U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   Form 10-KSB
                         Commission File No: 333-103096

(Mark One)

X Annual report under section 13 or 15(d) of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 2004.

_____Transition report under section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period from ____ to ____.

                        ALTERNATIVE ENERGY SOURCES, INC.
                        --------------------------------
             (Exact name of registrant as specified in its charter)

               Delaware                                74-3038728
               --------                                ----------
      (State of Incorporation)            (I.R.S. Employer Identification No.)

                                610 North Howard
                                 Tekoa, WA 99033
                              -------------------
              (Address of Principal Executive Offices) (Zip Code)

                                 (509) 626-8316
                                 --------------
              (Registrant's telephone number, including area code)

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
                                  -----     -----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock at the latest practicable date. As of December 31, 2004, the
registrant had 8,200,000 shares of common stock, $0.0001 par value, issued and
outstanding.

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




<PAGE>


                               TABLE OF CONTENTS

                            FORM 10-KSB ANNUAL REPORT
                        ALTERNATIVE ENERGY SOURCES, INC.

Statement Regarding Forward-Looking Information

PART I.

Item 1.   Description of Business
Item 2.   Description of Property
Item 3.   Legal Proceedings
Item 4.   Submission of Matters to a Vote of Security Holders

PART II

Item 5.   Market for the Registrant's Common Equity And Related
          Stockholder Matters
Item 6.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations
Item 7.   Financial Statements
Item 8.   Changes in and Disagreements on Accounting and Financial
          Disclosures
Item 8A.  Controls and Procedures

PART III

Item 9.   Directors and Executive Officers of the Registrant
Item 10.  Executive Compensation
Item 11.  Security Ownership of Certain Beneficial Owners and
          Management
Item 12.  Certain Relationships and Related Transactions
Item 13.  Exhibits and Reports on Form 8K
Item 14.  Principal Accounting Fees and Services

SIGNATURES
EXHIBITS

Exhibit 31.1
Exhibit 31.2
Exhibit 32


<PAGE>


                                     PART I

STATEMENT REGARDING FORWARD-LOOKING INFORMATION.
------------------------------------------------

This report contains various forward-looking statements that are based on the
Company's beliefs as well as assumptions made by and information currently
available to the Company. When used in this report, the words "believe,"
"expect," "anticipate," "estimate" and similar expressions are intended to
identify forward-looking statements. Such statements may include statements
regarding seeking business opportunities, payment of operating expenses, and the
like, and are subject to certain risks, uncertainties and assumptions which
could cause actual results to differ materially from projections or estimates
contained herein. Factors which could cause actual results to differ materially
include, among others, unanticipated delays or difficulties in location of a
suitable business acquisition candidate, unanticipated or unexpected costs and
expenses, competition and changes in market conditions, lack of adequate
management personnel and the like. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially form those anticipated, estimated or
projected. The Company cautions placing undue reliance on forward-looking
statements. These statements are applicable as to only the date made.

ITEM 1. Description of Business

Alternative Energy Sources, Inc. was incorporated on April 8, 2002. Our mailing
address is at 610 North Howard, Tekoa, Washington 99033. The telephone number of
our principal executive office is (509) 626-8316. The fax number is (509)
921-5605.

The Company is authorized to issue up to 75,000,000 (seventy-five million)
common shares, par value $0.0001.

The Company is headed up by Andrew Stinson officer and director and Bruce Gage,
Director, together they own a total of 5,000,000 shares (61.0%) of the Company's
issued and outstanding common stock.

The Company has not commenced any commercial operations or material operating
activities and has had no revenues or income from the date of inception through
the date of this filing. The Company has no full-time employees and owns no real
estate.

The Company registered common shares held by certain security shareholders,
which excluded the officer and directors common shares via a Form SB-2
Registration Statement. The Registration Statement was deemed effective
September 12, 2003. Since this period of time the Company has filed in a timely
manner with the Securities and Exchange Commission its periodic reports under
Rule 13(a) of the Exchange Act, including quarterly reports on Form 10-QSB and
annual reports on Form 10-KSB.

In July of 2004 the Company's common shares were listed on the
Over-the-Counter-Bulletin-Board (OTCBB). The ticker symbol for the Company's
common stock is "AESO". From July 2004 to December 2004 the stock traded at
$1.00 and $0.75 respectively with the last price indicted at $0.75.


<PAGE>


As a reporting company under the Exchange Act, the Company may register
additional securities on Form S-8 (provided that it is then in compliance with
the reporting requirements of the Exchange Act) and on Form S-3 (provided that
is has during the prior 12 month period timely filed all reports required under
the Exchange Act), and its class of common stock registered under the Exchange
Act may be traded in the United States securities markets provided that the
Company is then in compliance with applicable laws, rules and regulations,
including compliance with its reporting requirements under the Exchange Act.

There has been no bankruptcy, receivership, or similar proceeding by or against
the Company. In addition, there has been no material reclassification,
consolidation, merger, or purchase or sale of a significant amount of assets not
done in the ordinary course of business.

Strategic Business Plan of Issuer

Alternative Energy Sources, Inc. disclosed in the 3rd quarter of 2004, filed on
the Form 10QSB, that the business plan of the Company was to be redirected from
focusing efforts on business opportunities within the alternative energy
marketplace to identifying and pursuing the development of a new business plan
and direction for the Company. The reason for the change of direction was based
upon the Company's inability to raise proceeds or generate revenue from its
proposed business plan. As of December 31, 2004, management has not identified
any viable business plan or opportunities for the Company to pursue or engage
in.

