of Presentation

The  Company  follows  the  accrual  basis  of  accounting  in  accordance  with
accounting principles generally accepted in the United States of America and has
adopted a year-end of December 31.

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

                                       6
<PAGE>

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - continued

Management further acknowledges that it is solely responsible for adopting sound
accounting  practices,   establishing  and  maintaining  a  system  of  internal
accounting  control and preventing and detecting  fraud. The Company's system of
internal  accounting  control is designed to assure,  among other items, that 1)
recorded  transactions  are valid; 2) valid  transactions  are recorded;  and 3)
transactions  are  recorded in the proper  period in a timely  manner to produce
financial  statements which present fairly the financial  condition,  results of
operations  and cash  flows of the  Company  for the  respective  periods  being
presented

Going Concern Uncertainty

The  accompanying  financial  statements  have been prepared in conformity  with
accounting principles generally accepted in the United States of America,  which
contemplate  continuation of the Company as a going concern. As reflected in the
accompanying  consolidated  financial statements,  the Company has had recurring
losses and negative cash flows from  operations,  and negative  working capital.
The Company has abandoned it's only operating business segment and is attempting
to raise  capital  seek  acquisition  targets and commence  operations  in a new
business segment. There are no assurances that the Company will be successful in
any of  these  endeavors.  These  factors  raise  substantial  doubt  about  the
Company's  ability  to  continue  as a going  concern.  Without  realization  of
additional  capital, it would be unlikely for the Company to continue as a going
concern. The financial statements do not include any adjustments relating to the
recoverability  and  classification  of recorded asset  amounts,  or amounts and
classification  of  liabilities  that might be  necessary  should the Company be
unable to continue its existence.

Principles of Consolidation

The accompanying  consolidated  financial statements include the accounts of HSI
and its wholly owned subsidiary, ICI. All intercompany accounts and transactions
have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The  carrying  amount of cash,  accounts  payable,  notes  payable  and  accrued
liabilities, as applicable, approximates fair value due to the short term nature
of these items.

Cash and Cash Equivalents

The Company  considers all highly  liquid  investments  purchased  with original
maturities of three months or less to be cash equivalents.


                                       7
<PAGE>

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - continued

Concentration of Credit Risk

The Company  places its cash in what it believes to be  credit-worthy  financial
institutions.  However,  cash balances may exceed FDIC insured levels at various
times during the year. There were no bank balances  exceeding  insured limits at
March 31, 2005.

Revenue

There was no revenue generated in the quarter ended March 31, 2005.

Income Taxes

Income  taxes are  provided  for  based on the  liability  method of  accounting
pursuant to  Statement  of  Financial  Accounting  Standards  ("SFAS")  No. 109,
"Accounting  for Income  Taxes."  Deferred  income taxes,  if any, are recorded,
using enacted tax rates expected to apply,  to reflect the tax  consequences  on
future years of differences  between the tax bases of assets and liabilities and
their financial reporting amounts at each year-end.

Loss Per Share

The  Company  calculates  earnings  per share in  accordance  with SFAS No. 128,
"Earnings Per Share," which  requires  presentation  of basic earnings per share
("Basic EPS") and diluted earnings per share ("Diluted EPS"). The computation of
Basic EPS is computed by dividing loss available to common  stockholders  by the
weighted average number of outstanding common shares during the period.  Diluted
EPS gives effect to all dilutive  potential common shares outstanding during the
period. The computation of Diluted EPS does not assume  conversion,  exercise or
contingent  exercise of securities  that would have an  anti-dilutive  effect on
earnings.  As of  December  31,  2004,  there were no stock  options and 107,497
warrants outstanding.

Stock Based Compensation

In  1996,  SFAS  No.  123  "Accounting  for  Stock-Based  Compensation,"  became
effective for the Company.  SFAS No. 123, which  prescribes  the  recognition of
compensation  expense  based on the fair  value of  options  on the grant  date,
allows  companies to continue  applying APB 25 if certain pro forma  disclosures
are made assuming hypothetical fair value method, for which the Company uses the
Black-Scholes option-pricing model.

The Company  accounts for employee stock options in accordance  with  Accounting
Principles  Board  Opinion No. 25 ("APB 25"),  "Accounting  for Stock  Issued to
Employees." Under APB 25, the Company recognizes no compensation expense related
to employee  stock  options,  as no options are granted at a price below  market
price on the date of grant.

