**SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 
 **FORM
        10-KSB**
 
 **o** **ANNUAL
        REPORT UNDER SECTION 13 OR 15(d)** **OF
        THE SECURITIES EXCHANGE ACT OF 1934**
 
 **FOR
        THE FISCAL YEAR ENDED DECEMBER 31, 2006**
 
 333-141035
 (Commission
        file number)
  
 **RENEWABLE
        ENERGY RESOURCES INC.**
 (Name
        of
        the small business issuer in its charter.)
 Florida
                88-0409143(State
                    or other jurisdiction of incorporation or organization)
                (IRS
                    Employer  Identification
                    No.)
 
  **334
        S. HYDE PARK AVE., TAMPA, FLORIDA 33606**
 (Address
        of principal executive offices) (Zip Code)
 
 **813-****944-3185**
 (Issuer's
        telephone number)
 
 Internal
        Hydro International, Inc.
 (Former
        name, former address and former fiscal year, if changed since last
        report)
 
 **SECURITIES
        REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE**
 
 **SECURITIES
        REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: 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 o
 
 Indicate
        by check mark if there is no disclosure of delinquent filers in response
        to Item
        405 of Regulation S-B 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. x
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).
 Yes
o
        No x
 
 Revenue
        for the year ended December 31, 2006: $0.00
 
 As
        of
        March 15, 2007, there were 155,930,961 shares of common stock and 885,180
        shares
        of class "A" preferred stock issued and outstanding. with an aggregate market
        value of $8,968,782 as of the close of the market on March 15,
        2007.
 1
 **TABLE
                    OF CONTENTS**
                Page**PART
                    I**Item
                    1.
                Description
                    of Business
                3Item
                    2.
                Description
                    of Property
                6Item
                    3.
                Legal
                    Proceedings
                6Item
                    4.
                Submission
                    of Matters to a Vote of Security Holders
                7**PART
                    II**Item
                    5.
                Market
                    for Registrant’s Common Equity and Related Stockholder Matters And Small
                    Business Issuer Purchase of Equity Securities
                7Item
                    6.
                Management's
                    Discussion and Analysis or Plan of Operation
                8Item
                    7.
                Financial
                    Statements
                12Item
                    8.
                Changes
                    in and Disagreements With Accountants on Accounting
                    and  Financial Disclosure
                27Item
                    8A
                Controls
                    and Procedures
                27Item
                    8B
                Other
                    Information
                27**PART
                    III**Item
                    9.
                Directors,
                    Executive Officers, Promoters, Control Persons and;  Corporate
                    Governance; Compliance with Section 16(a) of the Exchange
                    Act
                27Item
                    10.
                Executive
                    Compensation
                30Item
                    11.
                Security
                    Ownership of Certain Beneficial Owners and Related Stockholder
                    Matter
                32Item
                    12.
                Certain
                    Relationships and Related Transactions, and Director
                    Independence
                33Item
                    13.
                Exhibits
                34Item
                    14.
                Principal
                    Accountant Fees and Services
                35SIGNATURES
                36
 2
 **PART
        I**
 
 
 
 **ITEM
        1. DESCRIPTION OF BUSINESS**
 
  **GENERAL
        INFORMATION ABOUT RENEWABLE ENERGY RESOURCES**
  Renewable
        Energy Resources, Inc. (the “Company”) was organized on December 31, 1996 as
        Tel-Voice Communications, Inc., a Nevada Corporation. On January 6, 2003,
        the
        Company changed its name to Home Services International, Inc. On January
        2,
        2004, we entered into a merger agreement with Internal Command International,
        Inc. and on January 13, 2004, the name of the Company was changed to Internal
        Hydro International, Inc. Our domicile was moved to Florida on February 4,
        2004.
        On February 20, 2007, we changed our name to Renewable Energy Resources,
        Inc. We
        are a publicly traded company listed on the OTC Electronic Bulletin Board
        under
        the symbol "RENW". Our offices are located at 334 S. Hyde Park Ave., Tampa,
        Florida 33606. Our website is www.renw.com .
 
 **HISTORY
        OF COMPANY**
 
 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. From
        1996-2000, Tel-Voice was a development stage company with no business activity.
        On June 30, 2000, Tel-Voice acquired Smartdotcom, Inc. ("SDC") in a transaction
        accounted for as a reverse merger. The Company retained the name Tel-Voice
        Communications, Inc. SDC had developed a technology that provided private
        electronic networks for labor unions and integrated communities, both of
        which
        included subscribers of the unions and communities. SDC intended to provide
        the
        hardware, software and technical support required to setup and maintain the
        networks; however, SDC was never able to grow due to liquidity
        issues.
 
 In
        December 2002, we addressed the liquidity problems, discontinued the operations
        of SDC and determined that we would abandon this business plan. On December
        16,
        2002, we closed a stock for debt exchange with our creditors effective on
        December 11, 2002 whereby all of the outstanding debt was converted to
        unregistered common stock at a conversion rate of one (1) share of common
        stock
        for each $0.45 of debt. In addition, on January 10, 2003, a majority of the
        shareholders approved (i) a reverse split of 28.9 shares of the old common
        stock
        for 1 share of new common stock effective January 13, 2003, (ii) the acquisition
        of a private entity name Home Services, Inc. and (iii) a name change to Home
        Services International, Inc.
 
 Home
        Services International, Inc. (“HSVI”) intended to act as a holding company for
        service businesses related to home building and home buying that wanted to
        expand into national markets. HSVI intended to acquire, establish joint ventures
        and develop such businesses.
 
 However,
        HSVI was presented with a business plan for a unique alternative energy
        technology by the management of Internal Command International (“ICI”), a
        Florida based private entity. HSVI felt that the Energy Commander technology
        for
        low impact hydro power production presented a unique opportunity. HSVI saw
        ICI’s
        technology as fulfilling a unique niche in the energy market. Thus, HSVI
        sought
        to acquire the technology and related expertise through the reverse merger
        process.
 
 On
        January 2, 2004, we entered into a merger agreement with HSVI. HSVI issued
        27,500,000 shares of its Series A Preferred stock to the shareholders of
        ICI. In
        connection with this acquisition, the Company’s name was changed to Internal
        Hydro International, Inc. (“IHDR”). On February 4, 2004, the Company’s domicile
        was changed to Florida. ICI was not a related party.
 
 As
        a
        result of the merger transaction with HSVI, the former Company stockholders
        obtained control of HSVI's voting stock. For financial accounting purposes,
        the
        acquisition was a reverse acquisition of HSVI, under the purchase method
        of
        accounting, and was treated as a recapitalization with the Company as the
        acquirer.
 
 On
        February 20, 2007 the Company changed our name to Renewable Energy Resources,
        Inc. We are a publicly traded company listed on the OTC Electronic Bulletin
        Board under the symbol "RENW". The symbol and name change reflect the Company’s
        broader range of business endeavors to include the development of energy,
        green
        energy and biofuel projects in addition to the production, marketing and
        sales
        of the Energy Commander V.
  3
  ITEM
        1. DESCRIPTION OF BUSINESS -
        continued
  **BUSINESS
        STRATEGY**
 
 We
        are a
        development stage enterprise. We intend to manufacture and distribute
        alternative energy products that use water pressure flow to generate
        electricity. We are currently finalizing production units of the Energy
        Commander Version Five ("EC V") low impact hydro units. We entered into an
        a
        Licensing, Joint Venture Agreement, and Manufacturing Agreement on October
        12,
        2005 with Regent Machine Products, LLC for the exclusive rights to the
        HydroCam/EC V technology developed by Regent Machine Products, LLC. Anthony
        Pecoraro, our former Chairman of the Board of Directors and former Vice
        President of New Technology Development, is the Vice President and Co-Founder
        of
        Regent Machine Products, LLC.
 