Over the next twelve months management plans to continue to explore different
options pertaining to a new business plan and direction. Andrew Stinson, officer
and director, as agreed to provide the necessary funds to maintain the reporting
status of the Company as required under the 1934 Act for the next twelve months.
However, this agreement has not been consummated in writing and may be revoked
at any time by either party. As such, investors must be aware that if the
Company cannot maintain its status as a Reporting Company, the Company would
fail and any investment made would be lost.

As of December 31, 2004, the Company had $68 of cash available. The Company has
not been able to generate any revenue from its proposed business of providing
consulting services and marketing wind driven energy systems to residential,
agricultural, and small businesses throughout the northwest. Since August 2004,
the Company's only activities have been organizational ones. The Company has not
generated any revenues and has not commenced any commercial operations.

The Company is redirecting the current focus towards identifying and pursuing
options regarding the development of a new business plan and direction. The
Company is exploring various business opportunities that have the potential to
generate positive revenue, profits and cash flow in order to financially
accommodate the costs of being a fully reporting company.


<PAGE>


ITEM 2. Description of Property

Alternative Energy Sources, Inc.'s principle executive address is 624 North
Howard, Tekoa, WA 99033. Andrew Stinson, President, is currently providing his
home office and mailing address for Alternative Energy. Mr. Stinson contributes
this office space along with his services to the Company. The approximate fair
market value of $500 per month for the services and office space has been
charged to operations since inception.

ITEM 3. Legal Proceedings

The Company is not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated.

No director, officer, or affiliate of the Company and no owner of record or
beneficial owner of more than 5.0% of the securities of the Company, or any
associate of any such director, officer or security holder is a party adverse to
the Company or has a material interest adverse to the Company in reference to
pending litigation.

ITEM 4. Submission of Matters to a Vote of Security Holders

There have been no matters submitted to the security holders for a vote.

                                     Part II

ITEM 5. Market for the Registrant's Common Equity And Related Stockholder
Matters

In July of 2004 the Company's common shares were listed on the Over-the-Counter-
Bulletin-Board (OTCBB). The ticker symbol for the Company's common stock is
"AESO". For the period from July 2004 to December 2004 the stock traded at a
high $1.00 and low of $0.75.

As of December 31, 2004, Alternative Energy had forty-one (41) shareholders of
record. The Company has not paid cash dividends and has no outstanding options.

ITEM 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Plan of Operation

The Company has not generated any revenues and has not commenced any commercial
operations.

The Company disclosed in the 3rd quarter of 2004 that it was no longer viable to
continue operations under the existing business plan of seeking opportunities
within the alternative energy marketplace specifically pertaining to wind energy
systems throughout Washington, Idaho, Montana, and Oregon (Pacific Northwest)
because of its inability to generate any revenue and/or raise additional
proceeds.


<PAGE>


Within the 3rd quarter of 2004 the Company redirected its focus towards
identifying and pursuing options regarding the development of a new business
plan and direction. As of December 31, 2004 management has not identified any
viable option for the Company to pursue. Accordingly, over the next twelve
months management plans to continue exploring various business opportunities
that have the potential to generate positive revenue, profits and cash flow in
order to financially accommodate the costs of being a fully reporting company.

As of the date of this report, the Company has no current business operations.
Its business plan is to seek one or more potential profitable business
combinations or acquisitions. At the present time the Company is concentrating
substantially all of its efforts in raising capital and developing business
operations.

This should not be read or understood that the Company will engage in capital
formation before an acquisition target has been secured and disclosed. A
corporation with no current business is generally unable to sell securities
because it provides investors no basis to invest any funds and the Company's
ability sell securities are substantially restricted by state and federal
regulations. Accordingly, the Company will not seek to raise funds by offering
its securities before disclosure of any arrangement to secure valuable business
assets.

The Company has had substantial operating losses since inception (April 8, 2002)
and is currently dependant upon outside financing to begin operations.
Management believes additional financing cannot be obtained prior to finding and
disclosing an acquisition of, or an arrangement to acquire, valuable business
assets.

For at least the next twelve months the Company anticipates it will continue to
file reports with the SEC, even though it may cease to be required to do so.
Management currently believes it is in the best interest of the Company to
report its affairs quarterly, annually and currently, in order to provide
accessible public information to interested parties, and also specifically to
maintain its qualification for the Over-the Counter-Bulletin-Board (OTCBB)
listing. The officer and director, if required plan to advance the expenses of
accounting, legal, and professional requirements, including expenses in
connection with this 1934 Act Registration of its common stock for the next
twelve months

Liquidity and Capital Resources

As of the date of this report, we require additional capital investments or
borrowed funds to meet cash flow projections and carry forward our new business
objectives. There can be no guarantee or assurance that we can raise adequate
capital from outside sources to fund any new direction the Company may consider.

The failure to secure adequate outside funding would have an adverse affect on
our plan of operation and a direct negative impact on shareholder liquidity,
which would most likely result in a complete loss of any funds invested in the
Company's common stock.


<PAGE>


Product Research and Development

The Company does not anticipate any costs or expenses to be incurred for product
research and development within the next twelve months.

There were none and there is no anticipated purchase or sale of plant or
significant equipment in the next twelve months.