For non-employee stock based compensation,  the Company recognizes an expense in
accordance with SFAS No. 123 and values the equity  securities based on the fair
value of the security on the date of grant. For stock-based  awards the value is
based on the  market  value  for the stock on the date of grant and if the stock
has  restrictions  as to  transferability  a discount  is  provided  for lack of
tradability.   Stock   option   awards  are  valued   using  the   Black-Scholes
option-pricing model.

                                       8
<PAGE>

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - continued

Advertising

The  Company  expenses  advertising  costs  as  incurred.  The  Company  had  no
advertising expense in the quarter ended March 31, 2005.

Recently Issued Accounting Pronouncements

In December  2002,  the FASB issued SFAS No.  148,  Accounting  for  Stock-Based
Compensation  - Transition  and  Disclosure - an amendment of FASB Statement No.
123. SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based  Compensation,
to provide  alternative methods of transition for a voluntary change to the fair
value-based  method of accounting  for  stock-based  employee  compensation.  In
addition,  SFAS No. 148 amends the  disclosure  requirements  of SFAS No. 123 to
require  prominent  disclosures in both interim and annual financial  statements
about the method of accounting for  stock-based  employee  compensation  and the
effect of the method used on reported  results.  SFAS No. 148 is  effective  for
financial statements issued for fiscal years ending after December 15, 2002. The
adoption  of SFAS  No.  148 did not  have a  material  effect  on its  financial
position or results of operations.

In January 2003, the FASB issued FIN No. 46,  Consolidation of Variable Interest
Entities,  and amended the  Interpretation  in December  2003. FIN No. 46 states
that companies  that have exposure to the economic  risks and potential  rewards
from  another  entity's  assets  and  activities  have a  controlling  financial
interest  in a  variable  interest  entity and should  consolidate  the  entity,
despite  the  absence  of  clear  control  through  a  voting  equity  interest.
Disclosure  of  significant  variable  interest  entities  is  required  in  all
financial  statements  issued  after  January 31, 2003,  regardless  of when the
variable  interest  was  created.  The  adoption  of FIN No.  46 will not have a
material effect on its financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150,  Certain  Financial  Instruments with
Characteristics  of Both  Liabilities  and  Equity.  SFAS  No.  150  established
standards for how a company clarifies and measures certain financial instruments
with  characteristics  of both liabilities and equity.  It requires a company to
classify such instruments as liabilities,  whereas they previously may have been
classified as equity.  SFAS No. 150 is effective  for all financial  instruments
entered into or modified  after May 31, 2003. The Company  anticipates  that the
adoption  of SFAS  No.  150 will not have a  material  effect  on its  financial
position or results of operations.

In  December  2004  the  FASB  issued  a  revised  Statement  123  (SFAS  123R),
"Accounting for Stock-Based  Compensation"  requiring public entities to measure
the cost of  employee  services  received  in  exchange  for an award of  equity
instruments based on grant date fair value. The cost will be recognized over the
period  during which an employee is required to provide  service in exchange for
the award -- usually the vesting period. The Company is evaluating the impact of
this new  pronouncement  and does not expect the effect of  implementation  will
have a significant impact on the Company's financial statements.


NOTE 2 - RELATED PARTY TRANSACTIONS

The Company borrows funds from officers and  stockholders  from time to time. As
at March 31, 2005, the balance of these loans was $66,000.  Currently, there has
been no repayment  terms  specified  for the  shareholder  loans,  as such,  the
Company has classified the loans as a Current Liability.

                                       9
<PAGE>

NOTE 2 - RELATED PARTY TRANSACTIONS - continued

The Company borrows funds from officers and  stockholders  from time to time. As
at March 31, 2005, there were no terms for the repayment of these loans.

During the three month period ended March 31, 2005,  the Company  received loans
of $27,000 from significant shareholders to cover operating expenses and certain
accounts payable. Currently, there has been no repayment terms specified for the
shareholder  loans,  as such,  the Company has  classified the loan as a Current
Liability.

NOTE 3 - NOTE PAYABLE

The Note  Payable  is a 1 year Term,  due April 30,  2005.  The Note  carries an
interest  rate  payable of 12% per annum.  The Note is  Convertible  into common
stock at the  discretion of the Lender,  including  all accrued  interest at the
lesser of $7.50 per share or at a 30% discount to the three  lowest  closing bid
prices for the five days prior to the conversion  date. The Note also includes a
warrant to purchase 100,000 shares of common stock at a price of $5.00 per share
for a period of 5 years.

The Company has valued the beneficial conversion feature of this Note Payable at
$60,000.  This  amount was charged as a discount  to the note and  amortized  to
interest expense over a one year period.