 We
        have
        now entered into the preproduction and fielding testing phase of our business
        plan. We anticipate producing ten EC V units in the next few months. These
        units
        will be deployed in North America and Europe in applications with natural
        water
        flows such as pipelines, rivers, aqueducts and dams. Additionally, we are
        identifying alternative energy technologies that we can license or acquire
        as
        additional revenue generating divisions.
  Manufacture
        of the first EC V units will be done by our joint venture partner, Cm2, located
        in Terni, Italy, about one hour north of Rome. Cm2 manufactures large industrial
        electrical components for utilities and other industries, including
        transformers, VM and LV electrical switchboards, auxiliaries and conduits
        for
        big transformers, cooling ducts, conduit bars, motors and generators. With
        on
        staff engineers, marketing and full production capabilities, Cm2 is well
        suited
        to handle the Energy Commander technology. Cm2 is ISO 9001 certified, and
        IQ NET
        certified for the production, maintenance and installation of all electrical
        systems, as well as maintaining certifications in the same for quality control.
        RINA (Italian Air and Shipping Registry) certifies that Cm2 works in accordance
        with ISO 9001 quality regulations in the making of the following products
        process services: Planning, production, installation and assistance of civil
        and
        industrial technological systems for electric, electronic and mechanical
        sectors. Cm2's clients include Siemens, Colgate Palmolive Europe, Alitalia
        and
        every large Italian utility.
  Cm2
        has
        dedicated 800,000 sq. foot for hosting the final development and starting
        the
        production line for the EC V. Cm2 has also reached an agreement with
        Politecnico, one of the foremost Italian universities, for its endorsement
        of
        the technology under a transfer plan that should assist Cm2 in obtaining
        European Union (EU) grants, and contributions from the Italian state and
        from
        the regional governments.
  We
        have a
        permanent assignment of the patent for the Energy Commander technology from
        the
        inventor, Rianey Nelson. Other intellectual property patents on the new
        technology will be generated into patent pending status before and commensurate
        with fielding. Additional patents will, in the opinion of management, be
        generated from improvements in the technology.
 
 The
        EC V
        has several advantages over all other alternative energy technologies. The
        EC V
        system represents the first time, to our knowledge, that a technology used
        the
        positive displacement of water pressure to create mechanical force to create
        electricity. The advantages of the EC are numerous. Primarily, the system
        is
        designed for installation to take advantage of waste flows of water. Therefore,
        the cost of the energy to produce electricity will be virtually, if not
        literally, free. Second, the EC units will take up very little space; an
        EC unit
        takes up 1/100 the space of a solar array to gain the same amount of electrical
        output. Third, the system will sell for approximately $45,000, or $1500.00
        per
        Kw, which is competitive with other power generation devices. This means
        either
        high profit or low electrical cost making for a more competitive market
        entry.
 
 The
        EC
        has no direct competition. Solar, wind, biomass and large flow hydro-power
        sources are much different than the EC technology, and these alternative
        energy
        sources can co-exist with the EC V. We are not competing with these segments
        because our source of power is different than solar, wind, geothermal (although
        the system can use geothermal outlets as power sources) or biomass. The EC
        V
        technology is related to traditional hydropower only in the sense that it
        can
        use water flows; however, the flows of water necessary for traditional
        hydropower are much greater—our technology is low flow (typically a six-inch
        pipe is connected to the unit).
 
 Our
        goal
        is to become a major contributor to the renewable energy segment of the United
        States and European economies. The demand for alternative energy sources
        has
        increased significantly as oil prices continue to remain high. Our EC technology
        provides reliable electricity at a lower cost than current alternatives,
        and
        does so with free flows of wasted water or gas.
 
 In
        today’s energy and renewable energy market, the positions of the players have
        stagnated. The renewable energy market has hinged around the six per cent
        mark
        for a number of years. We are targeting customers and industries with high
        electric utility costs and access to flow pressures of gas or fluid. We are
        placing special emphasis on the textile, oil and gas refining and drilling,
        home
        development, agricultural, and poultry, all of which have communicated great
        interest in placement of units. We
        are
        also targeting municipal, county, state and federal government facilities,
        including the U.S. military.
  4
  ITEM
        1.
        DESCRIPTION OF BUSINESS - continued
  The
        EC
        technology will have many applications in rural and third world areas. In
        the
        United States alone, there are over 70,000 dams that do not produce electricity,
        but many are capable of doing so with no environmental impact. The technology
        has numerous applications in third world areas where ready access to natural
        flow exists. Typically these areas will not support conventional hydropower
        systems but will support constant 24 hour a day power from the EC.
 
 We
        will
        market the EC V system through a distributor network. We are also seeking
        to
        acquire similar technologies that fit well with the EC V.
 
 However,
        since inception, we have suffered recurring losses from operations and have
        been
        dependent on existing stockholders and new investors to provide the cash
        resources to sustain our operations.
 
 Our
        long-term viability as a going concern is dependent on certain key factors,
        as
        follows:
 
 -
              Our
                  ability to continue to obtain sources of outside
                  financing.
 
 -
              Our
                  ability to increase profitability and sustain a cash flow level
                  that will
                  ensure support for continuing
                  operations.
 
 **ACQUSITIONS
        OF SIMILAR TECHNOLOGIES**
 
 CM2
        AGREEMENT:
 
 Cm2
        is a
        producer and supplier of electrical systems for European utilities and
        industrial users. In
        February 2005, *w* e ** entered
        into a joint venture agreement for the production, distribution and sale
        of our
        Energy Commander units to the (EU). Under the performance based contract, Cm2
        will
        manufacture units in Italy for distribution, sale, and lease into Europe
        as well
        as provide engineering, production, marketing, distribution, and service.
        We
        have no significant capital expenditure requirements in the agreement and
        will
        receive revenue in various forms.
 
 Cm2
        will
        distribute and service the units in Europe through a joint venture entity.
        Energy credits in the European Union are expected to be about 3 to 10 times
        higher than for units placed in the U.S. Cm2’s experience in the European energy
        market and ability to produce, sell, and maintain the units, gives us a strong
        partner for the EU.
 
 KINETIC
        ENERGY
 
 On
        July
        8, 2004, we entered into a strategic partnership agreement with Kinetic Energy
        Systems, Inc. (“Kinetic”), a privately held Florida Corporation. Kinetic has
        developed patented hydro and wind technologies, including the Hydrokinetic
        Generator, Offshore Energy Platform, KESC Bowsprit Generator and the KESC
        Tidal
        Generator. These technologies generate electrical power or hydrogen using
        kinetic energy from moving water such as tides and wind. We issued 1,250,000
        shares of treasury stock for 20% of the shares of the private company. We
        also
        agreed to assist in the development of Kinetic’s technology and have a license
        for the underwater and over water power generation. The Hydrokinetic Generator
        is at the prototype and engineering stage. The Offshore Energy Platform is
        at
        the prototype and engineering stage. The KESC Bowsprit Generator at the
        prototype and engineering stage. The Bowsprit is being designed for prototyping
        in the dual role of hydrogen production. The KESC Tidal Generator is at the
        engineering and prototype stage.
 
