SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

                            ANNUAL REPORT PURSUANT TO
                           SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2005

                                   ----------

                 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

     For the transition period from _________________ to __________________

                        Commission file number: 000-51762

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

        Delaware                                       74-3038728
        --------                                       ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                         88 West 44th Avenue, Vancouver
                        British Columbia, V5Y 2V1, Canada
                        ---------------------------------
                    (Address of principal executive offices)

                                 (604) 738-0540
                                 --------------
               Registrant's telephone number, including area code

Securities to be registered pursuant to Section 12(b) of the Act:

     Title of each class                   Name of each exchange on which
     to be so registered                   each class is to be registered

            None                                        None

Securities to be registered pursuant to Section 12(g) of the Act:

                                      None
                                      ----
                                (Title of Class)

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act.   Yes [X]   No [ ]

Note - Checking the box above will not relieve any registrant required to file
reports pursuant to Section 13 or 15(d) of the Exchange Act from their
obligations under those Sections.

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

                                 Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                                 Yes [X] No [ ]

State issuer's revenues for its most recent fiscal year:           0
                                                          ----------------------

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.)

                          $300,000 as at March 15, 2006
                          -----------------------------

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

                          15,375,000 on March 15, 2006
                          ----------------------------

<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.............................................4

Item 2.   Description of Property.............................................5

Item 3.   Legal Proceedings...................................................6

Item 4.   Submission of Matters to a Vote of Security Holders.................6

PART II

Item 5.   Market for the Registrant's Common Equity
              And Related Stockholder Matters.................................6

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

Item 7.   Financial Statements..............................................F-1

Item 8.   Changes in and Disagreements on Accounting and Financial
              Disclosures.....................................................9

Item 8A.  Controls and Procedures.............................................9

PART III

Item 9.   Directors and Executive Officers of the Registrant..................9

Item 10.  Executive Compensation.............................................11

Item 11.  Security Ownership of Certain Beneficial Owners and
              Management.....................................................11

Item 12.  Certain Relationships and Related Transactions.....................12

Item 13.  Exhibits and Reports on Form 8K....................................12

Item 14.  Principal Accounting Fees and Services.............................13

SIGNATURES...................................................................14

EXHIBITS


                                       3
<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 in Delaware on April 8, 2002.
With the resignation of Andrew Stinson as the Company's President on January 27,
2006, the Company's mailing address changed from 624 North Howard, Tekoa, WA
99033. Our current mailing address is 88 West 44th Street, Vancouver, BC V5Y
2V1, Canada. The telephone number of our principal executive office is (604)
738-0540.

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

Until January 27, 2006, the Company was headed up by Andrew Stinson officer and
director and Bruce Gage, Director, together they own a total of 9,375,000 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- or part-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 all of its
required periodic reports under Rule 13(a) of the Exchange Act, including
quarterly reports on Form 10-QSB and annual reports on Form 10-KSB, with the
Securities and Exchange Commission.


                                       4
<PAGE>

The Company's common shares are quoted on the Pink Sheets, LLC. The ticker
symbol for the Company's common stock is "AENS". In 2005, the stock traded
between $.08 and $.05, ending the year at $.05.

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, 2005, management has not identified
any viable business plan or opportunities for the Company to pursue or engage
in.

As of December 31, 2005, the Company had $4,762 of cash available. The Company
has not been able to generate any revenue in 2005. 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 has redirected its 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.

ITEM 2. Description of Property

In 2005, Alternative Energy Sources, Inc.'s principle executive address was 624
North Howard, Tekoa, WA 99033. Andrew Stinson, our former President, provided
his home office and mailing address for Alternative Energy. Mr. Stinson
contributed this office space along with his services to the Company.

On January 27, 2006, Mr. Stinson resigned from his position as President of
Alternative Energy, and Stephen Jackson became our President. As a result, our
principle executive address became 88 West 44th Street, Vancouver, BC V5Y 2V1,
Canada. This office is provided by Mr. Jackson who is receiving no compensation
in connection therewith.


                                       5
<PAGE>

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

No matters were submitted to the security holders for a vote in the fourth
fiscal quarter of 2005.

                                     PART II

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

In 2005, the Company's common shares were quoted on Pink Sheets, LLC. The symbol
for the Company's common stock is "AENS". In 2005, the stock traded at a high
$.08 and low of $.05.

As of December 31, 2005, Alternative Energy had seventeen 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.

