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

                                  FORM 10-KSB/A
                                  First Amended

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

                                    000-29743
                            (Commission file number)

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

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

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

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


        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                               TITLE OF EACH CLASS
                          COMMON STOCK, $.001 PAR VALUE

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  by check  mark 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 referenced in Part
III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ]

Revenue for the year ended December 31, 2004:  $0.00

There is a limited trading market for the registrant's  Common Stock. There were
18,218,127  shares of Common Stock, and 28,530,750 shares of class "A" preferred
stock issued and outstanding as of December 31, 2004.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

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

                                       1
<PAGE>

TABLE OF CONTENTS


Item Number and Caption
                                                                           Page
                                                                          -----

PART I


Item 1. Description of Business.............................................3

Item 2. Description of Property.............................................6

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

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


PART II

Item 5. Market for Common Equity and Related Stockholder Matters............7

Item 6. Management's Discussion and Analysis or Plan of Operations..........8

Item 7. Financial Statements...............................................11

Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.......................................................25

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act..........................26

Item 10. Executive Compensation............................................30

Item 11. Security Ownership of Certain Beneficial Owners and Management....30

Item 12. Certain Relationships and Related Transactions....................30

Item 13. Exhibits and Reports on Form 8-K..................................31

Item 14. Controls and Procedures...........................................31

Item 15. Principal Accountant Fees and Services............................32

SIGNATURES ................................................................33
                                       2
<PAGE>

                                     PART I



Item 1. Description of Business

Background

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

Overview of Discontinued Business

In December  2002,  the Company  determined  it would abandon its efforts of its
only operating business segment.

The Company was an all-inclusive  telecom,  video,  Internet,  entertainment and
security  provider.  It  was in the  business  of  enhancing  the  lives  of our
subscribers,  who benefit  from the added value of  high-quality  services and a
fully  integrated  system made available by a single company.  Subscribers  were
afforded  the  luxury  of  accessing  these  services  using  state-of   the-art
technology that included hardware, software and network connectivity.

The Company was also a content provider.  Once logged off the community network,
subscribers  could  access the Internet  and a host of special  offerings,  over
multi-speed  connections.  Subscribers  could  enjoy the  benefit  of  exclusive
network content and global Internet service.

1-866-UNIONET

1-866-Unionet  was a  private  network,  customized  for  more  than 17  million
potential  labor  union  subscribers.   Once  deployed,  this  multipurpose  and
interactive  network would  generate  on-going  revenue for our partners and us.
This network also incorporated sponsor  participation with a potential of over 3
billion advertising dollars.  This model is representative of all our solutions,
including  our  integrated   communities,   business  networks,  and  all  other
subscriber groups.

The  Company  intended  to develop  the  subscriber  base from  within the union
membership.  It would  utilize the SmartFone  and other  interactive  devices to
connect  subscribers to a private and secure Intranet.  Offering members both an
exclusive Intranet, and a gateway for Internet access,  establishes a market for
our current and future technologies.  The unique technical infrastructure allows
simple "plug & play"  flexibility.  1-866-Unionet's  network design offered cost
effective  scalable  services.  Unions  and labor  organizations  were to have a
financial stake in their own technology solution.


                                       3
<PAGE>

Item 1. Description of Business - continued

Overview of New Business

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

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

HSVI expected to have 2 roles in the joint ventures or aquisitions:

     1.   To act as the financing  intermediary between the business's that have
          adpoted the HSVI program.

     2.   To distribute the interest earnings and profits to the shareholder who
          have provided the financing.

The  corporate  offices  of HSVI  would not  require a large  infrastructure  or
overhead to operate this business:

          o    each  business  unit would be  trained to operate  independently,
               except for the financing

          o    the JV  partners  would  have the  responsibility  to manage  and
               coordinate the business unit relationship

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

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

Subject  to  the  terms  and  conditions  of  the  Merger   Agreement  (Plan  of
Reorganization)  and pursuant to Section  368(a)(1)(B)  of the Internal  Revenue
Code of 1986,  as amended,  the parties to the  Agreement  shall effect a Type B
reorganization (the  "Reorganization")  whereby all of the outstanding shares of
ICI common  stock will be  exchanged  for  5,000,000  shares of the HSVI Class A
Preferred Stock.

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

                                       4
<PAGE>

Item 1. Description of Business - continued

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

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


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

KINETIC ENERGY:

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

ETIG

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

                                       5
<PAGE>

Item 1. Description of Business - continued

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

NEW IMPACT

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

LETTERS OF INTENT

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

Employees
As of December 31, 2004, the company employed 3 full time employees.


Item 2. Description of Property

The Company leases its principal executive office,  which is located in a shared
office  facility  in Tampa,  Florida at a monthly  rent of $ 981.  This lease is
month to month.


Item 3. Legal Proceedings

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

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

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

No matter was  submitted  to a vote of  security  holders  during the year ended
December 31, 2004.


                                       6
<PAGE>

                                     PART II


Item 5.  Market for Common Equity and Related Stockholder Matters

The  Company's  common  stock  under  the  registered  name  of  Internal  Hydro
International,  Inc.  was first  quoted in June of 2002,  and now  trades on the
Over-the-Counter ("OTC") Bulletin Board under the symbol "IHDR".

Set forth below are the high and low  closing  prices for the  Company's  common
stock  as  reported  on the OTC  Bulletin  Board  for  the  last  four  quarters
(accounting for share split):

        Quarter Ended                High            Low
        --------------------------- ------        --------
        December 31, 2004           $0.26           $0.12
        September 30, 2004          $1.30           $0.15
        June 30, 2004               $2.10           $0.90
        March 31, 2004              $2.00           $1.10


The above quotations  represent  inter-dealer  quotations without retail markup,
markdown or commissions and may not represent actual transactions.


Record Holders

As of December 31, 2004 the Company had 184 shareholders of record.

Dividends

The Company has never  declared or paid any cash  dividends on our common stock.
Any  future  determination  relating  to  dividend  policy  will  be made at the
discretion  of our Board of  Directors  and will  depend on a number of factors,
including the future earnings,  capital  requirements,  financial  condition and
future  prospects  and such  other  factors as the Board of  Directors  may deem
relevant.

RECENT  SALES OF  UNREGISTERED  SECURITIES;  USE OF PROCEEDS  FROM  UNREGISTERED
SECURITIES

Sale of Common Stock.

There were no  underwriting  discounts or  commissions  in  connection  with the
Private Placements.

The  proceeds  from Private  Placements  were used by the Company for funding of
general corporate purposes.