 We
        will
        help market and develop Kinetic products in Europe and the United States.
        Our
        support of Kinetic is tied to our capital ability to do so. We will help
        introduce Kinetic’s products to European entities for development and
        marketing.
 
 TRITON
        TECHNOLOGIES :
 
 In
        April
        2005, we entered into a marketing and distribution agreement with Triton
        Technologies of Reston, Virginia. This agreement provided Triton the rights
        to
        market the Energy Commander technology. Under the agreement, Triton had
        responsibilities for the capital support of the Energy Commander IV development
        and engineering.
  5
  ITEM
        1.
        DESCRIPTION OF BUSINESS - continued
  Triton
        ceased to provide financial support for the EC IV a few months after entering
        into the agreement. We have attempted to contact representatives of Triton
        but
        to no avail. We sent a termination letter by registered mail to the last
        known
        address of the company.
 
 THE
        SPRINGFIELD ENERGY PROJECT
 
 On
        September 25, 2006, we entered into an agreement with Wastech, Inc. (WTCH.PK)
        to
        form the Springfield Energy Project (“SEP”). SEP is a joint venture with WTCH to
        acquire an old coalmine complex in Illinois. Over many years, million of
        tons of
        waste coal were deposited in a slurry area on the site. Other coal waste
        was
        pushed into gob piles. (Gob is the waste coal from bituminous coal mining
        regions). The slurry area is not covered or reclaimed because the coal fines
        were disposed before current reclamation regulations were in effect. The
        site’s
        permit allows the removal of the coal fines and also the disposal of coal
        combustion waste (fly ash) at the site. The sale of coal fines and the
        collection of tip fees to dispose of ash is the primary source of revenue
        for
        the project.
 
 Due
        to
        new scrubber technology at electrical generating facilities, coal fines have
        become a desirable commodity. The coarse, free-flowing coal fines in the
        slurry
        area can be sold as fuel in fluidized bed boilers or specially designed
        pulverized coal boilers. Potential customers for the coal fines are located
        within a short distance of the project. Negotiations with potential customers
        for long-term coal purchase agreements and ash disposal agreements are currently
        underway.
 
 SEP
        is
        currently in the financing stage and we are negotiating with multiple sources
        to
        provide the funding.
 
 **GOING
        CONCERN RISK**
 
 We
        have
        had and could have losses, deficits and deficiencies in liquidity, which
        could
        impair our ability to continue as a going concern.
  In
        our
        consolidated financial statements, our independent auditors have indicated
        that
        certain factors raise substantial doubt about our ability to continue as
        a going
        concern. Since our inception, we have suffered recurring losses from operations
        and have been dependent on existing stockholders and new investors to provide
        the cash resources to sustain its operations. The above factors represent
        continue to raise doubt about our ability to fully establish ourselves as
        a
        going concern.
  **IMPLEMENTATION
        OF BUSINESS STRATEGY DEPENDENT ON ADDITIONAL FINANCING**
  We
        must
        obtain financing to fund the expansion of operations. Such outside financing
        must be provided from the sale of equity or third party financing. Further,
        the
        sale of equity securities will dilute our existing stockholders' interests,
        and
        borrowings from third parties could result in our assets being pledged as
        collateral. While we are currently able to fund all basic operating costs,
        it is
        possible our operations could be restricted if loan terms increase our debt
        service requirements. There is no assurance that we can obtain financing
        on
        favorable terms.
 
 **EMPLOYEES**
  As
        of
        December 31, 2006, we had 3 full time consultants. Additionally, we utilize
        consultants on an as needed basis.
 
 **ITEM
        2. DESCRIPTION OF PROPERTY**
 
 Our
        principal executive offices are located at 334 S. Hyde Park Ave., Tampa,
        FL
        33606 with approximately 1500 square feet of office space rented from the
        former
        Chairman of the Board of Directors, Mark Pena.
 
 Management
        will continue to assess our needs for office space as we continue to expand
        our
        business.
 
 **ITEM
        3. LEGAL PROCEEDINGS**
 
 
 On
        March
        14, 2007, a lawsuit was filed in the Circuit Court of the Thirteenth Judicial
        Circuit of the State of Florida, in and for Hillsborough County Circuit Civil
        Division (Case No.: 07-003056). The plaintiff in the case is Lior Segal,
        the
        former CFO of Renewable Energy Resources, Inc. and the defendant is Renewable
        Energy Resources, Inc.
  6
  ITEM
        3. LEGAL PROCEEDINGS - continued
  Mr.
        Segal
        claims he is owed compensation of $4,500 for his work while employed by
        Renewable Energy Resources, Inc. and in addition, he had taken restricted
        shares
        of stock in lieu of cash compensation and since he is no longer with the
        company, would like to return the restricted shares of stock and receive
        $22,500
        is cash compensation in lieu of the restricted stock.
 
 Management
        believes that this case is without merit and the $26,500 is not accrued in
        the
        financial statements as management has determined that this payment currently
        is
        not yet probable.
 
 
 **ITEM
        4. SUBMISSION OR MATTERS TO A VOTE OF SECURITY HOLDERS**
 
 None.
  
 
 **PART
        II**
 
 **ITEM
        5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS**
 
 We
        first
        started trading on June 13, 2002 under the name Tel-Voice Communication,
        Inc. on
        the Over The Counter Bulletin Board (“OTCBB”). In January, 2002, we started
        trading under the name Home Services International, Inc. under the symbol
        “HSVI.” On
        January 2, 2004, Internal Command International, Inc. (a private company)
        merged
        with Home Services International, Inc. (a publicly traded company under symbol
        of HSVI) to become Internal Hydro International, Inc. On January 16, 2004,
        the
        trading symbol was changed from HSVI to IHDR.
 
 On
        July
        27, 2004, the Board of Directors approved a 5 to 1 stock split of our common
        and
        preferred stock to become effective September 10, 2004. The
        stock
        split increased the number of outstanding shares of common stock from 2,875,279
        to 14,376,395 and the number of outstanding shares of preferred stock from
        5,750,000 to 28,750,000 as of September 10, 2004. All references to our common
        and preferred stock in the financial statements have been restated to reflect
        the stock split .
 
 On
        February 20, 2007, we changed our name to Renewable Energy Resources, Inc.
        and
        obtained a new trading symbol on the OTC Bulletin Board of “RENW.”
 
 As
        of
        March 15, 2007, we had 155,930,961 shares of common stock outstanding and
        885,180 shares of class “A” preferred stock outstanding.
  Set
        forth
        below are the high and low closing bid prices for our common stock as reported
        on the OTC Bulletin Board for the last two fiscal years.
 
 
 Quarter
              
              
              High
              
              
              Low2005First
                  Quarter
              
              $
              0.2
              
              $
              0.08Second
                  Quarter
              
              $
              0.25
              
              $
              0.08Third
                  Quarter
              
              $
              0.13
              
              $
              0.051Fourth
                  Quarter
              
              $
              0.1
              
              $
              0.032006First
                  Quarter
              
              $
              0.6
              
              $
              0.04Second
                  Quarter
              
              $
              0.57
              
              $
              0.13Third
                  Quarter
              
              $
              0.145
              
              $
              0.06Fourth
                  Quarter
              
              $
              0.225
              
              $
              0.085
 
 
 The
        above
        quotations represent inter-dealer quotations without retail markup, markdown
        or
        commissions and may not represent actual transactions.
 