NOTE 4 - STOCKHOLDERS' DEFICIENCY

During the year ended December 31, 2003, HSI declared a 1 for 28.9 reverse stock
split.  The number of shares  presented in these  financial  statements has been
retroactively restated for all periods to reflect this reverse stock split.

During the year ended  December 31, 2004,  the Company  declared a 5 for 1 stock
split.  The number of shares  presented in these  financial  statements has been
retroactively restated for all periods to reflect this reverse stock split.

During the year ended December 31, 2002, the Company placed  2,813,180 shares of
its common stock in an escrow account. These shares are contingently issuable as
they  are to be  issued  to  creditors  as part of a plan to  negotiate  Company
obligations  through  an  intermediary.  The  Company  is  attempting  to settle
obligations  by  negotiating  with  creditors  to take  Company  common stock as
payment  for the  obligations.  During the year ended  December  31,  2002,  the
Company had not issued any of these shares to  creditors.  During the year ended
December 31, 2003,  the Company  negotiated a settlement in which 249,905 shares
of common stock were issued out of escrow to settle a creditor  obligation  that
had an original  balance of $65,000.  The settlement was recorded at the trading
value of the  shares on the date of  settlement.  That value was  $299,866.  The
result was an additional  expense of $234,866 charged to operations for the year
ended December 31, 2003.  During the quarter March 31, 2005, the Company did not
issued any of these shares to creditors.


On July 29, 2004(the Company entered into a Stock Purchase Agreement  ("Purchase
Agreement"),  effective  October 7, 2004,  with  Langley  Park  Investments  Plc
("Langley"),  a corporation  organized under the laws of England and Wales which
is  admitted  to trade on the London  Stock  Exchange  ("LSE") as an  investment
trust.  Pursuant to the Purchase  Agreement,  the Company sold 2,375,000  shares
(post-split)  of its common  stock  ("Company  Stock")  to  Langley  for a total
purchase price of approximately $1,780,000.

                                       10
<PAGE>

NOTE 4 - STOCKHOLDERS' DEFICIENCY - continued

Langley paid the purchase price by delivering 882,778 Ordinary Shares of Langley
("Langley  Shares")  to the  Company  with a value of one (1.00)  British  Pound
Sterling  (approximately  U.S.$1.80)  per share.  The Company issued the Company
Stock to Langley.  Both the Company Stock and the Langley  Shares will initially
be placed into escrow, including fifty percent (50%) of the Langley Shares to be
deposited  into  escrow  as  Downside  Price  Protection  (the  "Langley  Escrow
Shares").

The Company  intends to  liquidate  the Langley  Shares  released to it within a
reasonable  period of time  following  their listing on the LSE in order to fund
operations.  Although the parties have agreed upon a value of one (1.00) British
Pound Sterling (approximately  U.S.$1.80 per share) per Langley Share, there can
be no  assurances  that the  Company  can  liquidate  some or all of the Langley
Shares at that price.

On November 3, 2004 the Company sold 441,389 shares of Langley Park  Investment,
(London Exchange:  LPI) for $193,388. This was the first liquidation pursuant to
the Agreement.  These gross  proceeds  represented a loss of $697,237 based upon
the  difference  between the selling price on November 3, 2004 and the Company's
trading price on July 29, 2004.

The  balance of the 441,389  shares  owned by the Company are valued at December
31, 2004 at the market price of the Langley Park  Investments  Plc. as listed on
the London  Stock  Exchange  ("LSE")  with the  difference  being  carried as an
unrealized loss in the equity section of the Company's financial statements.

On  the  two  (2)  year  anniversary  of  the  Purchase   Agreement  ("Two  Year
Anniversary"),  the market value of the Company's  common stock will be compared
to the purchase price of the Company Stock under the Purchase  Agreement" Market
Value" is defined as the average of the ten (10) closing bid prices per share of
the  Company's  common  stock  during  the ten  (10)  trading  days  immediately
preceding the Two Year Anniversary of the Agreement.  If the Market Value of the
Company's  common stock on the Two Year  Anniversary  is the same or higher than
purchase price per share, then at that time, the Company will receive all of the
Langley Escrow Shares.  If the Market Value on the Two Year  Anniversary is less
than purchase price per share,  then for each percentage point decline in value,
the Company must sell a  corresponding  percentage of the Langley  Escrow Shares
back to Langley for nominal  consideration,  up to the maximum number of Langley
Escrow  Shares,  and the balance of the Langley  Escrow  Shares is released from
escrow to the Company.