In 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, 2005, 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.


                                       6
<PAGE>

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 currently depends 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.

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.

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, 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, 2005. The
Company sustained a net loss of $217,598 for the period then ended. This net
loss was for ongoing costs related to its development stage operations,
including legal fees. A loss of $251,630 from the period of inception (April 8,
2002) to December 31, 2005 has been incurred for development stage operations.


                                       7
<PAGE>

Liquidity and Capital Resources

As of December 31, 2005, the current cash on hand was $4,762. 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 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 $25,000. 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.

We may be required to find additional proceeds either through non-secured loans
from the officer, directors or various shareholders 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.


                                       8
<PAGE>

ITEM 7. FINANCIAL STATEMENTS


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

Financial Statements

Table of Contents

     Report of Independent Auditors                                          F-2
     Balance Sheet                                                           F-3
     Statements of Operations                                                F-4
     Statement of Stockholders' (Deficit)                                    F-5
     Statements of Cash Flows                                                F-6
     Notes to Financial Statements                                           F-7


                                       F-1
<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, 2005, and the related
statements of operations, stockholders' equity and cash flows for the years
ended December 31, 2005 and 2004, and the period from inception (April 8, 2002)
to December 31, 2005. 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 audit.

We conducted our audits in accordance with the 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, 2005, and results of its
operations and its cash flows for the years ended December 31, 2005 and 2004,
and the period from inception (April 8, 2002) to December 31, 2005, 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 6 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 6. 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 6, 2006


                                       F-2
<PAGE>

                        Alternative Energy Sources, Inc.
                          (A Development Stage Company)
                                  Balance Sheet
                                December 31, 2005


                                     Assets

Current assets
  Cash                                                                $   4,762
                                                                      =========

                    Liabilities and Stockholders' (Deficit)

Current liabilities
   Accounts payable                                                   $   6,656
   Accounts payable - related party                                      14,636
   Note payable                                                         201,000
                                                                      ---------
Total current liabilities                                               222,292
                                                                      ---------

Stockholders' (deficit)
  Common stock, $.0001 par value, 75,000,000 shares authorized,
   15,375,000 shares issued and outstanding                               1,538
  Additional paid-in capital                                             32,562
  (Deficit) accumulated during the development stage                   (251,630)
                                                                      ---------
                                                                       (217,530)
                                                                      ---------
                                                                      $   4,762
                                                                      =========


                                       F-3
<PAGE>

                        Alternative Energy Sources, Inc.
                          (A Development Stage Company)
                             Statement of Operations
                   Years Ended December 31, 2005 and 2004, and
         the Period From Inception (April 8, 2002) to December 31, 2005


<TABLE>
<CAPTION>
                                                      Year Ended        Year Ended       Inception to
                                                     December 31,      December 31,      December 31,
                                                         2005              2004              2005
                                                     ------------      ------------      ------------
<S>                                                  <C>               <C>               <C>
Revenue                                              $         --      $         --      $         --
                                                     ------------      ------------      ------------

Operating Costs and Expenses:
  General and administrative                              217,598            13,937           251,630
                                                     ------------      ------------      ------------

Net (loss)                                           $   (217,598)     $    (13,937)     $   (251,630)
                                                     ============      ============      ============

Per Share Information - basic and fully diluted:

Weighted average common shares outstanding             15,375,000        15,375,000
                                                     ============      ============

(Loss) per share                                     $      (0.01)     $      (0.00)
                                                     ============      ============
</TABLE>


                                       F-4
<PAGE>

                        Alternative Energy Sources, Inc.
                          (A Development Stage Company)
                      Statement of Stockholders' (Deficit)
           Period From Inception (April 8, 2002) to December 31, 2005


<TABLE>
<CAPTION>
                                                                                          (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           9,375,000            938          1,062             --           2,000
Common shares issued for cash
  at $.003 per share                         6,000,000            600          9,000             --           9,600
Contribution of services by shareholder             --             --          4,500             --           4,500
Net (loss) for the period                           --             --             --         (4,660)         (4,660)
                                            ----------     ----------     ----------     ----------      ----------
Balance, December 31, 2002                  15,375,000          1,538         14,562         (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                  15,375,000          1,538         20,562        (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                  15,375,000          1,538         26,562        (34,032)         (5,932)