 The
        bid
        price of our common stock was $.067 per share on March 15, 2007.
  7
  ITEM
        5.
        MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS -
        continued
  **RECORD
        HOLDERS**
 
 As
        of
        March 15, 2007, we had 1285 shareholders of record.
 
 **SECURITIES
        AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS FOR FISCAL YEAR ENDED
        DECEMBER 31, 2006**
 
 Number
                  of Securities to be issued upon exercise of outstanding options,
                  warrants
                  and rights
              Weighted-average
                  price of outstanding options warrants and rights
              Number
                  of Securities
                remaining
                  available for future issuance under equity compensation plans(excluding
                  securities reflected in column (a))(a)
              (b)
              (c)Equity
                  compensation plans approved by security holders
              0
              0
              0Equity
                  compensation plans not approved by security holders
              0
              0
              0TOTAL
              0
              0
              0
 
 **OUR
        TRANSFER AGENT IS:**
 
 Island
        Stock Transfer
 100
        2 nd Avenue
        South #104 N.
 St.
        Petersburg, Florida 33701
 
 **DIVIDENDS**
 
 We
        have
        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**
  During
        the last quarter of our fiscal year ended December 31, 2006, we completed
        the
        following transactions in reliance upon exemptions from registration under
        the
        Securities Act of 1933, as amended (the "Act") as provided in Section 4(2)
        thereof.  Each certificate issued for unregistered securities contained a
        legend stating that the securities have not been registered under the Act
        and
        setting forth the restrictions on the transferability and the sale of the
        securities.  None of the transactions involved a public offering and no
        commissions were paid.  We believe that each person had knowledge and
        experience in financial and business matters that allowed them to evaluate
        the
        merits and risks of our securities.  We believe that each person was
        knowledgeable about our operations and financial condition.
  **October
        2006**
 In
        October 2006, we issued 153,333 shares of our restricted common stock valued
        at
        $.085 per share to four individuals unrelated to the company, in payment
        of
        short term loans totaling $13,000. Pursuant
        to the terms of the loans, if the loan was not repaid within ten days, then
        shares of restricted common stock were to be issued to the lender equal to
        the
        amount of the loan. The value of the shares was calculated as of the date
        of the
        loan. The shares were discounted approximately 50%.
 
 **ITEM
        6. MANAGEMENT’S DISCUSSIONS AND ANALYSIS OR PLAN OF
        OPERATIONS**
 
 The
        following discussion and analysis should be read in conjunction with our
        consolidated financial statements and related footnotes for the year ended
        December 31, 2006 included in this Annual Report.
  8
  ITEM
        6. MANAGEMENT’S DISCUSSIONS AND ANALYSIS OR PLAN
        OF OPERATIONS - continued
  **GENERAL**
 
 Renewable
        Energy Resources, Inc. (the "Company") was organized on December 31, 1996
        as
        Tel-Voice Communications, Inc. as a Nevada Corporation. On January 6, 2003,
        we
        changed our name to Home Services International, Inc. On January 2, 2004,
        the
        Company entered into a merger agreement and on January 13, 2004, the name
        was
        changed to Internal Hydro International, Inc. The Company was re-domiciled
        to
        Florida on February 4, 2004. On February 20, 2007, we changed our name to
        Renewable Energy Resources, Inc. We are a publicly traded company listed
        on the
        OTC Electronic Bulletin Board under the symbol “RENW”. Our offices are located
        at 334 S. Hyde Park Ave., Tampa, Florida 33606. Our website is www.renw.com .
 
 **RESULTS
        OF OPERATIONS**
 
 Our
        operations during 2006 concentrated on the development of the EC V prototype.
        In
        2005, we turned over the development of the EC IV to Triton Technologies.
        Management felt the sales potential of the EC V warranted this shift in our
        focus. The goal was to proceed along parallel paths: Triton would finalize
        the
        development of the EC IV and take over the marketing of the product; and
        we
        would develop the EC V and market this product.
 
 The
        EC V
        is smaller than the EC IV but capable of producing the same electrical output.
        The versions of the EC IV produced were four and six cylinder in line engines.
        The EC V is a 12-cylinder radial system that uses “slices” that are combined to
        produce 30 Kw with a standard four slice array. Like the EC IV, the EC V
        is
        designed to accept a 65 p.s.i. flow. Unlike the EC IV, the radial cylinders
        on
        the EC V work on a common cam or shaft to drive a generator.
 
 Progress
        on completing the EC V prototype was slower than anticipated. Some of the
        delay
        can be attributed to the sophisticated machining required for the radial
        design.
        Some of the delay occurred because of the availability of funding. Additionally,
        when the prototype was tested, some design issues materialized. These issues
        were resolved and the prototype tested during the last quarter of the year.
        During testing the EC V showed itself to be robust and hardy—necessary for the
        type of installations contemplated by us.
 
 The
        arrangement with Triton Technologies to finish the development of the EC
        IV did
        not work out. We sent a termination letter to Triton and will develop the
        EC IV
        in line system in house. Discussions to restart work on the EC IV are currently
        underway with the original inventor, Rianey Nelson.
 
 In
        January 2007, the EC V prototype was shipped to our production partner, Cm2,
        in
        Italy. The prototype will undergo further design review with the goal of
        producing 10 commercial units during 2007. Some commercial units will remain
        in
        Europe for placement by Cm2 and the remaining units will be shipped to us
        for
        placement in the U.S.
 
 During
        2006, we also sought to acquire technologies that fit well with our philosophy
        for renewable energy products. We explored technologies including tire
        remediation, ethanol and bio-diesel production, clean water technologies,
        hazardous waste technologies, and other renewable and critical use
        technologies.
 
 **COMPARISON
        OF YEAR ENDED DECEMBER 31, 2006 TO YEAR ENDED DECEMBER 31,
        2005**
 
 Revenues
        were $0 in both 2005 and 2006. The
        $4,232,051 increase in the net loss to $7,045,255 for the year ended December
        31, 2006 from $2,813,204 for the year ended December 31, 2005 is due to a
        few
        factors. Selling, general & administrative expenses increased by $4,888,786
        to $6,342,034 for the year ended December 31, 2006 from $1,453,248 for the
        year
        ended December 31, 2005 primarily due to an increase in the issuance of common
        stock for consulting services paid in order to get the product through the
        final
        stages of development. Research & development costs increased by $274,736 to
        $691,993 for the year ended December 31, 2006 from $417,254 for the year
        ended
        December 31, 2005. Research & development costs increased as the company
        worked to meet a key goal, the refinement of the technology to prove the
        large
        scale power potential of the EC technology.
 