There are no employees of the Company, excluding the current President, Andrew
Stinson, and Director, Bruce Gage, of the corporation and no changes are
anticipated in the next twelve months.

Results of Operations

There were no revenues from sales for the year ended December 31, 2004.
The Company sustained a net loss of $13,937 for the period then ended for
ongoing costs related to its development stage operations. A loss of $34,032
from the period of inception (April 8, 2002) to December 31, 2004 has been
incurred for development stage operations.

Liquidity and Capital Resources

As of December 31, 2004, the current cash on hand was $68. The Company requires
additional funds in order to maintain its Reporting Company status, which
generally includes accounting and EDGAR filing fees.

Off-Balance Sheet Arrangements

As of the date of this Annual Report, the current funds available to the Company
will not be sufficient for to continue maintaining a reporting status. The
estimated cost to maintain the reporting status of the Company for the next
twelve months has been estimated at $8,500. The officer and director, Andrew
Stinson has indicated to the Company that he will provide the funds required to
maintain the reporting status in the form of a non-secured loan for the next
twelve months as the expenses are incurred. However, there is no contract in
place or written agreement securing this agreement. Management believes if the
Company cannot maintain its reporting status with the SEC it will have to cease
all efforts directed towards the Company. As such, any investment previously
made would be lost in its entirety.

If the officer ceases to loan the funds; or after the twelve month period has
expired, the Company will be required to find additional proceeds either through
loans from the officer and/or directors, or through private funding from the
sale of the Company's common stock. Currently, no steps have been taken for the
furtherance of either of the above options. If the Company is unsuccessful in
redirecting its business and fails to beginning operations or generating revenue
or is unsuccessful in obtaining additional funding, it will be unable to
continue as a going concern.

Other than the above described situation the Company does not have any
off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on the Company's financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors. The
term "off-balance sheet arrangement" generally means any transaction, agreement
or other contractual arrangement to which an entity unconsolidated with the
Company is a party, under which the Company has (i) any obligation arising under
a guarantee contract, derivative instrument or variable interest; or (ii) a
retained or contingent interest in assets transferred to such entity or similar
arrangement that serves as credit, liquidity or market risk support for such
assets.



<PAGE>


ITEM 7. FINANCIAL STATEMENTS


                        Alternative Energy Sources, Inc.
                          (A Development Stage Company)

                              Financial Statements

                                Table of Contents


         Report of Independent Auditors

         Balance Sheet

         Statements of Operations

         Statement of Stockholders' <Deficit>

         Statements of Cash Flows

         Notes to Financial Statements






















<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Stockholders and Board of Directors
Alternative Energy Sources, Inc.

We have audited the  accompanying  balance sheet of Alternative  Energy Sources,
Inc. (A  Development  Stage  Company) as of December 31,  2004,  and the related
statements  of  operations,  stockholders'  equity  and cash flows for the years
ended December 31, 2003 and 2004, and the period from inception  (April 8, 2002)
to December 31, 2004. These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with the auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates by management, as well as evaluating
the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Alternative  Energy Sources,
Inc. (A  Development  Stage Company) as of December 31, 2004, and results of its
operations  and its cash flows for the years ended  December  31, 2003 and 2004,
and the period from inception (April 8, 2002) to December 31, 2004 in conformity
with accounting principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 5 to the
financial statements,  the Company has suffered a loss from operations and is in
the development stage. These factors raise substantial doubt about the Company's
ability to continue  as a going  concern.  Management's  plans in regard to this
matter are also discussed in Note 5. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


Stark Winter Schenkein & Co., LLP




Denver, Colorado
March 22, 2005





<PAGE>


                         Alternative Energy Sources, Inc.
                          (A Development Stage Company)
                                  Balance Sheet
                                December 31, 2004




                                     Assets
                                     ------

Current assets
  Cash                                                                 $     68
                                                                       =========
                     Liabilities and Stockholders' <Deficit>
                     ---------------------------------------

Current liabilities
   Accounts payable - related party                                    $  6,000
                                                                       ---------
Stockholders' <Deficit>
  Common stock, $.0001 par value, 75,000,000 shares authorized,
   8,200,000 shares issued and outstanding                                  820
  Additional paid-in capital                                             27,280
  (Deficit) accumulated during the development stage                    (34,032)
                                                                       ---------
                                                                         (5,932)
                                                                       ---------

                                                                       $     68
                                                                       =========


















            See the accompanying notes to the financial statements.


<PAGE>


                        Alternative Energy Sources, Inc.
                          (A Development Stage Company)
                            Statements of Operations
                   Years Ended December 31, 2003 and 2004, and
         the Period From Inception (April 8, 2002) to December 31, 2004


                                      Inception to    Year Ended    Inception to
                                      December 31,   December 31,   December 31,
                                          2003           2004           2004
                                      ------------   ------------   ------------

Revenue                               $      --      $      --      $      --
                                      ------------   ------------   ------------

Operating Costs and Expenses:
  General and administrative               15,435         13,937         34,032
                                      ------------   ------------   ------------

Net (loss)                            $   (15,435)   $   (13,937)   $   (34,032)
                                      ============   ============   ============

Per Share Information -
 basic and fully diluted:

Weighted average common
 shares outstanding                     8,200,000      8,200,000      7,830,556
                                      ============   ============   ============

(Loss) per share                      $     (0.00)   $     (0.00)   $     (0.00)
                                      ============   ============   ============


















            See the accompanying notes to the financial statements.