Contribution of services by shareholder             --             --          6,000             --           6,000
Net (loss) for the year                             --             --             --       (217,598)       (217,598)
                                            ----------     ----------     ----------     ----------      ----------
Balance, December 31, 2005                  15,375,000     $    1,538     $   32,562     $ (251,630)     $ (217,530)
                                            ==========     ==========     ==========     ==========      ==========
</TABLE>


                                       F-5
<PAGE>

                        Alternative Energy Sources, Inc.
                          (A Development Stage Company)
                             Statement of Cash Flows
                   Years Ended December 31, 2005 and 2004, and
         the Period From Inception (April 8, 2002) to December 31, 2005


<TABLE>
<CAPTION>
                                                           Year Ended        Year Ended       Inception to
                                                          December 31,      December 31,      December 31,
                                                              2005              2004              2005
                                                          ------------      ------------      ------------
<S>                                                       <C>               <C>               <C>
Cash flows from operating activities:
Net (loss)                                                $   (217,598)     $    (13,937)     $   (251,630)
Adjustments to reconcile net (loss) to net cash
  (used in) operating activities:
Contribution of services by shareholder                          6,000             6,000            22,500
Accounts payable and accrued expenses                            6,656                --             6,656
                                                          ------------      ------------      ------------
  Net cash (used in) operating activities                     (204,942)           (7,937)         (222,474)
                                                          ------------      ------------      ------------

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

Cash flows from financing activities:
Related party advances                                           8,636             6,000            14,636
Proceeds from note payable                                     201,000                --           201,000
Common shares issued for cash                                       --                --            11,600
                                                          ------------      ------------      ------------
  Net cash provided by financing activities                    209,636             6,000           227,236
                                                          ------------      ------------      ------------

Increase (decrease) in cash and cash equivalents                 4,694            (1,937)            4,762

Cash and cash equivalents, beginning of period                      68             2,005                --
                                                          ------------      ------------      ------------

Cash and cash equivalents, end of period                  $      4,762      $         68      $      4,762
                                                          ============      ============      ============

Supplemental cash flow information:
   Cash paid for interest                                 $         --      $         --      $         --
                                                          ============      ============      ============
   Cash paid for income taxes                             $         --      $         --      $         --
                                                          ============      ============      ============
</TABLE>


                                       F-6
<PAGE>

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. The Company has chosen December 31, as a year-end and
has had no significant activity from inception to December 31, 2005.

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, 2005. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash and
accounts payable. 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.


                                       F-7
<PAGE>

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
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.


                                       F-8
<PAGE>

Recent Pronouncements

In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS
151 "Inventory Costs". This Statement amends the guidance in ARB No. 43, Chapter
4, "Inventory Pricing, to clarify the accounting for abnormal amounts of idle
facility expense, freight, handling costs, and wasted material (spoilage). In
addition, this Statement requires that allocation of fixed production overhead
to the costs of conversion be based on the normal capacity of the production
facilities. The provisions of this Statement will be effective for the Company
beginning with its fiscal year ending September 30, 2006. The Company is
currently evaluating the impact this new Standard will have on its operations,
but believes that it will not have a material impact on the Company's financial
position, results of operations or cash flows.

In December 2004, the FASB issued SFAS 153 "Exchanges of Non monetary Assets -
an amendment of APB Opinion No. 29". This Statement amended APB Opinion 29 to
eliminate the exception for non monetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of non monetary assets
that do not have commercial substance. A non monetary exchange has commercial
substance if the future cash flows of the entity are expected to change
significantly as a result of the exchange. The adoption of this Standard is not
expected to have any material impact on the Company's financial position,
results of operations or cash flows.

In December 2004, the FASB issued SFAS 123 (revised 2004) "Share-Based Payment".
This Statement requires that the cost resulting from all share-based
transactions be recorded in the financial statements. The Statement establishes
fair value as the measurement objective in accounting for share-based payment
arrangements and requires all entities to apply a fair-value-based measurement
in accounting for share-based payment transactions with employees. The Statement
also establishes fair value as the measurement objective for transactions in
which an entity acquires goods or services from non-employees in share-based
payment transactions. The Statement replaces SFAS 123 "Accounting for
Stock-Based Compensation" and supersedes APB Opinion No. 25 "Accounting for
Stock Issued to Employees". The provisions of this Statement will be effective
for the Company beginning with its fiscal year ending September 30, 2007. The
Company is currently evaluating the impact this new Standard will have on its
financial position, results of operations or cash flows.