 **LIQUIDITY
        AND CAPITAL RESOURCES**
 
 We
        intend
        to continue development of the Energy Commander systems but will need additional
        private placements, debt financing or equity investment in order to participate
        fully and at the levels intended. There can be no assurance that any of the
        plans developed will produce cash flows sufficient to ensure long-term
        viability.
  9
  ITEM
        6.
        MANAGEMENT’S DISCUSSIONS AND ANALYSIS OR PLAN OF OPERATIONS -
        continued
  We
        have
        incurred additional deficits in cash flow from operating activities. These
        deficits have been funded from loans from significant shareholders. We are
        in
        discussions with several capital organizations with a view to selling more
        common and preferred shares as a means of financing future capital needs.
        We
        anticipate it will be successful in these discussions; however there can
        be no
        assurances that we will be successful and will produce cash flows sufficient
        to
        ensure its long-term viability.
 
 **2007
        OUTLOOK**
 
 During
        January, we commenced a leadership transition. A new Board of Directors was
        appointed on January 17, 2007. We also retained Kenneth Brown as our new
        Chief
        Executive Officer and R. Edward Hart as our new Chief Operating Officer.
        These
        changes were made to allow us to move from a development phase company into
        a
        commercially operating entity generating revenue. Additionally, given the
        demand
        for alternatives to traditional fossil fuel energy from government, industry
        and
        citizens, management decided to broaden our range of business activities
        within
        the alternative energy space. We believe that the project development experience
        of new management will allow it to participate in a wide array of renewable
        energy projects such as biofuels development and biomass power
        projects.
 
 We
        will
        continue the preproduction efforts and field testing of the EC V units. We
        expect as long as no unforeseen problems are encountered with the technology
        to
        have 10 EC V units produced by our production partner, Cm2, during the second
        half of the year. We are also restarting the development of the EC IV
        technology. Discussions are underway with the original inventor of the
        technology, Rianey Nelson, and funds will be budgeted for this
        endeavour.
 
 We
        are
        also looking at a number of renewable energy projects. As discussed in Item
        1,
        management anticipates that we will be able to close on the Springfield Energy
        Project and begin operations selling waste coal and disposing of fly ash.
        This
        project is currently in the financing stage and there is no guarantee that
        we
        will get the financing necessary for the project. We are also looking at
        biodiesel projects and bio-mass power plant projects. These projects are
        currently in the negotiation phase.
 
 Finally,
        as part of the business plan, management is also looking at companies or
        technologies to acquire or partner with that complement our business goals.
 
 **Forward
        looking statements**
 We
        are
        including the following cautionary statement in this Form 10-KSB to make
        applicable and take advantage of the safe harbor provision of the Private
        Securities Litigation Reform Act of 1995 for any forward-looking statements
        made
        by, or on behalf of, Renewable Energy Resources, Inc. Forward-looking statements
        include statements concerning plans, objectives, goals, strategies,
        expectations, future events or performance and underlying assumptions and
        other
        statements which are other than statements of historical facts. The statements
        contained herein and other information contained in this report may be based,
        in
        part, on management's estimates, projections, plans and judgments. These
        forward-looking statements are subject to certain risks and uncertainties
        that
        could cause actual results to differ materially from historical results or
        those
        anticipated. In this report, the words "anticipates", "believes", "expects",
        "intends", "future", "plans", "targets" and similar expressions identify
        forward-looking statements. Readers are cautioned not to place undue reliance
        on
        the forward-looking statements contained herein. We undertake no obligation
        to
        publicly revise these forward-looking statements to reflect events or
        circumstances that may arise after the date hereof. Our expectations, beliefs
        and projections are expressed in good faith and are believed to have a
        reasonable basis, including without limitations, management's examination
        of
        historical operating trends, data contained in our records and other data
        available from third parties, but there can be no assurance that management's
        expectations, beliefs or projections will result or be achieved or accomplished.
        In addition to other factors and matters discussed elsewhere herein, the
        following are important factors that could cause actual results to differ
        materially from those discussed in the forward-looking statements: our
        dependence on limited cash resources, dependence on certain key personnel
        within
        the Company, and the ability to raise additional capital; our ability to
        obtain
        acceptable forms and amounts of financing; the demand for, and price level
        of,
        our products and services; competitive factors; the ability to mitigate
        concentration of business in a small number of customers; the evolving industry
        and technology standards; the ability to protect proprietary technology;
        the
        dependence on key personnel; and our ability to efficiently manage our
        operations. Accordingly, actual results may differ, possibly materially,
        from
        the predictions contained herein.
 
  10
  ITEM
        6. MANAGEMENT’S DISCUSSIONS AND ANALYSIS OR PLAN
        OF OPERATIONS - continued
 **UNCERTAINTIES:**
 
 **Development
        Stage Company**
 
 We
        are in
        the development stage. There is no assurance that our activities will be
        profitable. The likelihood of our success must also be considered in light
        of
        the problems, expenses, difficulties, complications, delays and all of the
        inherent risks frequently encountered in the formation and operation of a
        relatively new business.
 
 **Going
        Concern**
 
 The
        financial statements are presented on the basis that we are a going concern,
        which contemplates the realization of assets and the satisfaction of liabilities
        in the normal course of business over a reasonable length of time.
 
 Management
        believes that current plans to expand the our operations and a combination
        of
        financing and capital raising plans will provide sufficient working capital
        to
        allow us to continue as a going concern.
 
 **Costs
        of Conducting Business**
 
 We
        will
        still incur costs for research and development; however, the major work on
        the
        EC V has been completed. Marketing efforts will be expanded as units become
        available. The ability to generate a profit depends, among other factors,
        on the
        amount of revenues from the sale of our products and our operating
        costs.
 
 **Technological
        Change**
 
 We
        expect
        that many new technologies and products will be introduced over the next
        several
        years. Our success will depend, among other things, on our ability to develop
        and maintain a competitively positioned technologically. There can be no
        assurance that we will have access to subsequently developed technologies
        by
        other persons. Technological advances by a competitor may result in our present
        or future products becoming noncompetitive or obsolete. We cannot be assured
        that competitors will not develop functionally similar or superior products,
        which event could have an adverse effect on our business.
 
 **Contracts**
 
 There
        can
        be no assurance that we will be able to obtain sufficient and suitable contracts
        for our business plan.
 
 **Fluctuations
        in Operating Results**
 
 Our
        revenues and results of operations may vary significantly in the future.
        Our
        revenues and results of operations are difficult to forecast and could be
        adversely affected by many factors, some of which are outside our control
        including, among others, the expected relatively long sales and implementation
        cycles for our products; the size and timing of individual license transactions
        and joint venture arrangements; seasonality of revenues; changes in the our
        operating expenses; changes in the mix of products sold; timing of introduction
        or enhancement of our products or our competitors; market acceptance of new
        products; technological changes in technology; personnel changes and
        difficulties in attracting and retaining qualified sales, marketing, technical
        and consulting personnel; changes in customers' budgeting cycles; quality
        control of products sold; and economic conditions generally and in specific
        industry segments.
 
 There
        can
        be no assurance that our products will achieve broad market acceptance or
        that
        we will be successful in marketing our products or enhancements thereto.
        In the
        event that our current or future competitors release new products that have
        more
        advanced features, offer better performance or are more price competitive
        than
        the our products, demand for the our products would decline. A decline in
        demand
        for, or market acceptance of, our products as a result of competition,
        technological change, or other factors would have material adverse effects
        on
        the our business, financial condition and results of operations.
 
 **Seasonality**
 
 We
        do not
        expect to experience material seasonal variations in revenues or operating
        costs.
  **Off
        balance sheet arrangements**
 
 For
        the
        year ended December 31, 2006, we did not have any off balance sheet
        transactions.