<PAGE>


<TABLE>
<CAPTION>
                                   Alternative Energy Sources, Inc.
                                     (A Development Stage Company)
                                 Statement of Stockholders' <Deficit>
                      Period From Inception (April 8, 2002) to December 31, 2004

                                                                               (Deficit)
                                                                              Accumulated
                                              Common Stock        Additional   During the
                                              ------------         Paid in    Development
                                           Shares       Amount     Capital       Stage        Total
                                          ---------   ---------   ---------   ----------   ----------
<S>                                       <C>         <C>         <C>         <C>          <C>
Balance at inception                           --     $    --     $    --     $    --      $    --

Common shares issued for cash
  at inception at $.0004 per share        5,000,000         500       1,500        --          2,000
Common shares issued for cash
  at $.003 per share                      3,200,000         320       9,280        --          9,600
Contribution of services by shareholder        --          --         4,500        --          4,500
Net (loss) for the period                      --          --          --        (4,660)      (4,660)
                                          ---------   ---------   ---------   ----------   ----------
Balance, December 31, 2002                8,200,000         820      15,280      (4,660)      11,440

Contribution of services by shareholder        --          --         6,000        --          6,000
Net (loss) for the year                        --          --          --       (15,435)     (15,435)
                                          ---------   ---------   ---------   ----------   ----------
Balance, December 31, 2003                8,200,000         820      21,280     (20,095)       2,005

Contribution of services by shareholder        --          --         6,000        --          6,000
Net (loss) for the year                        --          --          --       (13,937)     (13,937)
                                          ---------   ---------   ---------   ----------   ----------
Balance, December 31, 2004                8,200,000   $     820   $  27,280   $ (34,032)   $  (5,932)
                                          =========   =========   =========   ==========   ==========















                        See the accompanying notes to the financial statements.
</TABLE>




<PAGE>


<TABLE>
<CAPTION>
                                Alternative Energy Sources, Inc.
                                  (A Development Stage Company)
                                     Statement of Cash Flows
                           Years Ended December 31, 2003 and 2004, and
                 the Period From Inception (April 8, 2002) to December 31, 2004

                                                        Year Ended    Year Ended   Inception to
                                                       December 31,  December 31,  December 31,
                                                           2003          2004          2004
                                                        ---------     ---------     ---------
<S>                                                     <C>           <C>           <C>
Cash flows from operating activities:
Net (loss)                                              $(15,435)     $(13,937)     $(34,032)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Contribution of services by shareholder                    6,000         6,000        16,500
                                                        ---------     ---------     ---------
  Net cash (used in) operating activities                 (9,435)       (7,937)      (17,532)

Cash flows from investing activities:
  Net cash provided by (used in) investing activities       --            --            --
                                                        ---------     ---------     ---------

Cash flows from financing activities:
Related party advances                                      --           6,000         6,000
Common shares issued for cash                               --            --          11,600
                                                        ---------     ---------     ---------
  Net cash provided by financing activities                 --           6,000        17,600
                                                        ---------     ---------     ---------

Increase (decrease) in cash and cash equivalents          (9,435)       (1,937)           68

Cash and cash equivalents, beginning of period            11,440         2,005          --
                                                        ---------     ---------     ---------

Cash and cash equivalents, end of period                $  2,005      $     68      $     68
                                                        =========     =========     =========


Supplemental cash flow information:
   Cash paid for interest                               $   --        $   --        $   --
                                                        =========     =========     =========
   Cash paid for income taxes                           $   --        $   --        $   --
                                                        =========     =========     =========







                     See the accompanying notes to the financial statements.
</TABLE>



<PAGE>


                        Alternative Energy Sources, Inc.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 2004


Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

The Company was incorporated on April 8, 2002 in the State of Delaware and is in
the  development  stage.  The  Company  intends to develop  its  business in the
alternative energy sector. Company has chosen December 31, as a year-end and has
had no significant activity from inception to December 31, 2004.

Revenue Recognition

In  general,  the  Company  records  revenue  when  persuasive  evidence  of  an
arrangement  exists,  services  have  been  rendered  or  product  delivery  has
occurred,  the  sales  price  to the  customer  is fixed  or  determinable,  and
collectability is reasonably assured.

Cash and Cash Equivalents

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

Financial Instruments

Fair value estimates  discussed herein are based upon certain market assumptions
and pertinent  information  available to management as of December 31, 2004. The
respective  carrying  value of certain  on-balance-sheet  financial  instruments
approximated  their fair values.  These financial  instruments  include cash and
accounts payable-related party. Fair values were assumed to approximate carrying
values for these financial instruments because they are short term in nature and
their carrying amounts approximate fair values.

Offering Costs

The Company defers costs  associated with the raising of capital until such time
as the offering is  completed,  at which time the costs are charged  against the
capital  raised.  Should the  offering  be  terminated  the costs are charged to
operations during the period when the offering is terminated.

Net Income (Loss) Per Common Share

The Company  calculates  net income (loss) per share as required by Statement of
Financial  Accounting Standards (SFAS) 128, "Earnings per Share." Basic earnings
(loss) per share is  calculated  by dividing  net income  (loss) by the weighted
average number of common shares  outstanding  for the period.  Diluted  earnings
(loss) per share is  calculated  by dividing  net income  (loss) by the weighted
average  number  of  common  shares  and  dilutive   common  stock   equivalents
outstanding.  During  periods in which the Company  incurs  losses  common stock
equivalents, if any, are not considered, as their effect would be anti dilutive.