On July 27, 2004,  the Board of  Directors  approved a 5 to 1 stock split of the
Company's  common and preferred stock,  effective  September 10, 2004. The stock
split  increased  the number of  outstanding  common  shares from  2,875,279  to
14,376,395  and the number of  outstanding  preferred  shares from  5,750,000 to
28,750,000 as of September  10, 2004.  All  references  to the Company's  common
stock in the financial statements have been restated to reflect the stock split.


                                       7
<PAGE>

Item 6.  Management's Discussions and Analysis or Plan of Operations


General

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

Background and Overview

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

In December of 2002, the Company  determined  that its business plan of becoming
an all-inclusive  telecom,  messaging and  communications  provider would not be
successful.  The  Company  therefore  wound  down  those  operations  and  began
searching  for new  business  ventures.  The Company has  incurred net losses of
$2,364,460 since inception.

In December of 2002, TVCM reorganized,  to become a "home services  provider" to
attract  investors and customers.  The Company  intended to become a provider of
services  to  homebuyers.  The  services  would  include  design,   construction
management and financing for  individuals  building their own custom homes.  The
Company  intended to raise capital in order to broker and originate  residential
mortgage loans.

The  Company  issued   "stock-for-debt"  and  rolled  back  the  share  issuance
outstanding 28.9 to 1. Tel-Voice Communications,  Inc., changed its name to Home
Services  International  Inc., and postured to grow and attract  investment thus
allowing the company to meet its obligations and provide  increased  shareholder
value.

Plan of Operation
-----------------

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

The  Company   intended  to  assemble  a  management  team  that  would  include
experienced  managers  in the  fields of  telecommunications,  technology,  home
building and  construction,  franchise  sales and  marketing,  and finance.  The
Company was seeking  acquisition targets that would provide synergies within the
complete process of acquiring land, construction and financing of new homes.

                                       8
<PAGE>

Item 6. Management's Discussions and Analysis or Plan of Operations - continued

The company intended to duplicate these in a franchise-type manner, so that HSVI
could create EBU's  (Entrepreneurial  Business Units) in several other cities or
communities. Any acquisition target was to have been in the "home service" field
and provide a product or service to a homeowner.

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



Results of Operations

Year ended December 31, 2004 vs. December 31, 2003
--------------------------------------------------

Liquidity and capital resources

The  Company  has  incurred  additional  deficits  in cash flow  from  operating
activities.   As  a  part  of  the  Merger   Agreement  with  INTERNAL   COMMAND
INTERNATIONAL  INC., the then Chief Executive Officer of HSVI, Jay Budd, has and
does affirm that the outstanding debts of HSVI have been properly structured for
management  of the debt  post-merger;  namely,  that the debt is in the hands of
suitable professional debt management team, including Fletcher & Associates, and
Harry J.  Miller,  PLLC,  that  there has been set  aside as part of the  issued
common stock for obligation and  satisfaction of the debt, and that the incoming
principals of ICI will be held harmless for this debt.

Critical Accounting Estimates

The  preparation  of our  financial  statements in  conformity  with  accounting
principles  generally  accepted  in the United  States of America  requires  our
management to make certain  estimates and  assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  As such, in accordance with
the use of  accounting  principles  generally  accepted in the United  States of
America,  our actual  realized  results  may differ  from  management's  initial
estimates  as  reported.  A summary of our  significant  accounting  policies is
detailed  in the  notes  to the  financial  statements,  which  are an  integral
component of this filing.

Management  evaluates the  probability of the utilization of the deferred income
tax asset  related to the net  operating  loss carry  forwards.  The Company has
estimated a $1,201,000  deferred  income tax asset related to net operating loss
carry  forwards at December 31,  2004.  Management  determined  that because the
Company has yet to generate  taxable  income and that the  generation of taxable
income in the short term is uncertain, it was appropriate to provide a valuation
allowance for the total deferred income tax asset.


Forward looking statements

This report contains certain  forward-looking  statements  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities Exchange Act of 1934, as amended. Stockholders are cautioned that all
forward-looking  statements  involve risks and  uncertainty,  including  without


                                       9
<PAGE>

Item 6. Management's Discussions and Analysis or Plan of Operations - continued

limitation,  the ability of us develop our  technology  and execute our business
plan.  Although  we  believe  the  assumptions  underlying  the  forward-looking
statements  contained  herein are reasonable,  any of the  assumptions  could be
inaccurate,  and therefore,  there can be no assurance that the  forward-looking
statements contained in the report will prove to be accurate.

Off balance sheet arrangements

The Company's  liquidity has not dependent upon off balance sheet  transactions.
For the year ended  December  31,  2004,  the  Company did not engage in any off
balance sheet transactions.




                                       10
<PAGE>

Item 7.  Financial Statements

                INTERNAL HYDRO INTERNATIONAL, INC. AND SUBSIDIARY

                        CONSOLIDATED FINANCIAL STATEMENTS

                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                                TABLE OF CONTENTS
                                                                     PAGE (S)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                    12

CONSOLIDATED BALANCE SHEETS                                                13

CONSOLIDATED STATEMENTS OF OPERATIONS                                      14

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY                         15

CONSOLIDATED STATEMENTS OF CASH FLOWS                                      16



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                              17-25





                                       11
<PAGE>


           REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the  Stockholders  and Board of  Directors of Internal  Hydro  International,
Inc.:


We have audited the balance  sheet of Internal  Hydro  International,  Inc. (the
Company),  a development stage company, as of December 31, 2004, and the related
statements of operations, stockholders' deficit and cash flows for the year then
ended and January 21, 2003 (date of  inception)  to  December  31,  2003.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit 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  made by  management,  as well as evaluating  the overall
financial  statement  presentation.  We believe 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 Internal Hydro  International,
Inc. as of December 31, 2004,  and the results of its  operations and cash flows
for year then ended and  January 21, 2003 (date of  inception)  to December  31,
2003, in conformity with accounting  standards  generally accepted in the United
States of America.

As disclosed in Note 1, the accompanying financial statements have been prepared
assuming  that the Company  will  continue as a going  concern.  The Company has
experienced  material  operating losses and had a net working capital deficiency
of $1,035,842 at December 31, 2004.  Management is seeking equity capital and is
implementing  a  business  plan  that it  believes  will  result  in  profitable
operations.  There can be no assurances that the Company will obtain  sufficient
capital or that operations will become  profitable.  These and other  conditions
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  The accompanying  financial  statements do not include any adjustments
that might be  necessary  should the  Company be unable to  continue  as a going
concern.