11





**ITEM
      7. FINANCIAL STATEMENTS**





The
      financial statements for this item begin on page F-1.




**TABLE
        OF CONTENTS**
 
 **PAGE**REPORT
                  OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
              **F-2**FINANCIAL
                  STATEMENTSBalance
                  Sheet A**s**
                  of December 31, 2006
              **F-3**Statements
                  of Operations For
                  the years ended December 31, 2006 and 2005
              **F-4**Statements
                  of Stockholders’ Equity (Deficit) For
                  the Years Ended December 31, 2006 and 2005
              **F-5**Statements
                  of Cash Flows For
                  the Years Ended December 31, 2006 and 2005
              **F-6**Notes
                  to Financial Statements
              **F-7-
                  F-15**






F-1
 12




**Report
        of Independent Registered Public Accounting Firm**
 
 
 
 To
        the
        Board of Directors
 Renewable
        Energy Resources, Inc.
 Tampa,
        Florida
 
 We
        have
        audited the balance sheet of Renewable Energy Resources, Inc. as of December
        31,
        2006 and the related statements of operations, statement of stockholders’
deficit and cash flows, for the year then ended, and for the period from
        inception to December 31, 2006. These financial statements are the
        responsibility of the Company's management. Our responsibility is to express
        an
        opinion on these financial statements based on our audit.
 
 We
        conducted our audit in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). 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 that our audit provided 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 Renewable Energy Resources,
        Inc. as
        of December 31, 2006 and the results of their operations and cash flows for
        the
        years then ended, and for the period from inception to December 31, 2006,
        in
        conformity with accounting principles generally accepted in the United States
        of
        America.
 
 The
        accompanying financial statements have been prepared assuming the Company
        will
        continue as a going concern. As discussed in Notes 1 and 2 to the financial
        statements, the Company suffered recurring losses from operations and has
        not
        yet realized any revenues. This raises substantial doubt about the Company’s
        ability to continue as a going concern. The financial statements do not include
        any adjustments that might result from the outcome of this uncertainty.
 
 
 
 /s/
        Baumann, Raymondo & Company PA
 Baumann,
        Raymondo & Company PA
 Tampa,
        Florida
 March
        27,
        2007




F-2
 13


**RENEWABLE
                  ENERGY RESOURCES, INC.****BALANCE
                  SHEET**(A
                  Development Stage Company)**As
                  of December 31, 2006****ASSETS****CURRENT
                  ASSETS**Cash
                  and Cash Equivalents
              
              $
              4,221Security
                  Deposit
              
              
              2,500Total
                  Current Assets
              
              
              6,721**PROPERTY
                  AND EQUIPMENT**Computers
                  and Equipment (net)
              
              
              13,885**OTHER
                  ASSETS**Investment-
                  Langley
              
              
              6,304Investment-
                  Kinetic Energy
              
              
              68,750License
              
              
              100,000Prepaid
                  Rent
              
              
              4,200Total
                  Other Assets
              
              
              193,139**Total
                  Assets**
              
              $
              199,860**LIABILITIES
                  & STOCKHOLDERS' EQUITY****CURRENT
                  LIABILITIES**Accounts
                  Payable
              
              $
              86,011Shareholder
                  Loans
              
              
              155,000Total
                  Current Liabilities
              
              
              241,011**OTHER
                  LIABILITIES**Debt
                  Under Negotiations
              
              
              906,879Commitments
                  and Contingencies
              
              
              -Total
                  Liabilities
              
              
              1,147,890**STOCKHOLDERS'
                  EQUITY**Common
                  Stock, $.001 par value, 200,000,000 Shares Authorized
              
              
              122,914122,913,547
                  Issued and OutstandingPreferred
                  Stock, $.001 par value, 70,000,000 Shares Authorized
              
              
              1,0561,055,180
                  Issued and OutstandingAdditional
                  Paid -in Capital
              
              
              12,581,087Accumulated
                  Comprehensive Loss
              
              
              (83,787
              )Accumulated
                  Deficit
              
              
              (13,569,300
              )Total
                  Stockholders' Equity
              
              
              (948,030
              )**Total
                  Liabilities & Equity**
              
              $
              199,860See
                  accompanying notes to audited financial statements which are an
                  integral
                  part of these financial
                  statements




F-3
 14




**RENEWABLE
                  ENERGY RESOURCES, INC.****STATEMENT
                  OF OPERATIONS**(A
                  Development Stage Company)For
                  the years ended December 31, 2006 and 2005**Accumulated****from****Date
                  of****For
                  the year**
              
              
              **For
                  the year**
              
              
              **Inception****ended**
              
              
              **ended**
              
              
              **Through****December
                  31, 2006**
              
              
              **December
                  31, 2005**
              
              
              **December
                  31, 2006**Net
                  Sales
              
              $
              -
              
              $
              -
              
              $
              -Cost
                  of Sales
              
              
              -
              
              
              -
              
              
              -Gross
                  Profit
              
              
              -
              
              
              -
              
              
              -Selling,
                  General & Administrative Expenses
              
              
              6,342,034
              
              
              1,453,248
              
              
              10,515,410Reasearch
                  And Development
              
              
              691,993
              
              
              417,257
              
              
              1,357,926Loss
                  from Operations
              
              
              7,034,027
              
              
              1,870,505
              
              
              11,873,336Loss
                  on
                  Sale of Securities
              
              
              -
              
              
              -
              
              
              697,237Permanent
                  Impairment Writedown onMarketable
                  securities
              
              
              -
              
              
              903,468
              
              
              903,468Interest
                  Expense
              
              
              11,228
              
              
              39,231
              
              
              95,259Net
                  Loss
              
              $
              7,045,255
              
              $
              2,813,204
              
              $
              13,569,300Basic
                  Net Loss Per Common Share
              
              $
              (0.08
              )
              $
              (0.07
              )Diluted
                  Net Loss Per Common Share
              
              $
              (0.08
              )
              $
              (0.07
              )Weighted
                  Average of Common SharesOutstanding
              
              
              87,708,593
              
              
              39,375,134See
                  accompanying notes to audited financial statements which are an
                  integral
                  part of these financial
                  statements






F-4
 15




**RENEWABLE
                  ENERGY RESOURCES, INC.**For
                  the Years Ended December 31, 2006 and 2005(A
                  Development Stage Company)**STATEMENTS
                  OF STOCKHOLDERS' DEFICIT****Additional**
              
              
              **Accumulated****Common
                  Stock**
              
              
              **Preferred
                  Stock**
              
              
              **Paid
                  -In**
              
              
              **Comprehensive**
              
              
              **Accumulated****Shares**
              
              
              $
              
              
              Shares
              
              
              $
              
              
              Capital
              
              
              **Loss**
              
              
              **Deficit**
              
              
              **Total**BALANCEDECEMBER
                  31, 2004
              
              
              18,218,127
              
              $
              18,218
              
              
              28,530,750
              
              $
              28,531
              
              $
              3,761,111
              
              $
              (771,362
              )
              $
              (3,710,840
              )
              $
              (674,342
              )Shares
                  Issued for Services
              
              
              14,193,398
              
              
              14,193
              
              
              
              
              
              
              
              
              1,218,374
              
              
              
              
              
              
              