<PAGE>


                        Alternative Energy Sources, Inc.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 2004


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 amounts  reported in the  financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

Segment Information

The Company follows SFAS 131,  "Disclosures  about Segments of an Enterprise and
Related Information."  Certain information is disclosed,  per SFAS 131, based on
the  way  management  organizes  financial   information  for  making  operating
decisions and assessing performance.  The Company currently operates in a single
segment and will  evaluate  additional  segment  disclosure  requirements  as it
expands its operations.

Income Taxes

The Company  follows SFAS 109  "Accounting  for Income  Taxes" for recording the
provision for income  taxes.  Deferred tax assets and  liabilities  are computed
based upon the difference  between the financial  statement and income tax basis
of assets and  liabilities  using the enacted  marginal tax rate applicable when
the related  asset or liability is expected to be realized or settled.  Deferred
income  tax  expenses  or  benefits  are  based on the  changes  in the asset or
liability  each period.  If available  evidence  suggests that it is more likely
than not  that  some  portion  or all of the  deferred  tax  assets  will not be
realized, a valuation allowance is required to reduce the deferred tax assets to
the amount that is more likely than not to be realized.  Future  changes in such
valuation  allowance are included in the provision for deferred  income taxes in
the period of change.

Stock-Based Compensation

The Company  accounts for equity  instruments  issued to employees  for services
based on the fair value of the equity instruments issued and accounts for equity
instruments  issued  to other  than  employees  based  on the fair  value of the
consideration received or the fair value of the equity instruments, whichever is
more reliably measurable.

The Company  accounts for stock based  compensation in accordance with SFAS 123,
"Accounting  for  Stock-Based  Compensation."  The  provisions of SFAS 123 allow
companies  to either  expense the  estimated  fair value of stock  options or to
continue to follow the intrinsic value method set forth in Accounting Principles
Board  Opinion  25,  "Accounting  for Stock  Issued to  Employees"  (APB 25) but
disclose  the pro forma  effects on net income  (loss) had the fair value of the
options  been  expensed.  The Company has elected to continue to apply APB 25 in
accounting for its stock option incentive plans.

Impairment of Long-Lived Assets

The Company  accounts for long-lived  assets and goodwill in accordance with the
provisions of SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" and SFAS 142, "Goodwill and Other Intangible  Assets." SFAS 144 requires
that  long-lived  assets and certain  identifiable  intangibles  be reviewed for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying amount of an asset may not be recoverable.  Recoverability of assets to
be held and used is measured by a comparison of the carrying  amount of an asset


<PAGE>


                        Alternative Energy Sources, Inc.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 2004


to future net cash flows  expected to be generated by the asset.  If such assets
are  considered to be impaired,  the  impairment to be recognized is measured by
the amount by which the carrying  amount of the assets exceeds the fair value of
the assets.  Assets to be disposed of are  reported at the lower of the carrying
amount or fair value  less costs to sell.  SFAS 142  requires  annual  tests for
impairment of goodwill and intangible  assets that have indefinite  useful lives
and  interim  tests when an event has  occurred  that more  likely  than not has
reduced the fair value of such assets.

Recent Pronouncements

In November 2004, the FASB issued SFAS 151,  "Inventory  Costs." SFAS 151 amends
the accounting for abnormal amounts of idle facility expense,  freight, handling
costs,  and wasted material  (spoilage) under the guidance in ARB 43, Chapter 4,
"Inventory  Pricing."  Paragraph 5 of ARB 43, Chapter 4, previously  stated that
"...under some  circumstances,  items such as idle facility  expense,  excessive
spoilage,  double freight, and rehandling costs may be so abnormal as to require
treatment as current  period  charges...."  This  Statement  requires that those
items be recognized as  current-period  charges  regardless of whether they meet
the  criterion of "so  abnormal."  In addition,  this  Statement  requires  that
allocation of fixed production  overheads to the costs of conversion be based on
the normal  capacity of the production  facilities.  This statement is effective
for inventory  costs incurred during fiscal years beginning after June 15, 2005.
Management does not expect adoption of SFAS 151 to have a material impact on the
Company's financial statements.

In  December  2004,  the FASB  issued  SFAS  152,  "Accounting  for Real  Estate
Time-Sharing  Transactions."  The FASB issued this  Statement as a result of the
guidance  provided in AICPA  Statement of Position (SOP) 04-2,  "Accounting  for
Real  Estate  Time-Sharing  Transactions."  SOP 04-2  applies to all real estate
time-sharing  transactions.  Among other items, the SOP provides guidance on the
recording  of credit  losses and the  treatment of selling  costs,  but does not
change the revenue  recognition  guidance in SFAS 66,  "Accounting  for Sales of
Real  Estate,"  for real  estate  time-sharing  transactions.  SFAS  152  amends
Statement  66 to  reference  the  guidance  provided in SOP 04-2.  SFAS 152 also
amends SFAS 67,  "Accounting  for Costs and Initial  Rental  Operations  of Real
Estate  Projects",  to state that SOP 04-2  provides  the  relevant  guidance on
accounting  for  incidental  operations  and costs  related  to the sale of real
estate  time-sharing  transactions.  SFAS 152 is effective  for years  beginning
after June 15, 2005, with restatements of previously issued financial statements
prohibited.  Management  does not expect adoption of SFAS 152 to have a material
impact on the Company's financial statements.