NOTE 5 - BUSINESS SEGMENTS

The Company operates in one business  segment,  the manufacture and marketing of
devices that produce  electrical energy from existing water,  steam, air and gas
flows.


NOTE 6 - COMMON AND PREFERRED STOCK

The Company issued  4,834,500  shares of its Common Stock during the three month
period ended March 31, 2005 for services  rendered to the Company.  The value of
these services is recorded at $435,105 which was based upon the closing price of
the Company's shares at March 31, 2005.

The Company  issued  372,000  shares of its Common  Stock during the three month
period ended March 31, 2005 for the  forgiveness  of debt to  shareholders.  The


                                       11
<PAGE>

NOTE 6 - COMMON AND PREFERRED STOCK - continued

value of these  services is recorded at $40,200 for the three month period ended
March 31, 2005 which was based upon the cash value of the loans forgiven.


During  the  period  January 1, 2005 to March 31,  2005  shareholders  converted
19,591,790 Preferred shares into the Company's Common shares on a 1 for 1 basis.


NOTE 7 - COMMITMENTS AND CONTINGENCIES

The Company has  obligations to numerous  creditors and vendors.  The Company is
attempting to settle these obligations, primarily through the issuance of common
stock.  Management  believes  that the  Company  will  ultimately  settle  these
obligations  for no more than amounts  accrued at March 31, 2005.  However,  the
Company has made  settlement  offers to  numerous  creditors.  These  offers are
represented by a specified  number of shares.  Any settlements will be valued at
the fair value of the stock at the time the settlement is reached.

NOTE 8 - MERGER TRANSACTION

On January 2, 2004, the Company entered into a merger  transaction with HSI. The
Company  had net  assets  of  $385.  The net  deficit  of HSI was  approximately
$1,034,000 at January 2, 2004. As discussed in Note 1, the Company accounted for
this transaction under the purchase method of accounting,  and it was treated as
a recapitalization with the Company as the acquirer. HSI had office equipment of
approximately  $2,000,  accounts payable and accrued liabilities of $400,000 and
other liabilities of $636,000.

NOTE 9 - INVESTMENTS

During the year ended  December  31,  2004,  the  Company  entered  into a Stock
Purchase  Agreement to acquire  882,778 shares of Langley Park  Investments  Plc
("Langley"),  a corporation  organized under the laws of England and Wales which
is  admitted  to trade on the London  Stock  Exchange  ("LSE") as an  investment
trust.  Pursuant to the Purchase  Agreement,  the Company sold 2,375,000  shares
(post-split)  of its common  stock  ("Company  Stock")  to  Langley  for a total
purchase price of $1,781,250  based on the trading value of the Company's shares
delivered to Langley.  The Company sold one half of its Langley  holdings during
the year ended December 31, 2004.

The Company  currently  classifies  all investment  securities as  available-for
-sale. These securities are presented at their estimated fair value.  Unrealized
gains and losses on such securities,  net of the related income tax effect,  are
excluded  from  earnings and reported as a separate  component of  stockholders'
equity until  realized.  Realized  gains and losses are included in earnings and
are derived using the specific identification method for determining the cost of
securities sold.

Investment in Langley securities consisted of the following at March 31, 2005:

                                  Gross Unrealized        Fair
                        Cost      Gains      Losses      Value
                  ---------- ---------- ----------- ----------
Equity securities  $ 890,625  $       -  $ (772,440)  $ 18,185
S

Proceeds  from  sales of equity  securities  were  $193,388  and gross  realized
(losses)  gains were  ($697,237)  for the year ended December 31, 2004. The fair


                                       12
<PAGE>


NOTE 9 - INVESTMENTS - continued

value at March 31, 2005 is determined  based on the trading price of Langley and
translated to U.S. dollars at the exchange rate on March 31, 2005.

During the year ended December 31, 2004, the Company  invested in Kinetic Energy
Systems,  Inc.  ("Kinetic") by issuing  1,250,000 shares of its common stock for
approximately  20% of Kinetic.  The value of the  investment  was  determined to
$187,500 based on the trading price of the Company's common stock at the time of
the agreement.  The Company intends to jointly develop and market  complimentary
technologies with Kinetic.  The Company  classifies its investment in Kinetic as
available for sale and has carried its investment at cost.  Kinetic is a private
company and there is quoted  market price for its  securities.  The Company does
not believe that its investment in Kinetic is impaired at March 31, 2005.