              
              1,232,567Debt
                  Converted to Common Stock
              
              
              2,595,915
              
              
              2,596
              
              
              
              
              
              
              
              
              127,154
              
              
              
              
              
              
              
              
              129,750Conversion
                  of Preferred to Common Stock
              
              
              21,363,305
              
              
              21,363
              
              
              (21,363,305
              )
              
              (21,363
              )Issued
                  for Regent Contract
              
              
              7,400,000
              
              
              7,400
              
              
              
              
              
              
              
              
              288,600
              
              
              
              
              
              
              
              
              296,000Net
                  Loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (2,813,204
              )
              
              (2,813,204
              )Unrealized
                  Loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (223,889
              )
              
              
              
              
              (223,889
              )Permanent
                  Impairmentof
                  Marketable Securities
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              903,468
              
              
              
              
              
              903,468BALANCEDECEMBER
                  31, 2005
              
              
              63,770,745
              
              
              63,771
              
              
              7,167,445
              
              
              7,168
              
              
              5,395,239
              
              
              (91,783
              )
              
              (6,524,045
              )
              
              (1,149,650
              )Shares
                  Issued for Services
              
              
              42,312,753
              
              
              42,313
              
              
              
              
              
              
              
              
              5,866,589
              
              
              
              
              
              
              
              
              5,908,902Debt
                  Converted to Common Stock
              
              
              7,702,784
              
              
              7,703
              
              
              
              
              
              
              
              
              812,374
              
              
              
              
              
              
              
              
              820,077Conversion
                  of Preferred to Common Stock
              
              
              6,112,265
              
              
              6,112
              
              
              (6,112,265
              )
              
              (6,112
              )Issued
                  for Regent Contract
              
              
              3,015,000
              
              
              3,015
              
              
              
              
              
              
              
              
              506,885
              
              
              
              
              
              
              
              
              509,900Net
                  Loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (7,045,255
              )
              
              (7,045,255
              )Unrealized
                  Loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              7,996
              
              
              
              
              
              7,996BALANCEDECEMBER
                  31,2006
              
              
              122,913,547
              
              $
              122,914
              
              
              1,055,180
              
              $
              1,056
              
              $
              12,581,087
              
              $
              (83,787
              )
              $
              (13,569,300
              )
              $
              (948,030
              )See
                  accompanying notes to audited financial statements which are an
                  integral
                  part of these financial
                  statements




F-5
 16


**RENEWABLE
                    ENERGY RESOURCES, INC.****STATEMENT
                    OF CASH FLOWS**(A
                    Development Stage Company)For
                    the Years Ended December 31, 2006 and 2005**Accumulated
                    from****Date
                    of Inception****For
                    the Year Ended**
                
                
                **For
                    the Year Ended**
                
                
                **through****December
                    31, 2006**
                
                
                **December
                    31, 2005**
                
                
                **December
                    31, 2006****OPERATING
                    ACTIVITIES**Net
                    Loss
                
                $
                (7,045,255
                )
                $
                (2,813,204
                )
                $
                (13,569,299
                )Adjustments
                    To Reconcile Net Loss to Cash Used By Operating
                    Activities:Depreciation
                
                
                4,445
                
                
                3,700
                
                
                12,076Amortization
                    of Debt Discount
                
                
                -
                
                
                -
                
                
                40,000Issuance
                    of Shares for Interest
                
                
                6,196
                
                
                -
                
                
                6,196Issuance
                    of Common Shares for Services
                
                
                5,824,239
                
                
                1,232,568
                
                
                9,300,376Issuance
                    to Regent
                
                
                509,900
                
                
                296,000
                
                
                805,900Loss
                    on Sale of Securities
                
                
                -
                
                
                -
                
                
                697,237Permenent
                    Impairment
                
                
                -
                
                
                903,468
                
                
                903,468Changes
                    in Assets & LiabilitiesStock
                    Subscription
                
                
                -
                
                
                2,500
                
                
                -Stock
                    Loans Receivable
                
                
                -
                
                
                7,000
                
                
                7,000Contingent
                    Payroll Liability
                
                
                (26,624
                )
                
                37,987
                
                
                11,363Decrease
                    / Increase in AP & Accrued Liability
                
                
                (37,988
                )
                
                38,048
                
                
                40,991Cash
                    Provided (Used) By Operating Activitites
                
                
                (765,087
                )
                
                291,933
                
                
                (1,744,692
                )**INVESTING
                    ACTIVITIES**Purchase
                    of Fixed Assets
                
                
                (7,878
                )
                
                -
                
                
                (23,881
                )Cash
                    Proceeds on Sale of Marketable Securities
                
                
                7,820
                
                
                -
                
                
                201,208Licensing
                    Fee
                
                
                (100,000
                )
                
                -
                
                
                (100,000
                )Employee
                    Advances
                
                
                -
                
                
                -
                
                
                (7,000
                )Cash
                    Provided (Used) By Investing Activities
                
                
                (100,058
                )
                
                -
                
                
                70,327**FINANCING
                    ACTIVITIES**Proceeds
                    from notes payable
                
                
                -
                
                
                -
                
                
                60,000Net
                    Proceeds From Shareholder Advances
                
                
                871,265
                
                
                254,482
                
                
                1,621,086Security
                    deposit
                
                
                (2,500
                )
                
                -
                
                
                (2,500
                )Cash
                    Provided By Financing
                
                
                868,765
                
                
                254,482
                
                
                1,678,586Increase
                    in Cash and Cash Equivalents
                
                
                3,620
                
                
                37,451
                
                
                4,221**CASH
                    AND CASH EQUIVALENTS, beginning of year**
                
                
                600
                
                
                38,051
                
                
                -**CASH
                    AND CASH EQUIVALENTS, end of year**
                
                $
                4,221
                
                $
                600
                
                $
                4,221See
                    accompanying notes to audited financial statements which are
                    an integral
                    part of these financial
                    statements


F-6
 17
 
 **RENEWABLE
          ENERGY RESOURCES, INC.**
 **NOTES
        TO AUDITED FINANCIAL STATEMENTS**





NOTE
            1 -
            DESCRIPTION OF BUSINESS AND SIGNIGICANT ACCOUNTING POLICIES
 
 Background
            and Nature of Business
 
 RENEWABLE
            ENERGY RESOURCES, INC., a Development Stage Company, (formerly Internal
            Hydro
            International, Inc. (“IHII”) and 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
            January 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.
 
 Management
            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.
 
 Development
            Stage Enterprise
 
 The
            Company is considered a Development Stage Enterprise in that principal
            operations have not commenced and principal operations have not generated
            any
            revenue. During the development stage, the Company devotes most of its
            activities toward establishing business and raising capital.
 
 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 financial statements, the Company has had recurring losses
            and
            negative cash flows from operations, and negative working capital. 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.
  F-7
 18
 
 
 **RENEWABLE
                ENERGY RESOURCES, INC.**
 **NOTES
              TO AUDITED FINANCIAL STATEMENTS**
  NOTE
            1 -
            DESCRIPTION OF BUSINESS AND SIGNIGICANT ACCOUNTING POLICIES -
            continued
 
 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 in accordance with the provisions of SFAS no. 157 “Disclosures
            about Fair Value of Financial Instruments”.
 
 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, 2006.
 