In December 2004, the FASB issued SFAS 153,  "Exchanges of Nonmonetary  Assets,"
an  amendment  to Opinion No. 29,  "Accounting  for  Nonmonetary  Transactions."
Statement 153 eliminates  certain  differences in the guidance in Opinion No. 29
as compared to the guidance  contained in standards issued by the  International
Accounting  Standards Board. The amendment to Opinion No. 29 eliminates the fair
value  exception  for  nonmonetary  exchanges of similar  productive  assets and
replaces it with a general exception for exchanges of nonmonetary assets that do
not have commercial substance.  Such an exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. SFAS 153 is effective for nonmonetary asset exchanges occurring
in periods beginning after June 15, 2005.  Earlier  application is permitted for
nonmonetary  asset exchanges  occurring in periods  beginning after December 16,
2004.  Management does not expect adoption of SFAS 153 to have a material impact
on the Company's financial statements.

In December  2004,  the FASB issued SFAS  123(R),  "Share-Based  Payment."  SFAS
123(R)  amends SFAS 123,  "Accounting  for  Stock-Based  Compensation,"  and APB
Opinion 25,  "Accounting  for Stock Issued to Employees."  SFAS 123(R)  requires


<PAGE>


                        Alternative Energy Sources, Inc.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 2004


that  the  cost  of  share-based  payment  transactions  (including  those  with
employees and  non-employees)  be recognized in the financial  statements.  SFAS
123(R)  applies  to all  share-based  payment  transactions  in which an  entity
acquires  goods or services by issuing (or offering to issue) its shares,  share
options,  or other equity  instruments  (except for those held by an ESOP) or by
incurring  liabilities  (1) in amounts  based (even in part) on the price of the
entity's  shares  or  other  equity  instruments,  or (2) that  require  (or may
require)  settlement  by the  issuance  of an  entity's  shares or other  equity
instruments.  This statement is effective (1) for public companies qualifying as
SEC small  business  issuers,  as of the  first  interim  period or fiscal  year
beginning after December 15, 2005, or (2) for all other public companies,  as of
the first interim  period or fiscal year  beginning  after June 15, 2005, or (3)
for all nonpublic entities, as of the first fiscal year beginning after December
15, 2005. Management is currently assessing the effect of SFAS No. 123(R) on the
Company's financial statements.

Note 2. STOCKHOLDERS' <DEFICIT>

During December 2002 the Company  affected a ten for one forward stock split and
during  September 2003 the Company  affected a five for one forward stock split.
All share and per share  amounts  have  been  restated  to give  effect to these
splits.

At inception,  the Company issued  5,000,000 shares of its common stock for cash
aggregating $2,000, to certain officers.

During July and August 2002 the Company issued  3,200,000 shares of common stock
for cash aggregating $9,600 pursuant to a private placement offering.

During the years ended December 31, 2003 and 2004, and the period from inception
to December 31, 2004 an officer  contributed  administrative  services valued at
$6,000, $6,000 and $16,500 o the capital of the Company.

During  the year  ended  December  31,  2003 the  Company  filed a  Registration
Statement on Form SB-2 with the Securities  and Exchange  Commission to register
an aggregate of 640,000 shares of common stock held by current shareholders. The
Company will receive no proceeds from the sale of these securities.

Note 3. INCOME TAXES

The Company  accounts  for income taxes under SFAS 109,  "Accounting  for Income
Taxes",  which  requires use of the  liability  method.  SFAS 109 provides  that
deferred  tax assets  and  liabilities  are  recorded  based on the  differences
between the tax bases of assets and liabilities  and their carrying  amounts for
financial reporting purposes, referred to as temporary differences. Deferred tax
assets  and  liabilities  at the end of each  period  are  determined  using the
currently  enacted tax rates  applied to taxable  income in the periods in which
the deferred tax assets and liabilities are expected to be settled or realized.

The provision for income taxes differs from the amount  computed by applying the
statutory  federal income tax rate to income before  provision for income taxes.
The sources and tax effects of the differences are as follows:


<PAGE>


                        Alternative Energy Sources, Inc.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 2004


         Income tax provision at
          the federal statutory rate               34 %
         Effect of operating losses               (34)%
                                                  ----
                                                    -
                                                  ====

As of December 31, 2004,  the Company has a net operating loss  carryforward  of
approximately  $17,000.  This loss will be  available to offset  future  taxable
income.  If not used,  this  carryforward  will expire in 2024. The deferred tax
asset  relating to the operating  loss  carryforward  has been fully reserved at
December 31, 2004. The principal  difference  between the net operating loss for
financial  reporting  purposes and income tax purposes results from the services
contributed by affiliates of $16,500.

Note 4. ACCOUNTS PAYABLE - RELATED PARTIES

During the year ended December 31, 2004,  affiliates of the Company  advanced an
aggregate of $6,000 for working  capital to the Company,  these advances are due
on demand and do not bear interest.

Note 5. BASIS OF REPORTING

The Company's financial statements are presented on a going concern basis, which
contemplates  the  realization of assets and  satisfaction of liabilities in the
normal course of business.

The Company has experienced a loss from operations  during its development stage
as a result of its investment  necessary to achieve its operating plan, which is
long-range in nature.  For the period from  inception to December 31, 2004,  the
Company  incurred  a net  loss of  $34,032.  In  addition,  the  Company  has no
significant assets or revenue generating operations.