In March 2005, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No.107 (SAB 107) which provides guidance regarding the
interaction of SFAS 123(R) and certain SEC rules and regulations. The new
guidance includes the SEC's view on the valuation of share-based payment
arrangements for public companies and may simplify some of SFAS 123(R)'s
implementation challenges for registrants and enhance the information investors
receive.

In March 2005, the FASB issued FIN 47, Accounting for Conditional Asset
Retirement Obligations, which clarifies that the term 'conditional asset
retirement obligation' as used in SFAS 143, Accounting for Asset Retirement
Obligations, refers to a legal obligation to perform an asset retirement
activity in which the timing and/or method of settlement are conditional on a
future event that may or may not be within the control of the entity. FIN 47
requires an entity to recognize a liability for the fair value of a conditional
asset retirement obligation if the fair value can be reasonably estimated. FIN
47 is effective no later than the end of the fiscal year ending after December
15, 2005. The Company does not believe that FIN 47 will have a material impact
on its financial position or results from operations.

 In August 2005, the FASB issued SFAS 154, Accounting Changes and Error
Corrections. This statement applies to all voluntary changes in accounting
principle and to changes required by an accounting pronouncement if the
pronouncement does not include specific transition provisions, and it changes
the requirements for accounting for and reporting them. Unless it is
impractical, the statement requires retrospective application of the changes to
prior periods' financial statements. This statement is effective for accounting
changes and correction of errors made in fiscal years beginning after December
15, 2005.


                                       F-9
<PAGE>

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.
On May 17, 2005, the Company's shareholders approved a forward stock split of
its common stock of four shares for one share of existing stock for shareholders
of record on May 17, 2005, and on July 7, 2005, the Company's shareholders
approved a reverse stock split of its common stock of 0.46875 shares for one
share of existing stock for shareholders of record on July 7, 2005. All share
and per share amounts have been restated to give effect to these splits.

At inception, the Company issued 9,375,000 shares of its common stock for cash
aggregating $2,000, to certain officers.

During July and August 2002 the Company issued 6,000,000 shares of common stock
for cash aggregating $9,600 pursuant to a private placement offering.

During the years ended December 31, 2004 and 2005, and the period from inception
to December 31, 2005 an officer contributed administrative services valued at
$6,000, $6,000 and $22,500 to 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 received 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:

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

As of December 31, 2005, the Company has a net operating loss carryforward of
approximately $229,000. This loss will be available to offset future taxable
income. If not used, this carryforward will expire in 2025. The deferred tax
asset of approximately $78,000 relating to the operating loss carryforward has
been fully reserved at December 31, 2005. The principal difference between the
net operating loss for financial reporting purposes and income tax purposes
results from the services contributed by affiliates of $22,500.

Note 4. ACCOUNTS PAYABLE - RELATED PARTIES

From inception to December 31, 2005, affiliates of the Company advanced an
aggregate of $14,636 for working capital to the Company, these advances are due
on demand and do not bear interest.


                                      F-10
<PAGE>

Note 5. NOTES PAYABLE

On October 12, 2005 the Company received $201,000 pursuant to an unsecured loan
agreement. The term of the loan is for twelve months and bears interest at 10%
per annum. Principal and interest is payable on the due date of the loan. The
amount of accrued interest as of December 31, 2005, was $4,405. The Company used
$193,340 of the loan proceeds to pay legal fees.

Note 6. 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, 2005, the
Company incurred a net loss of $251,630. In addition, the Company has no
significant assets or revenue generating operations and has working capital and
stockholder deficits of $217,530 at December 31, 2005.

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.


                                       F-11
<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, who is also acting as the
accounting 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, 2005, 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 year ended December 31, 2005 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, 2005. Based on that
assessment, management concluded that, as of December 31, 2005, The Company's
internal control over financial reporting is effective based on those criteria.


                                    PART III


ITEM 9. Directors and Executive Officers of Registrant

The Directors and Officers of the Company since January 1, 2005 are as follows:

<TABLE>
<CAPTION>
Name                    Age        Term Served                                 Title
<S>                     <C>        <C>                                         <C>
Andrew Stinson          32         From inception to January 27, 2006          President, Director and
                                                                               Chief Financial Officer

Bruce Gage              47         From Inception to January 27, 2006          Director

Stephen Jackson         43         Since January 27, 2006                      President, Chief Executive
                                                                               Officer, and Director
</TABLE>


                                        9
<PAGE>


Either of Mr. Stinson or Mr. Gage 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.