/s/  EPSTEIN, WEBER & CONOVER, PLC
     Scottsdale, Arizona
     May 12, 2005


                                       12
<PAGE>



                        INTERNAL HYDRO INTERNATIONAL INC


                                  BALANCE SHEET

                             As of December 31, 2004

                                     ASSETS
                                     ------

CURRENT ASSETS
   Cash and equivalents                                         $    38,051
   Stock subscription receivable                                      2,500
                                                                -----------
                                                                     40,551
                                                                -----------
PROPERTY & EQUIPMENT
   Computers & Equipment
     (net of accumulated depreciation)                               14,152
                                                                -----------

OTHER ASSETS
   Accounts/loan receivable                                           7,000
   Investment - Langley Park                                        119,263
   Investment - Kinetic Energy                                      187,500
                                                                -----------
                                                                    313,763
                                                                -----------

                                                                $   368,466
                                                                ===========

                       LIABILITIES & STOCKHOLDERS' EQUITY
                       ----------------------------------
CURRENT LIABILITIES
   Accounts payable                                             $    32,001
   Interest Payable                                                   4,800
   Accrued Liabilities                                                4,130
   Due to shareholder                                                55,000
   Notes Payable                                                     40,000
                                                                -----------
                                                                    135,931
OTHER LIABILITIES
   Debt under professional management (Note 4)                      906,879
                                                                -----------
       Total Liabilities                                          1,042,810
                                                                -----------

STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 75,000,000 shares authorized
18,218,127 shares issued and outstanding (7,647,025 in 2004)         18,218
Preferred stock, $.001 par value, 10,000,000 shares authorized
28,530,750 shares issued and outstanding (1,250,000 in 2004)         28,531
Additional paid-in capital                                        3,761,110
Unrealized loss on Investment                                      (771,362)
Deficit accumulated during Development Stage                     (3,710,841)
                                                                -----------
              Total Stockholders' Equity                           (674,344)
                                                                -----------

                                                                $   368,466
                                                                ===========
See accompanying notes to unaudited financial statements

                                       13
<PAGE>



                        INTERNAL HYDRO INTERNATIONAL INC

                             STATEMENT OF OPERATIONS
                             -----------------------
                 For the years ended December 31, 2004 and 2003
<TABLE>
<CAPTION>

                                                                                        Accumulated from
                                               Date of Inception                       Date of Inception
                                                    through       For the year ended        through
                                              December 31, 2003    December 31, 2004   December 31, 2004
                                             -------------------- ------------------- ------------------
<S>                                              <C>                  <C>                 <C>
NET SALES                                        $             --     $            --     $           --


COST OF SALES                                                  --                  --                 --
                                             -------------------- ------------------- ------------------


              GROSS PROFIT                                     --                  --


SELLING, GENERAL & ADMINISTRATIVE EXPENSES                 47,726           2,672,401          2,720,127
RESEARCH & DEVELOPMENT                                     32,700             215,976            248,676
                                             -------------------- ------------------- ------------------

              LOSS FROM OPERATIONS                         80,426           2,888,377          2,968,803

              LOSS ON SALE OF SECURITIES                       --             697,237            697,237
              INTEREST EXPENSE                                 --              44,800             44,800
                                             -------------------- ------------------- ------------------

NET LOSS                                         $         80,426     $     3,630,414     $ 3,710,840.00
                                             ==================== =================== ==================

BASIC NET LOSS PER COMMON SHARE                  $          (0.01)    $         (0.40)
                                             =================== ===================
DILUTED NET LOSS PER COMMON SHARE                $          (0.01)    $         (0.39)
                                             =================== ===================

WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING           7,647,025           9,116,317
                                             =================== ===================
</TABLE>

See accompanying notes to unaudited financial statements


                                       14
<PAGE>



                        INTERNAL HYDRO INTERNATIONAL INC

                          NOTES TO FINANCIAL STATEMENTS

                       STATEMENTS OF STOCKHOLDERS' DEFICIT


<TABLE>
<CAPTION>

                                                                                                Accumulated
                                              Common Stock        Preferred stock    Paid-in   Comprehensive Accumulated
                                         Shares           $     Shares          $    Capital        Loss       Deficit       Total
                                      ----------- ---------- ----------- --------- ----------- ------------- ----------- ----------
<S>                                      <C>        <C>        <C>         <C>       <C>          <C>          <C>         <C>
 BALANCE January 21, 2003               7,647,025  $   7,647  27,500,000  $ 27,500  $   45,664   $         -  $        -  $  80,811

   Net loss                                                                                                      (80,426)   (80,426)
                                      ----------- ---------- ----------- --------- ----------- ------------- ----------- ----------

BALANCE DECEMBER 31, 2003               7,647,025      7,647  27,500,000     27,500     45,664                  (80,426)  $     385

 Recapitalization for reverse merger          --         --    1,250,000     1,250  (1,035,012)                          (1,033,762)

 Shares issued for services             5,099,602      5,100                         2,238,470                            2,243,569

 Debt converted to common stock         1,627,250      1,627                           486,864                              488,491

 Conversion of preferred to common        219,250        219    (219,250)     (219)        --

 Value of warrants and
    conversion feature                                                                  60,000                               60,000

 Issued for investment in marketable
    securities                          2,375,000      2,375                         1,778,875                            1,781,250

 Issued for Kinetic agreeement          1,250,000      1,250                           186,250                              187,500

  Net loss                                                                                                    (3,630,414)(3,630,414)

 Unrealized loss on marketable securities                                                           (771,362)              (771,362)
                                                                                                                         ----------
  Total Comprehensive Loss                                                                                               (4,401,776)
                                      ----------- ---------- ----------- --------- ----------- ------------- ----------- ----------

 BALANCE DECEMBER 31, 2004             18,218,127  $  18,218  28,530,750  $ 28,531  $3,761,111  $   (771,362)$(3,710,840) $(674,343)
                                   ============== ========== =========== ========= =========== ============= =========== ===========
</TABLE>
See accompanying notes to unaudited financial statements