The  Company's  ability to continue as a going  concern is  contingent  upon its
ability to attain profitable  operations by securing  financing and implementing
its business  plan. In addition,  the  Company's  ability to continue as a going
concern must be considered in light of the problems,  expenses and complications
frequently  encountered by entrance into established markets and the competitive
environment in which the Company operates.

The financial  statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
















<PAGE>


ITEM 8. Changes in and Disagreements on Accounting and Financial Disclosures

None.

Item 8A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Alternative Energy's chief executive officer and chief financial officer
conducted an evaluation of the effectiveness of the design and operation of the
Company's disclosure controls and procedures, as defined in Rules 13a-15(e) and
Rule 15d-15(e) under the Exchange Act. Based upon their evaluation as of
December 31, 2004, they have concluded that those disclosure controls and
procedures are effective.

Changes in Internal Control over Financial Reporting

There have been no changes in Alternative Energy's internal control over
financial reporting during the quarter ended December 31, 2004 that have
materially affected, or are reasonably likely to affect, the Company's internal
control over financial reporting.

Management's Report on Internal Control over Financial Reporting

The management of Alternative Energy Sources is responsible for establishing and
maintaining adequate internal control over financial reporting as defined in
Rule 13a-15(f) under the Exchange Act. Our internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with accounting principles generally
accepted in the United States of America. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

Alternative Energy's management assessed the effectiveness of the Company's
internal control over financial reporting as of December 31, 2004. In making the
assessment, it used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in "Internal Control-Integrated
Framework." Based on that assessment, management concluded that, as of December
31, 2004, The Company's internal control over financial reporting is effective
based on those criteria.



<PAGE>


                                    PART III

ITEM 9. Directors and Executive Officers of Registrant

The Directors and Officers of the Company, all of those whose terms will expire
at the 2005 shareholders meeting, or at such a time as their successors shall be
elected and qualified, are as follows:

Name              Age   Term Served              Title

Andrew Stinson     32   Since inception         President, Director and
                                                Chief Financial Officer

Bruce Gage         47   Since Inception         Director

Either of the above persons may be deemed a "promoter" of, Alternative Energy as
that term is defined in the rules and regulations promulgated under the
Securities and Exchange Act of 1933.

There are no other persons nominated or chosen to become directors or executive
officers, nor do we have any employees other than above mentioned officer and
director. The By-laws of Alternative Energy require no less than one member on
the board of directors and no more than seven.

Officer and Director Background:

Andrew Stinson: President and Director. From 2002 to present Mr. Stinson hold
the position of an educator at Tekoa Oaksdale School District. From 1994 to 2002
Mr. Stinson held the position of an educator for LaCrosse School District, Where
he taught (and currently teaches) biology, chemistry, physics, and geology at
both the junior high and senior high levels. Mr. Stinson is also involved in
coaching basketball and tennis. Education: Graduated Cum Laude with a Bachelor
of Science from Eastern Washington University in 1994.

Bruce Gage: Director. In 1994 Mr. Bruce Gage was involved in the start-up and
development of WOW Pollutions Control Systems ("WOW"), Otis Orchards, WA. WOW
Pollution Control Systems is a small business enterprise that is involved with
the distribution and sales of environmentally conscious products to the
residential, business and farming sectors. Specifically, WOW is an authorized
distributor for Reznor waste oil heater and boiler systems. WOW also sells
wastewater treatment systems designed to recycle wastewater produced from
business operations such as car washes and maintenance facilities mixtures that
are designed for petroleum related clean-ups. The company is also involved with
the sale of alternative energy systems, such as windmills and solar panel
systems. Since 1994, Mr. Gage has acted as an independent contractor with WOW,
providing technical consulting and sales services for the company. Mr. Gage has
experience with bio-remediation of soil related to petroleum products, providing
design and installation of wastewater treatment systems, and waste oil
reclamation systems. In addition, in 1999 Mr. Gage introduced and began the
sales of alternative energy products through WOW as an independent contractor,
which included solar and wind power systems. Mr. Gage plans to begin selling the
alternative energy product lines, specifically the wind power systems through
Alternative Energy Sources within the next twelve months and within the next


<PAGE>


eighteen months have all wind power systems sold through Alternative Energy.
Although there are no agreements in place or anticipated in the future, WOW, has
been put on notice and is fully aware of Mr. Gage's plans with Alternative
Energy and no conflict of interest is anticipated between the businesses.
Education: In 1981 Mr. Gage completed the Pre-Physical Therapy program at
Eastern Washington University.

The term of office for each Director is one year, or until his successor is
elected and qualified at the Company's annual meeting of Shareholders, subject
to ratification by the Shareholders. The term of office for each Officer is one
year or until a successor is elected and qualified and is subject to removal by
the Board. No Officer or Director of the Company has been the subject of any
Order, Judgment, or Decree of any court of competent jurisdiction, of any
regulatory agency enjoining him from acting as an investment advisor,
underwriter, broker, or dealer in the securities, or as an affiliated person,
director, or employee of an investment company, bank savings and loan
association, or insurance company or from engaging in or continuing any conduct
or practice in connection with the purchase or sale of any securities nor has
any person been the subject of any order of a state authority barring or
suspending for more than sixty days, the right of such person to be engaged in
such activities or to be associated with such activities. No Officer or Director
of the Company has been convicted in any criminal proceedings (excluding traffic
violations) or the subject of a criminal proceeding which is presently pending.