                                       13
<PAGE>


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

General

The following discussion and analysis should be read in conjunction with the our
consolidated  financial  statements  and  related  footnotes  for the year ended
December 31, 2004 included in this Annual Report on Form 10-KSB.  The discussion
of results,  causes and trends  should not be construed to imply any  conclusion
that such results or trends will necessarily continue in the future.

Background and Overview

Tel-Voice Communications,  Inc. ("Tel-Voice") was incorporated under the laws of
the State of Nevada  on  December  31,  1996 to engage in any  lawful  corporate
activity,  including,  but not limited to,  selected  mergers and  acquisitions.
Smartdotcom,  Inc.  ("Smartdotcom") was incorporated under the laws of the State
of Nevada on April 19, 1999. On June 30, 2000, Smartdotcom became a wholly owned
subsidiary of Tel-Voice  through a reverse merger.  Tel-Voice  issued  4,376,895
shares of its common stock for all of the issued and outstanding common stock of
Smartdotcom.  Prior  to the  merger,  Tel-Voice  had no  business  activity  and
therefore,  pro forma operating results as if the acquisition had taken place at
the beginning of the periods presented have not been presented.  Smartdotcom has
been treated as the acquirer and  accordingly,  Smartdotcom  is presented as the
continuing entity. The historical financial statements are those of Smartdotcom.

In December of 2002, the Company  determined  that its business plan of becoming
an all-inclusive  telecom,  messaging and  communications  provider would not be
successful.  We therefore have wound down those operations and are now searching
for new business  ventures.  At the time, the Company had incurred net losses of
$2,560,448 since inception.

Because  the Company had  determined  that it would exit the  telecommunications
business,  it developed a new business  plan to become a provider of services to
homebuyers.

Home Services International Inc. (HSVI) intended to act as a holding company for
service  businesses  related to the home  building  and home buying that want to
expand into  national  markets.  HSVI  intended to  acquire,  joint  venture and
develop such businesses. Businesses that were intended targets included mortgage
broking,  mortgage  originations  and  lending,  construction  lending and other
services that would benefit propsective home buyers.

HSVI expected to have 2 roles in the joint ventures or aquisitions: 1. To act as
the financing  intermediary  between the  business's  that have adpoted the HSVI
program.  2. To distribute the interest  earnings and profits to the shareholder
who have provided the financing.

The  corporate  offices  of HSVI  would not  require a large  infrastructure  or
overhead to operate  this  business:  o each  business  unit would be trained to
operate independently, except for the financing o the JV partners would have the
responsibility to manage and coordinate the business unit relationship

This feature of the business meant most of the revenues  generated  would result
in high  profit  margins  and cash  flow  that can be  distributed  back the the
shareholders.  The first phase of this would be to pay dividends directly on the
preferred shares we intend to issue in raising capital.

As of December 29, 2003 the above Business Plan was abandoned. An opportunity to
merge with INTERNAL COMMAND  INTERNATIONAL INC. was negotiated with an effective
date  of  January  2,  2004.  The  merged   companies   became   INTERNAL  HYDRO
INTERNATIONAL INC.

Subject  to  the  terms  and  conditions  of  the  Merger   Agreement  (Plan  of

                                       14
<PAGE>

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

Reorganization)  and pursuant to Section  368(a)(1)(B)  of the Internal  Revenue
Code of 1986,  as amended,  the parties to the  Agreement  shall effect a Type B
reorganization (the  "Reorganization")  whereby all of the outstanding shares of
ICI  common  stock  were  exchanged  for  27,500,000  shares of the HSVI Class A
Preferred Stock.

The Company has valued the  acquisitions  of these assets at  $18,732,000  based
upon an indication  of value  estimate  provided by IPA Advisory &  Intermediary
Services, 1275 Barclay Blvd, Buffalo Grove, Illinois. 60089.

INTERNAL HYDRO  INTERNATIONAL  INC. owns an alternative power system. The Energy
Commander IV (EC IV) is a patented technology,  utilizing  wastewater,  fluid or
gas flow from any source  where flow  pressure  is present,  and yet wasted,  to
create electricity.  The system takes in the wasted pressure flow, where it goes
through the heart of the system, and into pistons that create massive mechanical
forces,  all of which is transferred to a generator  creating both  electricity,
and optional air  pressure,  both being for direct use or storage.  The water or
gas then moves out of the unit,  to it's  original  destination,  without  added
waste. The system is noiseless and emission free

IHI has  prepared a business  model that will market the EC IV system  through a
distributors  network  around  the  world.  Numerous  municipalities,  counties,
manufacturing, textile, petroleum, residential development, and other industries
have  entered into  agreements  and intents  with IHI for  application  of these
units.