                                       15
<PAGE>




                        INTERNAL HYDRO INTERNATIONAL INC


                             STATEMENT OF CASH FLOWS

                 For the years ended December 31, 2004 and 2003

<TABLE>
<CAPTION>

                                                                                                                 Accumulated from
                                                                             Date of Inception                   Date of Inception
                                                                                  through     For the year ended      through
                                                                             December 31, 2003 December 31, 2004 December 31, 2004
                                                                            ------------------ ----------------- -----------------
<S>                                                                                   <C>                <C>              <C>
OPERATING ACTIVITIES
   Net Loss                                                                   $        (80,426) $  (3,630,414.00)  $    (3,710,840)
     Adjustments to reconcile net loss to cash used by operating activities:
       Depreciation expense                                                                 -              3,931             3,931
       Amortization of Debt discount                                                        -             40,000            40,000
       Issuance of common and preferred stock for services performed                        -          2,243,569         2,243,569
        Loss on sale of securites                                                           -            697,237           697,237
       Changes in assets and liabilities
          Stock subscription receivable                                                     -             (2,500)           (2,500)
         (Decrease) Increase in accounts payable and accrued liabilities                    -             40,931            40,931
                                                                            ------------------ ----------------- -----------------

          Cash used by operating activities                                   $        (80,426) $       (607,246)       $ (687,672)

INVESTING ACTIVITIES
     Purchase of fixed assets                                                 $             -   $        (16,003)  $       (16,003)
     Cash on proceeds on sale of marketable securities                                      -            193,388           193,388
     Employee advances                                                                      -             (7,000)           (7,000)
                                                                            ------------------ ----------------- -----------------

          Cash provided by investing activities                               $             -   $        170,385  $        170,385

FINANCING ACTIVITIES
    Proceeds from notes payable                                               $             -   $         60,000  $         60,000
    Proceeds from shareholder advances                                                  80,811           414,527           495,338
                                                                            ------------------ ----------------- -----------------
Cash provided by financing activities                                         $         80,811  $        474,527  $        555,338

INCREASE IN CASH AND CASH EQUIVILENTS                                         $            385  $         37,666  $         38,051

CASH AND CASH EQUIVILENTS, beginning of year                                                -               385                 -
                                                                            ------------------ ----------------- -----------------

CASH AND CASH EQUIVILENTS, end of year                                        $            385   $        38,051  $         38,051
                                                                            ================== ================= =================
</TABLE>
See accompanying notes to unaudited financial statements


                                       16
<PAGE>


                INTERNAL HYDRO INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIGICANT ACCOUNTING POLICIES

Background and Nature of Business

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

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

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

Basis of Presentation

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

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

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

                                       17
<PAGE>

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

Going Concern Uncertainty

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

Principles of Consolidation

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


Use of Estimates

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

Fair Value of Financial Instruments

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

Cash and Cash Equivalents

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

Concentration of Credit Risk

The Company  places its cash in what it believes to be  credit-worthy  financial
institutions.  However,  cash balances may exceed FDIC insured levels at various
times during the year. There were no bank balances  exceeding  insured limits at
December 31, 2004.

Revenue

There was no revenue generated in the years ended December 31, 2004 and 2003.

                                       18
<PAGE>

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

Income Taxes

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

Loss Per Share

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

Stock Based Compensation

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

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

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

Advertising

The  Company  expenses  advertising  costs  as  incurred.  The  Company  had  no
advertising expense in the year ended December 31, 2004.

Recently Issued Accounting Pronouncements

In December  2002,  the FASB issued SFAS No.  148,  Accounting  for  Stock-Based
Compensation  - Transition  and  Disclosure - an amendment of FASB Statement No.
123. SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based  Compensation,
to provide  alternative methods of transition for a voluntary change to the fair
value-based  method of accounting  for  stock-based  employee  compensation.  In
addition,  SFAS No. 148 amends the  disclosure  requirements  of SFAS No. 123 to


                                       19
<PAGE>

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

require  prominent  disclosures in both interim and annual financial  statements
about the method of accounting for  stock-based  employee  compensation  and the
effect of the method used on reported  results.  SFAS No. 148 is  effective  for
financial statements issued for fiscal years ending after December 15, 2002. The
adoption  of SFAS  No.  148 did not  have a  material  effect  on its  financial
position or results of operations.

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

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

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

NOTE 2 - RELATED PARTY TRANSACTIONS

The Company borrows funds from officers and  stockholders  from time to time. As
at December 31, 2004, the balance of these loans was $55,000.  Currently,  there
has been no repayment terms  specified for the  shareholder  loans, as such, the
Company has classified the loans as a Current Liability.


NOTE 3 - NOTE PAYABLE

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

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

                                       20
<PAGE>


NOTE 4 - STOCKHOLDERS' DEFICIENCY

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

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

The Company  issues its common stock from time to time to  compensate  employees
and consultants as consideration for services rendered.  These shares are valued
at the trading  value on the date of grant.  During the year ended  December 31,
2004,  the  Company  issued  5,099,602  shares  of its  common  stock  valued at
$2,243,569

During the year ended December 31, 2002, the Company placed  2,813,180 shares of
its common stock in an escrow account. These shares are contingently issuable as
they  are to be  issued  to  creditors  as part of a plan to  negotiate  Company
obligations  through  an  intermediary.  The  Company  is  attempting  to settle
obligations  by  negotiating  with  creditors  to take  Company  common stock as
payment  for the  obligations.  During the year ended  December  31,  2002,  the
Company had not issued any of these shares to  creditors.  During the year ended
December 31, 2003,  the Company  negotiated a settlement in which 249,905 shares
of common stock were issued out of escrow to settle a creditor  obligation  that
had an original  balance of $65,000.  The settlement was recorded at the trading
value of the  shares on the date of  settlement.  That value was  $299,866.  The
result was an additional  expense of $234,866 charged to operations for the year
ended  December 31, 2003.  During the year ended  December 31, 2004, the Company
did not issued any of these shares to creditors.

During the year ended  December 31, 2004,  the Company  converted debt and trade
accounts payable of $488,491 for 1,627,250 shares of its common stock.

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

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

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

On November 3, 2004 the Company sold 441,389 shares of Langley Park  Investment,
(London Exchange:  LPI) for $193,388. This was the first liquidation pursuant to
the Agreement.  These gross  proceeds  represented a loss of $697,237 based upon


                                       21
<PAGE>

NOTE 4 - STOCKHOLDERS' DEFICIENCY - continued

the  difference  between the selling price on November 3, 2004 and the Company's
trading price on July 29, 2004.

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

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


NOTE 5 - FURNITURE AND EQUIPMENT

Furniture  and  equipment  is  stated  at cost  less  accumulated  depreciation.
Depreciation  is recorded on a  straight-line  basis over the  estimated  useful
lives of the assets of 3 years. Depreciation expense for the year ended December
31, 2004 and 2003 was $3,931 and $5,795, respectively.