Mr. Stinson and Mr. Gage both resigned from their respective positions of
President, Director and Chief Financial Officer and Director on January 27,
2006, on which date Mr. Jackson began his term as President, Chief Executive
Officer and Director of Alternative Energy.

Mr. Jackson's term as director and officer will expire at the 2006 shareholders'
meeting or at such time as their successors shall be selected and qualified.

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 holds
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. In 1981 Mr. Gage completed the
Pre-Physical Therapy program at Eastern Washington University.

Stephen Jackson: Mr. Jackson has been principally engaged in the private
practice of law since May 1988. Mr. Jackson is a graduate of the University of
British Columbia, receiving a Bachelor of Arts degree in 1985. Mr. Jackson
received a Bachelor of Legal Letters degree from Osgoode Hall Law School of York
University in 1988. He is a member in good standing with the Law Societies of
British Columbia and the Yukon.

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.


                                       10
<PAGE>

Code of Ethics

The Company has not formally adopted a written code of ethics that applies to
the Company's principal executive officer, principal financial officer or
controller, or persons performing similar functions. Based on our small size,
early development stage and limited financial and human resources, we did not
believe that formally adopting a written code of ethics would benefit the
Company or its shareholders.

Audit Committee

Since we have only one director, we have neither an audit committee of the Board
of Directors nor an "audit committee financial expert," as such term is defined
under the Securities Exchange Act.

Compliance with Section 16 of the Exchange Act

Based solely on a review of Form 3, Form 4, and amendments thereto furnished to
the Company under Rule 16a-3(e) promulgated under the Securities Exchange Act of
1934 during the most recent fiscal year, and Form 5, and amendments thereto
furnished to the Company with respect to its most recent fiscal year, the
directors and officers of the Company were in timely compliance with the
reporting requirements under Section 16(a) of the Securities Exchange Act of
1934.

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.


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 (1)
President and Director              7,031,250            45.7%          Common

Bruce Gage (1)
Director                            2,343,750            17.1%          Common

Stephen B. Jackson
President and Director                      0               0%          Common

Officers and Directors as
a Group                             9,375,000            61.0%          Common


                                       11
<PAGE>

      (1)   Resigned on January 27, 2006.
      (2)   Began Term as President and Director on January 27, 2006.

Andrew Stinson and Bruce Gage's address is 610 North Howard, Tekoa, Washington
99033. Mr. Jackson's address is 88 West 44th Street, Vancouver, BC V5Y V21,
Canada.

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.
If and when the business operations increase and a more extensive time
commitment is needed, Mr. Jackson is prepared to devote more time to Alternative
Energy's affairs. The amounts of compensation and other terms of any full time
employment arrangements would be determined, if and when, such arrangements
become necessary.

ITEM 13. Exhibits and Reports on Form 8K

EXHIBITS

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


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

3.1            Articles of Incorporation (1)
3.2            By-Laws (2)
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


                                       12
<PAGE>

      (1)   Previously filed as Exhibit 3.1 to the Company's Form SB-2 filed on
            February 11, 2003, registration number 333-103096, and is hereby
            incorporated into this filing by reference.
      (2)   Previously filed as Exhibit 3.2 to the Company's Form SB-2 filed on
            February 11, 2003, registration number 333-103096, and is hereby
            incorporated into this filing by reference.

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, 2004 and $9,000 for the year ended December 31, 2005.

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


                                       13
<PAGE>

                                   SIGNATURES

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

ALTERNATIVE ENERGY SOURCES, INC.
(Registrant)

Date:    March 13, 2006

By: /s/ Stephen Jackson
    --------------------------------------
    Stephen Jackson
    President, Chief Executive Officer,
    Director and acting Accounting Officer


                                       14
<PAGE>

Exhibit Index


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

3.1            Articles of Incorporation (1)
3.2            By-Laws (2)
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

      (1)   Previously filed as Exhibit 3.1 to the Company's Form SB-2 filed on
            February 11, 2003, registration number 333-103096, and is hereby
            incorporated into this filing by reference.
      (2)   Previously filed as Exhibit 3.2 to the Company's Form SB-2 filed on
            February 11, 2003, registration number 333-103096, and is hereby
            incorporated into this filing by reference.


                                       15