The  first  goal  of the  new  management  of IHDR  was  the  perfection  of the
technology  to prove  the  large  scale of the  power  potential  of the  Energy
Commander technology. This entailed the intricacy of design and engineering of a
new  style of unit on a much  larger  scale.  It  required  the  acquisition  of
materials,  fabrication of machined parts never before made; the manufacture and
design of a valve system so unique that it would  qualify as a new  intellectual
asset;  the  assembly of the unit;  and the  testing of the unit under  pressure
simulation. This work resulted in the final production of a unit in late August,
2004 (the  Energy  Commander  IV - A Model).  The EC IV (A) was a four  cylinder
unit,  designed  for a four inch  feed of water at 65  p.s.i.  The EC IV (A) was
shown to produce energy via its 25 kilowatt  generator,  successfully under real
world  conditions.  With the successful  completion of the EC IV (A) the company
proceeded  to design a smaller  sized unit which would  produce even more power.
The planning and design of the variant model EC IV (B) has now begun.  The EC IV
(B) will be an eight  cylinder  unit 50% the size of the (A) model  producing 30
kilowatts at 55 p.s.i. The new design will call for new parts, a new engineering
firm, new plans and new equipment to make it smaller and  standardized  for mass
production.

The Company's  management  sought to further its business plan by acquisition of
further similar  technologies and by execution of contracts for future units and
rights to distribution of the technology.

KINETIC ENERGY:

On July 8, 2004,  Internal Hydro  International made an announcement that it had
entered into an  agreement  with  KINETIC  ENERGY  SYSTEMS,  INC.  (KINETIC),  a
privately held Florida Corporation, for a strategic partnership.  Internal Hydro
received  20% of the shares of the private  company,  with access to license and
develop  the  technology  Kinetic  held  for  underwater  and over  water  power
generation.  Internal Hydro  International  issued  1,250,000 shares of treasury


                                       15
<PAGE>

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

stock for this  interest.  Internal  Hydro agreed to help develop the technology
and market it within its resources.

ETIG

On  November  3,  2004,  the  Company  entered  into  agreement  with  El  Tigre
Development (ETIG), a Nevada Corporation,  for the purchase of one hundred units
of the  Company's  Energy  Commander  IV units.  The  purchase  price of the one
hundred units was $2,250,000, with the first ten units to cost $50,000 each. The
agreement  itself had a three year term and called for the  Company  and ETIG to
share in revenue  generated  from each unit beyond the purchase  price.  For the
first ten units,  revenue is 20% for the  Company  from any source on the units.
Additional units include 50% revenue to the Company. In exchange for the initial
ten-unit  purchase,  the Company  granted  rights for  placement  to ETIG in the
states of Washington,  North  Carolina,  Oregon and Utah.  Upon execution of the
first  ten-unit  purchase,  two  lines of  credit  to the  Company  will  become
effective. Each line of credit shall be for $5,000,000 to the Company's benefit.
The first line of credit will entitle ETIG to place units in Idaho and Asia. The
second line of credit  will  entitle  ETIG to place  units in South  America and
Scotland.

On December 15, 2004,  the Company had not received the initial  payment for the
ten-unit  order and ETIG,  which  had  renamed  itself  McGregor  Energy,  Inc.,
requested a thirty (30) day  extension for the payment of the initial ten units.
The  extension was granted.  As of March 31, 2005,  the Company has not received
payment on the initial ten-units.

NEW IMPACT

On November 2, 2004 Internal Hydro  International and New Impact, LLC, a private
Arizona based Company,  entered into a contract for the purchase of energy units
from IHDR, with follow on rights for distribution and use of IHDR's  technology.
The  initial  phase of the  contract  calls  for IHDR to  supply  ten units at a
purchase  price of $500,000 for use in New Impact's water  treatment  facilities
and other areas in the Southwest. This contract has not been funded to date.

LETTERS OF INTENT

Throughout the year, the company released news on a limited number of letters of
intent from potential users of the production units when they are available.  To
date,  all such  potential  users and parties of interest  still want to acquire
units for use once production units of the new version of the unit is available.

Results of Operations

Quarter ended March 31, 2005 vs. March 21, 2004

Revenue for the three months ended March 31, 2005 and 2004 was $-0-.

General and  administrative  expenses  for the three months ended March 31, 2005
increased  by  $378,610.  The increase is  principally  due to  increased  costs
related to the  Company's  expanded  effort to finalize an equity  financing  to
commence marketing of the EC IV machines. All of the expenses were paid for from
loans provided by significant shareholders and services provided for shares.