Property and equipment consisted of the following at December 31, 2004:

         Office and computer equipment             $      33,388

         Less accumulated depreciation                   (19,236)
                                                    ------------

         Furniture and equipment, net              $      14,152
                                                    ============


NOTE 6 - STOCK OPTIONS -


There were no stock  options  granted nor was there any pro forma  effect of the
vesting of options  granted in previous  periods in the years ended December 31,
2004 and 2003.


NOTE 7 - INCOME TAXES -

The Company  has no net income tax  provision  or benefit in the  periods  ended
December 31, 2004 and 2003. Prior to the merger transaction with HIS the Company
elected to be treated as an  S-Corporation  as prescribed  under Section 1362 of
the  Internal  Revenue  Code.  As  an  S-Corporation,  items  of  income,  loss,
deductions  and credits  generated by the Company  flow through  directly to the
stockholders and are included in the tax returns of the individual stockholders.

                                       22
<PAGE>

NOTE 7 - INCOME TAXES - continued

During the year ended  December  31, 2004,  the Company  generated a tax benefit
related to operating loss  carryforwards  of $1,456,000 which was equally offset
by a valuation allowance.

The Company  has  cumulative  net  operating  losses as of December  31, 2004 of
approximately $3,935,000 that expire in 2008 through 2023.

At December 31, 2004,  the Company had federal net operating loss carry forwards
of  approximately  $6,938,000  that  expire  from  2013 to 2024  and  state  net
operating loss carry forwards of approximately  $6,620,000 that expire from 2005
to 2008.  Substantially  all of the  deferred  income  tax  asset of  $2,756,000
relates to income tax benefits from net operating loss carry  forwards.  Because
of the change of control  issues under Section 382 of the Internal  Revenue Code
and the current  uncertainty of realizing the benefits of the tax  carryforward,
an equal valuation  allowance has been established.  The full realization of the
tax benefit  associated  with the carry forward depends  predominantly  upon the
Company's ability to generate taxable income during the carry forward period.


NOTE 8 - COMMITMENTS AND CONTINGENCIES


The Company has  obligations to numerous  creditors and vendors.  The Company is
attempting to settle these obligations, primarily through the issuance of common
stock.  Management  believes  that the  Company  will  ultimately  settle  these
obligations for no more than amounts accrued at December 31, 2004. However,  the
Company has made  settlement  offers to  numerous  creditors.  These  offers are
represented by a specified  number of shares.  Any settlements will be valued at
the fair value of the stock at the time the settlement is reached.

NOTE 9 - MERGER TRANSACTION

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


                                       23
<PAGE>

NOTE 10- LOSS PER SHARE

Outstanding  options and warrants  were not  considered in the  calculation  for
diluted  earnings  per share  for the years  ended  December  31,  2004 and 2003
because the effect of their inclusion would be antidilutive.

<TABLE>
<CAPTION>
                                          2003                                    2004
                        ------------------------------------  -----------------------------------
                             Loss        Shares    Per share     Loss         Shares   Per share
                        -----------  ------------  ---------  -----------  ---------- -----------
<S>                       <C>              <C>        <C>          <C>          <C>        <C>
 Net (Loss)               $ (80,426)                          $(3,630,415)
Discontinued operations           0                                     0
Continuing operations       (80,426)                           (3.630,415)



Basic Loss Per Share:
Loss available to common
    stockholders         $  (80,426)    7,647,025     $(0.01) $(3,630,415)  9,116,317      $(0.40)
                        ===========              ===========  ===========            ============
Effect of dilutive
   securities               N/A                                    N/A

Diluted Loss Per Share                                $(0.01)                              $(0.40)
                                                 ===========                         ============
</TABLE>


Warrants and options to purchase  107,497 and 10,669 shares of common stock were
outstanding  and excluded  from the loss per share  calculation  at December 31,
2004 and 2003 respectively.




NOTE 11 - INVESTMENTS

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

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

                                       24
<PAGE>

NOTE 11 - INVESTMENTS - continued

     Investment in Langley securities consisted of the following at December 31,
2004:

                                        Gross Unrealized
                                   -------------------------       Fair
                           Cost        Gains         Losses        Value
                      ---------    ---------    ------------    ---------
Equity securities    $  890,625    $       -    $   (771,362)    $ 119,263


Proceeds  from  sales of equity  securities  were  $193,388  and gross  realized
(losses)  gains were  ($697,237)  for the year ended December 31, 2004. The fair
value at December 31, 2004 is  determined  based on the trading price of Langley
and translated to U.S. dollars at the exchange rate on December 31, 2004.

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




                                  * * * * * *



ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE


         None.


                                       25
<PAGE>

                                    PART III

ITEM 9. DIRECTORS EXECUTIVE OFFICERS,  PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT


EXECUTIVE OFFICERS AND DIRECTORS

     The members of the Board of Directors  of the Company  serve until the next
annual meeting of stockholders, or until their successors have been elected. The
officers  serve at the  pleasure of the Board of  Directors.  On January 2, 2004
when then Home Services  International  Inc. acquired the shares of the Internal
Command  International  Inc. the  Directors  were Jay H. Budd and Robert E. Lee.
After this  transaction,  Robert E. Lee  resigned  and Mark Pena and Wade Kenyon
were appointed as Directors.

     On January 2, 2004 when then Home Services  International Inc. acquired the
shares of the Internal Command International Inc. Jay H. Budd was the CEO of the
Company.  After this  transaction,  Jay H Budd resigned and was  re-appointed as
Executive Vice President and Craig Huffman was appointed as President and CEO.

     Jay H.  Budd  resigned  both his  position  on the Board of  Directors  and
Executive Vice President on August 23, 2004.

     The  following  table  sets  forth  the name,  age,  and  position  of each
executive officer and director of the Company:

DIRECTOR'S   NAME     AGE     OFFICE                 TERM EXPIRES
--------------------------------------------------------------------------------

Mark Pena            41       Chairman/Director      next annual meeting
Wade Kenyon          65        Director              next annual meeting


EXECUTIVE OFFICER'S   NAME      AGE               OFFICE
--------------------------------------------------------------------------------

Craig Huffman                   39            President/CEO



     Set forth below is certain biographical information, present occupation and
business  experience  for the past five  years of each  director  and  executive
officer of the  Company.  Officers  of the  Company  are elected by the Board of
Directors and hold office until their successors are chosen and qualified, until
their death or until they resign or have been removed from office. All corporate
officers serve at the discretion of the Board of Directors.