ITEM 10. Executive Compensation

Alternative Energy's current officer and directors receive no compensation and
have received no restricted stock awards, options, or any other payouts. As
such, we have not included a Summary Compensation Table.

There are no current employment agreements between Alternative Energy and its
executive officer or directors. The officer and directors currently devote an
immaterial amount of time, no more than 10-15% of their time, to manage the
affairs of Alternative Energy. The directors and principal officers have agreed
to work with no remuneration until such time as we receive sufficient revenues
necessary to provide proper salaries to all officers and compensation for
directors' participation. The officers and the board of directors have the
responsibility to determine the timing of remuneration for key personnel based
upon such factors as positive cash flow to include stock sales, product sales,
estimated cash expenditures, accounts receivable, accounts payable, notes
payable, and a cash balance of not less than $150,000 at each month end. When
positive cash flow reaches $25,000 at each month end and appears sustainable,
the board of directors will re-address compensation for key personnel and enact
a plan at that time which will benefit Alternative Energy as a whole. At this
time, management cannot accurately estimate when sufficient revenues will occur
to implement this compensation, or the exact amount of compensation.

There are no annuity, pension or retirement benefits proposed to be paid to
officers, directors or employees of the corporation in the event of retirement
at normal retirement date pursuant to any presently existing plan provided or
contributed to by the corporation or any of its subsidiaries, if any.


<PAGE>


ITEM 11. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters

The following table sets forth certain information with respect to the
beneficial ownership of our common stock as it relates to our named Director and
executive Officer, and each person known to Alternative Energy to be the
beneficial owner of more than five percent (5%) of said securities, and all of
our directors and executive officers as a group:

Name and Position             Shares        Percent       Security

Andrew Stinson
President and Director        3,750,000     45.7%         Common

Bruce Gage
Director                      1,250,000     17.1%         Common

Officers and Directors as
a Group                       5,000,000     61.0%         Common

Andrew Stinson and Bruce Gage's address is 610 North Howard, Tekoa, Washington
99033.

The above referenced common shares were paid for and issued in May 2002, for
consideration of $0.02 per share and total consideration of $2,000. (Please note
that the above share total reflects the 10:1 forward split, effective December
12, 2002; and a subsequent forward split of 5:1, effective September 15, 2003)

ITEM 12. Certain Relationships and Related Transactions

Currently, there are no contemplated transactions that Alternative Energy may
enter into with our officers, directors or affiliates. If any such transactions
are contemplated we will file such disclosure in a timely manner with the SEC on
the proper form making such transaction available for the public to view.

Alternative Energy has no formal written employment agreement or other contracts
with our current officer, and there is no assurance that the services to be
provided by him will be available for any specific length of time in the future.
Andrew Stinson and Bruce Gage anticipate initially devoting at a minimum of
twelve to fifteen hours per month of their available time to Alternative
Energy's affairs. If and when the business operations increase and a more
extensive time commitment is needed, Andrew Stinson and/or Bruce Gage are
prepared to devote more time to Alternative Energy's affairs, in the event that
becomes necessary. The amounts of compensation and other terms of any full time
employment arrangements would be determined, if and when, such arrangements
become necessary.


<PAGE>


ITEM 13. Exhibits and Reports on Form 8K

EXHIBITS

The following exhibits are incorporated into this Form 10-KSB Annual Report:

  EXHIBIT NO.       DESCRIPTION
  -----------       -----------

     31.1           Certification of CEO pursuant to Rule
                    13a-14(a) as adopted pursuant to Section
                    302 of the Sarbanes-Oxley Act of 2002

     31.2           Certification of Director pursuant to
                    Rule 13a-14(a) as adopted pursuant to
                    Section 302 of the Sarbanes-Oxley Act of 2002

     32             Certification of CEO and Director pursuant
                    to 18 U.S.C. 1350, as Adopted Pursuant to
                    Section 906 of the Sarbanes-Oxley Act of 2002

                    Articles of Incorporation*
                    Bylaws*
                    Form 8K**
                    --------------------------

* Previously filed with the Company's Form SB-2 on February 11, 2003 and is
hereby incorporated into this filing by reference.

**8-K filed on September 18, 2003. Disclosed a 5:1 forward split of the
Company's common stock; the split was effective for all shareholders of record
on September 15, 2003. The current report also disclosed the change in the
Company's principle executive address as 610 North Howard, Tekoa, WA 99033


ITEM 14. Principal Accounting Fees and Services

The aggregate audit fees billed or to be billed by Stark Winter Schenkein & Co.,
LLP for the audit of Alternative Energy Sources' annual financial statements and
review of financial statements included in Alternative Energy's Form 10-QSB and
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements was approximately $9,000 for the
year ended December 31, 2003 and $9,000 for the year ended December 31, 2004.

There were no other audit-related fees incurred or additional audit or
professional fees to be billed for the above periods.


SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

ALTERNATIVE ENERGY SOURCES, INC.
(Registrant)

Date: March 30, 2005

By: /s/ Andrew Stinson
    -------------------
    Andrew Stinson
    President, Chief Executive Officer,
    Chief Financial Officer and Director

Date:  March 30, 2005

By: /s/ Bruce Gage
    ----------------
    Bruce Gage
    Director