Interest  expense for the three months ended March 31, 2005 increased by $1,800.
The increase is the result of the Note Payable dated April 30, 2004.  Research &
Development  costs  increased by $58,958 as a result of the company  classifying


                                       16
<PAGE>

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

these costs as expense  rather than  attributing  these costs to the  proto-type
asset.

Liquidity and capital resources

The  Company  has  incurred  additional  deficits  in cash flow  from  operating
activities.  These  deficits  have  been  funded  from  loans  from  significant
shareholders.  The Company is in discussions with several capital  organizations
with a view to selling more common and preferred  shares as a means of financing
future  capital  needs.  The company  anticipates it will be successful in these
discussions,  however  there  can be no  assurances  that  the  Company  will be
successful in doing so.

As a part of the Merger Agreement with INTERNAL COMMAND  INTERNATIONAL INC., the
previous Chief Executive Officer of HSVI, Jay Budd, has and does affirm that the
outstanding  debts of HSVI have been properly  structured  for management of the
debt post-merger; namely, that the debt is in the hands of suitable professional
debt management team, Fletcher & Associates, and that there has been set aside a
pool of common  stock,  as part of the issued  common stock of the Company,  for
obligation  and  satisfaction  of the debt,  and that the ongoing  operations of
Internal Hydro International Inc. will be held harmless for this debt.

As a result of this obligation by the previous Chief Executive  Officer of HSVI,
Jay Budd,  and the  agreement,  with  Fletcher &  Associates,  the  Company  has
re-classified these debts from "Current Liabilities" to "Other Liabilities". The
Company is currently  seeking a legal opinion regarding the timing of converting
this debt to equity.  Once this opinion is confirmed,  this debt will be written
of with a corresponding increase in Stockholders' Equity.

Forward-looking statements

This report contains certain  forward-looking  statements  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities Exchange Act of 1934, as amended. Stockholders are cautioned that all
forward-looking  statements  involve risks and  uncertainty,  including  without
limitation,  the ability of us develop our  technology  and execute our business
plan.  Although  we  believe  the  assumptions  underlying  the  forward-looking
statements  contained  herein are reasonable,  any of the  assumptions  could be
inaccurate,  and therefore,  there can be no assurance that the  forward-looking
statements contained in the report will prove to be accurate.

Off balance sheet arrangements

The Company's  liquidity has not dependent upon off balance sheet  transactions.
For the period  ended  March 31,  2005,  the  Company  did not engage in any off
balance sheet transactions.

Item 3. Controls and Procedures

The Company  maintains  disclosure  controls and procedures that are designed to
ensure that  information  required to be  disclosed  in our annual and  periodic
reports  filed with the SEC is  recorded,  processed,  summarized  and  reported
within the time periods specified in the SEC's rules and forms. These disclosure
controls and procedures are further  designed to ensure that such information is
accumulated and  communicated  to our management,  including our Chief Executive
Officer and Principal  Accounting  Officer,  to allow timely decisions regarding
required disclosure.

                                       17
<PAGE>

Item 3. Controls and Procedures - continued

Based on the most recent  evaluation,  which was completed within 90 days of the
filing of this report,  our Chief  Executive  Officer and  Principal  Accounting
Officer  believes  that the Company's  disclosure  controls and  procedures  are
effective and there have been no significant  changes in the Company's  internal
controls  or in other  factors  that could  significantly  affect  the  internal
controls subsequent to the date of the most recent evaluation.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

A former  employee and director has  suggested he and several  shareholders  are
threatening  to sue  the  Company  over  breach  of  agreement  relating  to the
company's  refusal to forward certain share  certificates that are alleged to be
owed to them.

The  Company  has been  advised  a  judgment  is  pending  from a  creditor  for
non-payment of a debt of approximately $43,000.

Item 2 - Changes in Securities

During the three month period ended March 31, 2005 the Company granted 4,834,500
shares of its common stock as  consideration  for  services  provided by certain
staff and Board members.  These shares were issued in March 2005.  There were no
underwriters  involved in the issuance of these shares and the  securities  were
not publicly offered for sale.

During the three month period ended March 31, 2005 the Company  granted  372,000
shares  of its  Common  Stock  consideration  for  the  forgiveness  of  debt to
shareholders. These shares were issued in March 2005. There were no underwriters
involved in the  issuance of these shares and the  securities  were not publicly
offered for sale.