Mark Pena
Board of Directors

Member Board of Directors of Sun Rayz Beverages, Inc., Florida.
Corporate General Counsel/ Bevsystems International, Inc.,

Stetson  University  College of Law, Honor Roll, John O. Weihl Award Scholarship
Recipient  representing  top  student  of class in Trial  Advocacy/  Mann  Award
Scholarship Recipient  representing  Character and Leadership in the practice of
law, Student Bar Association President/ American Bar Association Young Lawyer as
Division Leutenant Governor.

                                       26
<PAGE>

ITEM 9. DIRECTORS EXECUTIVE OFFICERS,  PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE A - continued

Rutgers College, New Brunswick,  NJ, Union College,  Cranford, NJ, University of
South Florida, Tampa, Florida. Honors included: Dean's List, Member: Pi Gamma Mu
International Honor Society.

Teen Court  Judge,  Hillsborough  County  Bar  Association  Troubled  Teen Youth
Program.  Attorney/Solo  Practioner,  Law Office of Mark E. Pena,  P.A.,  Tampa,
Florida Admitted to Practice:  July, 1994.  Member,  Florida Bar, Federal Middle
District of Florida,  11th  Federal  Circuit  Court of  Appeals.,  American  Bar
Assoc./ Member  International  Law and Business Law Divisions.  Primary areas of
practice  include  general  corporate  transactions,  structure and  litigation,
commercial  transactions,  civil  litigation,  international  law. Past practice
includes insurance defense, first party contracts, and employment. Former Senior
Partner/  Law  Office of Pena &  Thomas,  P.A.,  Tampa  Florida  Former  Special
Assistant Florida State Attorneys Office,  Prosecution Clinic,  Pinellas County,
Florida.  Corporate  representation  included:  Armor Insurance Co., Progressive
Insurance Co., Bevsystems  International,  Inc., Staff Suppliers Inc., Corrosion
Control  Specialists,  Inc.,  Nextrade Inc.,  Gulf South Income  Properties Inc.
d/b/a  Best  Western,   Southeastern   Income   Properties  Inc.,  d/b/a  Howard
Johnsons/Orlando.,  DTNet  Technologies,  Inc.  DTNet  International,  Inc., St.
Mary's Parish,  Polish Catholic  Church,  St.  Petersburg,  Florida.,  Gulf West
Property Development LLC, N B Financial LLC. Counsel of record in over 400 civil
litigation cases throughout the State of Florida and Federal Districts.

Wade Kenyon
Board of Directors
BA Degree University of South Florida - Major Chemistry, Minor Zoology.
Co-founder of Internal Command Industries,

2000 to Current - Baring Industries,  Inc. a division of Electrolux Professional
Sales Manager - Manages the Orlando branch office of Baring Industries.  Oversee
the activities of two other project  management teams,  participate in the daily
sales activities, negotiate pricing for the projects and project manage selected
projects and  coordinate  branch  office  operation  with the rest of the Baring
management team.

1997 to 2000  Johnson  Lancaster  Project  Manager - Solicited  and managed high
profile Food Service projects some of which include Universal Studios,  Orlando,
and Disney World, Orlando, along with University of North Carolina,  Lenoir Hall
in Greensboro,  NC. 1991 to 1997 Kenyon and Kenyon,  Inc. - Food  Facilities and
Laundry  Design and  Consulting  - major  projects  and  customers  included the
Georgia Department of Corrections, and other major contracts.

1991 to 1997  Sherman  Robinson  Associates,  Atlanta - Partner  with Kenyon and
Kenyon,  Inc. - Food Facilities  Design and Consulting - designed  numerous food
service  facilities  including  the  Olympic  Stadium  concessions  for the 1996
Olympic  games and the food service  facilities  for the Atlanta  Braves  Turner
Stadium.

1990 to 1991 Judy Ford Stokes and Associates -Contracted Consultant -
responsibilities included participation in design and project management of
several major food services in the southeast and Washington, D.C.

1985 to 1990  Greitzer,  Inc.,  Vice  President - responsible  for revamping the
manufacturing  processes,  participating  in the design and  development  of the
product  lines,  reorganizing  the sales and  marketing  efforts and  personally
closing sales.

                                       27
<PAGE>

ITEM 9. DIRECTORS EXECUTIVE OFFICERS,  PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE A - continued

1986 to 1990  Greitzer,  Inc.,  President - as  president  was  responsible  for
overseeing  and  guiding  each  company  department,  reporting  to the Board of
Directors,  negotiating  labor  contracts,  reviewing  manufacturing  costs  and
continuing personal contact with the company key clients. Increased the sales of
the firm fivefold from 1985 to 1990.

1981 to 1984 Internal Command Industries, Tampa, FL - co founder and vice
president.

Craig Huffman
Chief Executive Officer and President

President and co-founder, Internal Command International, Tampa, Florida
2001-2004. Oversaw the development of the Energy Commander technology, all
corporate operations, patent protection, and all other aspects of the corporate
build up.

Author of the business plan for Internal Hydro, and the revenue stream plan.

BA, University of Tampa, 1989. President Student Political Organization,  member
Sigma Phi Epsilon

Juris Doctor, cum laude (2nd in class), Stetson University College of Law, 1997;
recipient West?s Corpus Juris Secundum Award for Torts and Civil Procedure.

Solo  Practitioner:  Craig A.  Huffman,  P.A.  primary  areas of practice  being
criminal  law,  civil tort  practice,  and  appellate  work.  Tried over 50 jury
trials, in both State and Federal Court; authored over 40 appeals.

Army ROTC four year scholarship  recipient.  Major,  United States Army Reserve,
1989-Present; commissioned as a Field Artillery Officer presently the JAG Corps.
United States Army Field  Artillery  Officer  Basic  Course;  United States Army
Judge Advocate Officers Basic Course, Judge Advocate Officers Advanced Course.

Deputy Sheriff in  Hillsborough  County  Florida as an  Enforcement  Deputy from
1990-1995.  Graduate Tampa Police Academy;  Hillsborough County Sheriff?s Office
Academy; Sex Crimes Investigations:  Hostage Negotiations;  Kinesic Interviewing
Techniques; Interviews and Interrogations.



CONFLICTS OF INTEREST

     Certain conflicts of interest existed at December 31, 2004 and may continue
to exist between the Company and its officers and directors due to the fact that
each has other business  interests to which they devote their primary attention.
Each officer and director  may continue to do so  notwithstanding  the fact that
management time should be devoted to the business of the Company.