During  the  period  January 1, 2005 to March 31,  2005  shareholders  converted
19,591,790 Preferred shares into the Company's Common shares on a 1 for 1 basis.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

31   Quarterly  Certification  Pursuant To Section 302 Of The SARBANES-OXLEY Act
     Of 2002

32   Internal Hydro International Inc.  Certification Of Chief Executive Officer
     Pursuant to 18 U.S.C. Section  1350, as Adopted  Pursuant to Section 906 of
     The SARBANES-OXLEY Act of 2002


                                       18
<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Action of 1934,  as amended,  the  registrant  has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                        INTERNAL HYDRO INTERNATIONAL INC.





By:   /s/ CRAIG A. HUFFMAN
 ---------------------------
          Craig A. Huffman
          CHIEF EXECUTIVE OFFICER



Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this  Report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.




       Signature                   Title                     Date

    /s/ CRAIG A. HUFFMAN
--------------------------
        Craig A. Huffman,  Chief Executive Officer       May 13, 2005

                                       19
<PAGE>


Exhibit 31

             QUARTERLY CERTIFICATION PURSUANT TO SECTION 302 OF THE
                           SARBANES-OXLEY ACT OF 2002


I, Craig A. Huffman,  certify, pursuant to Rule 13a-4 of the Securities Exchange
Act of 1934,  as adopted  pursuant to Section 302 of the  Sarbanes-Oxley  Act of
2002, with respect to the Quarterly Report of Internal Hydro International, Inc.
("IHDR") on Form 10-QSB for the quarterly period ended March 31, 2005 ("Report")
that:

(1) I have reviewed this Report;

(2) based on my knowledge,  this Report does not contain any untrue statement of
a  material  fact  or omit  to  state a  material  fact  necessary  to make  the
statements made, in light of the circumstances  under which such statements were
made, not misleading with respect to the period covered by this Report;

(3)  based  on my  knowledge,  the  financial  statements  and  other  financial
information included in this Report, fairly present in all material respects the
financial condition, results of operations and cash flows of IHDR as of, and for
the periods presented in this Report;

(4) I am responsible for  establishing and maintaining  disclosure  controls and
procedures  (as defined in Exchange  Act Rules 13a-14 and 15d-14) for IHDR and I
have:

     (a)  designed  such  disclosure  controls  and  procedures  to ensure  that
material   information  relating  to  IHDR  is  made  known  to  me  by  others,
particularly during the period in which this Report is being prepared;

     (b)  evaluated  the  effectiveness  of  IHDR's   disclosure   controls  and
procedures  as of a date  within 90 days prior to the filing date of this Report
(the "Evaluation Date"); and

     (c) presented in this Report my conclusions  about the effectiveness of the
disclosure  controls and procedures  based on my evaluation as of the Evaluation
Date;

(5) I have disclosed,  based on my most recent  evaluation,  to our auditors and
the audit  committee  of our  board of  directors  (or  persons  performing  the
equivalent function):

     (a) all  significant  deficiencies  in the design or  operation of internal
controls which could adversely affect our ability to record, process,  summarize
and report  financial  data and have  identified  for our  auditors any material
weaknesses in internal controls; and

     (b) any fraud,  whether or not material,  that involves management or other
employees who have a significant role in our internal controls; and

(6) I have  indicated  in this  Report  whether  or not there  were  significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of my most recent evaluation, including
any  corrective  actions with regard to  significant  deficiencies  and material
weaknesses.


By:      /s/ Craig A. Huffman
      ---------------------------
            Craig A. Huffman
            Chief Executive Officer

                                       20
<PAGE>


Exhibit 32
                        INTERNAL HYDRO INTERNATIONAL INC.
                                CERTIFICATION OF
                             CHIEF EXECUTIVE OFFICER
                       PURSUANT TO18 U.S.C. SECTION 1350,
                       AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002

I, Craig  Huffman,  solely for the purpose of complying  with 18 U.S.C.  Section
1350,  as adopted  pursuant  to Section 906 of the  Sarbanes-Oxley  Act of 2002,
hereby  certify  that to my knowledge  the  Quarterly  Report of INTERNAL  HYDRO
INTERNATIONAL  INC. on Form 10-QSB for the quarterly period ended March 31, 2005
fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that  information  contained in such Form 10-QSB fairly
presents  in all  material  respects  the  financial  condition  and  results of
operations of Internal Hydro International, Inc.





/s/ Craig A. Huffman
------------------------
    Craig A. Huffman
    Chief Executive Officer

                                       21
<PAGE>