     Certain  conflicts  of  interest  may exist  between  the  Company  and its
management,  and  conflicts  may  develop in the  future.  The  Company  has not
established  policies or procedures  for the  resolution of current or potential
conflicts of  interests  between the  Company,  its  officers  and  directors or
affiliated entities.  There can be no assurance that management will resolve all
conflicts  of interest in favor of the  Company,  and failure by  management  to
conduct the  Company's  business in the  Company's  best  interest may result in
liability to the  management.  The officers and directors are accountable to the


                                       28
<PAGE>

ITEM 9. DIRECTORS EXECUTIVE OFFICERS,  PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE A - continued

Company as fiduciaries  which mean that they are required to exercise good faith
and integrity in handling the Company's  affairs.  Shareholders who believe that
the   Company  has  been  harmed  by  failure  of  an  officer  or  director  to
appropriately  resolve any conflict of interest may,  subject to applicable rule
of  civil  procedure,  be able to bring a class  action  or  derivative  suit to
enforce their rights and the Company's rights.

BOARD MEETINGS AND COMMITTEES

     The Directors and Officers will not receive  remuneration  from the Company
until a subsequent offering has been successfully  completed,  or cash flow from
operating  permits,  all in the discretion of the Board of Directors.  Directors
may be paid their  expenses,  if any, of attendance at such meeting of the Board
of Directors,  and may be paid a fixed sum for attendance at each meeting of the
Board of  Directors  or a stated  salary  as  Director.  No such  payment  shall
preclude any Director  from serving the  Corporation  in any other  capacity and
receiving compensation therefor. No compensation has been paid to the Directors.
The Board of  Directors  may  designate  from  among its  members  an  executive
committee  and one or  more  other  committees.  No such  committees  have  been
appointed.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     Based  solely  upon a review of forms 3, 4, and 5 and  amendments  thereto,
furnished to the Company during or respecting its last fiscal year, no director,
officer,  beneficial owner of more than 10% of any class of equity securities of
the  Company  or any other  person  known to be  subject  to  Section  16 of the
Exchange  Act of 1934,  as  amended,  failed to file on a timely  basis  reports
required by Section 16(a) of the Exchange Act for the last fiscal year.


AUDIT COMMITTEE FINANCIAL EXPERT

     The  Company's  board  of  directors  does  not  have an  "audit  committee
financial   expert,"  within  the  meaning  of  such  phrase  under   applicable
regulations  of the  Securities  and Exchange  Commission,  serving on its audit
committee.  The  board of  directors  believes  that all  members  of its  audit
committee are financially literate and experienced in business matters, and that
one or more  members of the audit  committee  are  capable of (i)  understanding
generally accepted accounting principles ("GAAP") and financial statements, (ii)
assessing the general  application  of GAAP  principles  in connection  with our
accounting for estimates,  accruals and reserves, (iii) analyzing and evaluating
our  financial   statements,   (iv)  understanding  our  internal  controls  and
procedures  for  financial  reporting;  and (v)  understanding  audit  committee
functions,  all of which are attributes of an audit committee  financial expert.
However,  the board of directors  believes that there is not any audit committee
member who has obtained these attributes through the experience specified in the
SEC's definition of "audit committee financial expert." Further, like many small
companies,  it is difficult  for the Company to attract and retain board members
who qualify as "audit  committee  financial  experts," and competition for these
individuals is significant.  The board believes that its current audit committee
is able to  fulfill  its  role  under  SEC  regulations  despite  not  having  a
designated "audit committee financial expert."

                                       29
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

     None of the executive  officer's salary and bonus exceeded  $100,000 during
any of the Company's last two fiscal years.


ITEM 11. SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT

PRINCIPAL SHAREHOLDERS; MANAGEMENT SHARE HOLDINGS

     Beneficial  Ownership is  determined  in  accordance  with the rules of the
Securities and Exchange  Commission and generally  includes voting or investment
power with respect to  securities.  The following  table sets forth Common Stock
ownership  information  as of the Record  Date with  respect to (i) each  person
known  to us to be the  beneficial  owner  of  more  than 5% of our  issued  and
outstanding  Common Stock and  Preferred  Stock;  (ii) each of our directors and
executive  officers;  and (iii) all of our directors and executive officers as a
group. Unless otherwise indicated, the business address of each person listed is
Internal Hydro International,  Inc., 607 W. MARTIN LUTHER KING Jr. Blvd., TAMPA,
FLORIDA 33603

   Name and Address of       Title of   Amount and Nature of  Percent of
   Beneficial Owner            Class      Beneficial Owner       Class
-  ---------------------------------------------------------------------
-  Craig Huffman            Preferred       6,509,020           22.8%
-  Rianey Nelson            Preferred       7,739,760           27.1%
-  Mark Pena                Preferred       1,213,280            4.3%
-  James A. Thomas          Preferred       6,051,140           21.2%


-  Mark Pena                Common            362,154            2.0%
-  Craig Huffman            Common          1,129,630            6.2%
-  Wade Kenyon              Common            136,135             .7%
-  ---------------------------------------------------------------------
All officers and directors
     as a group (1 person)  Preferred       7,722,300           27.1%
                            Common          1,411,412            8.9%



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


     Shareholders of the Company have advanced the Company money in order to pay
general  and  administrative  expenses.  As of December  31, 2004 and 2003,  the
Company owed $55,000 and $128,963, respectively, relating to these loans.


None of our  directors,  executive  officers or key  employees is related to any
other of our directors, executive officers or key employees.


ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS OF THE COMPANY

During the year ended  December 31, 2004, the Board of Directors met 2 times and
held 1 meeting via unanimous consent in lieu of a special meeting. A majority of
the  directors  was  present at each  meeting,  all  constituting  a quorum.  In
addition to regularly scheduled meetings, a number of Directors were involved in
numerous informal  discussions with management,  offering advice and suggestions
on a broad range of corporate matters.

                                       30
<PAGE>

Item 13.  Exhibits and Reports on Form 8-K

                                  EXHIBIT INDEX

The following exhibits are filed as part of this Annual Report on Form 10-KSB or
are incorporated herein by reference:

Exhibit         Description
--------------  ----------------------------------------------
3.1.1           Articles of Incorporation (1)
3.1.2           Amended Articles of Incorporation (1)
3.2             Bylaws (1)
10.1            Lock-up agreement with Hagit Bernstein (1)
10.2            Lock-up agreement with Raphi Shram (1)
10.3            Lock-up agreement with Naomi Shram (1)
10.4            Stock Purchase Agreement and Plan of Reorganization (2)
21.1            Subsidiaries of Registrant (F)
31.1            Certification, pursuant to Rule 13a-4 of the Securities Exchange
                Act of 1934
32.1           Certification  of Chief  Executive  Officer  pursuant to18 u.s.c.
               section  1350,  as  adopted   pursuant  to  Section  906  of  the
               Sarbanes-Oxley act of 2002

(1)  Incorporated  by reference to the  Exhibits to the  Registration  Statement
     filed by the Registrant on Form 10SB dated March 1, 2000.

(2)  Incorporated  by reference  to the Exhibits to the Current  Report filed by
     the Registrant on Form 8-K/A dated December 11, 2000.

F        Filed herewith

Reports filed on Form 8-K

Item 14  - Controls and Procedures

     As required by Rule 13a-14 under the Exchange Act,  within 90 days prior to
the filing date of this report,  the Company  carried out an  evaluation  of the
effectiveness of the design and operation of the Company's  disclosure  controls
and  procedures.  This evaluation was carried out under the supervision and with
the  participation  of the Company's  management,  including the Company's Chief
Executive  Officer.  Based upon that  evaluation,  the Company's Chief Executive
Officer  concluded  that the Company's  controls and  procedures  are effective.
There have been no significant  changes in the Company's internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
the date the Company carried out this evaluation.

     Disclosure  controls and procedures are controls and other  procedures that
are  designed  to  ensure  that  information  required  to be  disclosed  in the
Company's  reports  filed or  submitted  under  the  Exchange  Act is  recorded,
processed,  summarized  and reported  within the time  periods  specified in the
Securities and Exchange  Commission's rules and forms.  Disclosure  controls and
procedures  include controls and procedures  designed to ensure that information
required to be  disclosed  in Company  reports  filed under the  Exchange Act is
accumulated  and  communicated  to  management,  including the  Company's  Chief
Executive   Officer  as  appropriate,   to  allow  timely  decisions   regarding
disclosures.

     The Company has confidence in its internal  controls and procedures and has
expanded  its efforts to develop and improve  its  controls.  Nevertheless,  the
Company's  management,  including the Chief Executive  Officer,  does not expect
that the Company's disclosure procedures and controls, or its internal controls,
will  necessarily  prevent all error or intentional  fraud. An internal  control
system, no matter how well conceived and operated,  can provide only reasonable,
but not absolute,  assurance that the  objectives of such internal  controls are


                                       31
<PAGE>

Item 14  - Controls and Procedures - continued

met.  Further,  the design of an internal  control  system must reflect the fact
that the  Company  is subject  to  resource  constraints,  and the  benefits  of
controls  must be  considered  relative to their costs.  Because of the inherent
limitations  in all internal  control  systems,  no  evaluation  of controls can
provide  absolute  assurance  that all internal  control  issues or instances of
fraud, if any, within the Company be detected.

ITEM 15. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following is a summary of the fees billed to us by EPSTEIN, WEBER & CONOVER,
PLC for professional services rendered for the years ended December 31, 2004 and
2003:

Service                   2004                2003
---------------------------------------------------
Audit Fees             $18,103             $14,565
All Other Fees              -                    -
---------------------------------------------------
Total                  $18,103             $14,565
===================================================

AUDIT FEES - Consists of fees billed for professional  services rendered for the
audits of our financial statements,  reviews of our interim financial statements
included in quarterly  reports,  services  performed in connection  with filings
with the Securities & Exchange  Commission and related comfort letters and other
services  that  are  normally  provided  by  EPSTEIN,  WEBER &  CONOVER,  PLC in
connection with statutory and regulatory filings or engagements.

TAX FEES - Consists of fees billed for professional services for tax compliance,
tax  advice  and tax  planning.  These  services  include  assistance  regarding
federal,  state and local tax compliance  and  consultation  in connection  with
various transactions and acquisitions.



AUDIT  COMMITTEE  PRE-APPROVAL OF AUDIT AND  PERMISSIBLE  NON-AUDIT  SERVICES OF
INDEPENDENT AUDITORS

     The Audit  Committee is to  pre-approve  all audit and  non-audit  services
provided by the independent auditors. These services may include audit services,
audit  related  services,  tax services and other  services as allowed by law or
regulation.  Pre-approval  is  generally  provided  for up to one  year  and any
pre-approval  is detailed as to the  particular  service or category of services
and is generally  subject to a specifically  approved  amount.  The  independent
auditors  and  management  are  required  to  periodically  report  to the Audit
Committee regarding the extent of services provided by the independent  auditors
in accordance  with this  pre-approval  and the fees incurred to date. The Audit
Committee may also pre-approve particular services on a case-by-case basis.

                                       32
<PAGE>

                                  CERTIFICATION
                                  -------------


                                   SIGNATURES

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

                        INTERNAL HYDRO INTERNATIONAL INC.




By:   /s/ CRAIG A. HUFFMAN
 ---------------------------
          Craig A. Huffman


CHIEF EXECUTIVE OFFICER


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




       Signature                   Title                            Date

    /s/ CRAIG A. HUFFMAN
--------------------------
        Craig A. Huffman, Chief Executive Officer     May 12, 2005

                                       33
<PAGE>


Exhibit 31.1 CERTIFICATIONS

I, Craig A. Huffman,  certify, pursuant to Rule 13a-4 of the Securities Exchange
Act of 1934,  as adopted  pursuant to Section 302 of the  Sarbanes-Oxley  Act of
2002,  with respect to the Annual Report of Internal Hydro  International,  Inc.
("IHDR") on Form 10-KSB for the year ended December 31, 2004 ("Report") that:

(1) I have reviewed this Report;

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

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

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

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

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

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

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

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

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

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





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


                                       34
<PAGE>


Exhibit 32.1
                        INTERNAL HYDRO INTERNATIONAL INC.
                                CERTIFICATION OF
                             CHIEF EXECUTIVE OFFICER
                       PURSUANT TO18 U.S.C. SECTION 1350,
                       AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002

I, Craig  Huffman,  solely for the purpose of complying  with 18 U.S.C.  Section
1350,  as adopted  pursuant  to Section 906 of the  Sarbanes-Oxley  Act of 2002,
hereby   certify  that  to  my  knowledge   Annual  Report  of  Internal   Hydro
International, Inc. ("IHDR") on Form 10-KSB for the year ended December 31, 2004
("Report") fully complies with the requirements of Section 13(a) or 15(d) of the
Securities  Exchange  Act of 1934 and that  information  contained  in such Form
10-QSB  fairly  presents in all material  respects the  financial  condition and
results of operations of Internal Hydro International, Inc.



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

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