 Revenue
 
 There
            was
            no revenue generated in the years ended December 31, 2006 and 2005.
 
 Income
            Taxes
 
 Income
            taxes are provided for based on the liability method of accounting pursuant
            to
            Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting
            for
            Income Taxes.” Deferred income taxes, if any, are recorded, using enacted tax
            rates expected to apply, to reflect the tax consequences on future years
            of
            differences between the tax bases of assets and liabilities and their
            financial
            reporting amounts at each year-end.
 
 Loss
            Per
            Share
 
 The
            Company calculates earnings per share in accordance with SFAS No. 128,
            "Earnings
            Per Share," which requires presentation of basic earnings per share ("Basic
            EPS") and diluted earnings per share ("Diluted EPS"). The computation
            of Basic
            EPS is computed by dividing loss available to common stockholders by
            the
            weighted average number of outstanding common shares during the period.
            Diluted
            EPS gives effect to all dilutive potential common shares outstanding
            during the
            period. The computation of Diluted EPS does not assume conversion, exercise
            or
            contingent exercise of securities that would have an anti-dilutive effect
            on
            earnings. As of December 31, 2006, there were no stock options and 3,107,497
            warrants outstanding.
 
 
 
 
  F-8
 19
 
 
 **RENEWABLE
                ENERGY RESOURCES, INC.**
 **NOTES
              TO AUDITED FINANCIAL STATEMENTS**
  NOTE
            1 -
            DESCRIPTION OF BUSINESS AND SIGNIGICANT ACCOUNTING POLICIES -
            continued
  Stock
            Based Compensation
 
 The
            Company is subject to the provisions of SFAS No. 123 "Accounting for
            Stock-Based
            Compensation," which prescribes the recognition of compensation expense
            based on
            the fair value of options on the grant date. SFAS No. 123 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.
 
 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.
 
 The
            Company uses the fair value based method of accounting for its stock
            option
            plans. Effective
            January 1, 2006, the Company adopted SFAS No. 123 (Revised 2004), *Share-Based
            Payments* ,
            which
            requires companies to expense stock options and other share-based payments. SFAS
            No.
            123R supersedes SFAS No. 123, which permitted either expensing stock
            options or
            providing pro forma disclosure. The Company adopted the modified prospective
            application transition method as proscribed by SFAS No. 123R, which applies
            to
            all new awards and to awards granted, modified, canceled, or repurchased
            after
            January 1, 2006, as well as the unvested portion of the prior awards.
            The
            adoption of SFAS No. 123R resulted in no changes to the 2006 or prior
            financial
            statement amounts or disclosures.
 
 Advertising
 
 The
            Company expenses advertising costs as incurred. The Company had no advertising
            expense in the year ended December 31, 2006.
 
 Recently
            Issued Accounting Pronouncements
 
 Management
            has not identified any new accounting pronouncements that are expected
            to a
            material effect on the Company’s financial statements.
 
 NOTE
            2 -
            GOING CONCERN CONSIDERATION
 
 Since
            its
            inception, the Company has suffered recurring losses from operations
            and has
            been dependent on existing stockholders and new investors to provide
            the cash
            resources to sustain its operations. During the year ended December 31,
            2006 and
            2005, the Company reported net losses of $7,045,255 and $2,813,204,
            respectively.
 
 The
            Company’s long-term viability as a going concern is dependent on certain key
            factors, as follows:
 
 §
                  The
                      Company’s ability to obtain adequate sources of outside financing to
                      support near term operations and to allow the Company to continue
                      forward
                      with current strategic plans.
 
 §
                  The
                      Company’s ability to ultimately achieve adequate profitability and
                      cash
                      flows to sustain continuing
                      operations.
 
 
 NOTE
            3 -
            RELATED PARTY TRANSACTIONS
 
 The
            Company entered into a comprehensive Agreement for Licensing, Joint Venture
            Agreement, and Manufacturing Agreement on October 12, 2005 with Regent
            Machine
            Products, LLC for the exclusive rights to the HydroCam/EC V technology
            which was
            developed by Regent Machine Products, LLC. Anthony Pecoraro, the Company’s
            former Chairman of the Board and VP of New Technology, is the current
            Vice
            President and Co-Founder of Regent Machine Products, LLC. In addition,
            Mr.
            Pecoraro is married to Mary Pecoraro, the President and Co-Founder of
            Regent
            Machine Products, LLC. Mr.
            Pecoraro was not affiliated with the Company at the time the comprehensive
            Agreement for Licensing, Joint Venture Agreement, and Manufacturing Agreement
            was signed, however, Mary Pecoraro was Secretary of the Company at that
            time.
  F-9
 20
 
 
 **RENEWABLE
                ENERGY RESOURCES, INC.**
 **NOTES
              TO AUDITED FINANCIAL STATEMENTS**
  NOTE
            3 - RELATED PARTY TRANSACTIONS -
            continued
  For
            the
            year ended December 31, 2006 officers and directors of the company received
            18,308,862 shares valued at $2,253,512 for partial payment of their services
            for
            the year. 95.6% of shares were shares of restricted common stock.
  We
            borrow
            funds from officers and stockholders from time to time.
  Two
            individuals named in Item 403 of Regulation S-B have advanced us money
            for
            general and administrative expenses: Craig Huffman, our Current Executive
            Vice
            President Chairman of the Board and former President, and James Thomas,
            our
            current Director.
 
 As
            of
            December 31, 2005, Mr. Huffman was owed a total of $46,000. Mr. Huffman
            received
            200,000 shares of our restricted common stock on 4/10/06 for payment
            of this
            loan.
 
 As
            of
            December 31, 2005, Mr. Thomas was owed a total of $37,500. Mr. Thomas
            received
            300,000 shares of our restricted common stock on 3/28/06 as payment for
            $5,500
            owed for a loan made on 6/23/2005.
 
 As
            of
            December 31, 2006, Mr. Huffman was owed $25,500 and Mr. Thomas was owed
            $32,000.
 
 There
            have been no repayment terms specified for these loans. As such, we have
            classified the loans as current liabilities.
 
 In
            addition, Charles Pecoraro, the brother of Anthony Pecoraro, our former
            Chairman
            and Vice President of New Technology Development, was issued 950,000
            shares of
            stock for consulting services valued at $491,500. He also received 100,000
            shares of stock as a commission/finders fee valued at $57,000. John Phillip
            Pecoraro, the brother of Anthony Pecoraro, our former Chairman and Vice
            President of New Technology Development, was issued 25,000 shares of
            stock for
            consulting services valued at $2,700. Phillip Pecoraro, the brother of
            Anthony
            Pecoraro, our former Chairman and Vice President of New Technology Development,
            was issued 10,000 shares of stock for consulting services valued at
            $2,000.
 
 On
            March
            23, 2006, Mary Pecoraro was issued 100,000 shares valued at $30,500 for
            payment
            due under the Agreement for Licensing, Joint Venture Agreement, and
            Manufacturing Agreement. Mary Pecoraro is our former Secretary and is
            the wife
            of Anthony Pecoraro, our former Chairman and Vice President of New Technology
            Development.
 
 On
            June
            7, 2006, Mary Pecoraro was issued 300,000 shares valued at $20,000 for
            payment
            due under the Agreement for Licensing, Joint Venture Agreement, and
            Manufacturing Agreement.
 
 During
            the fiscal year ended December 31, 2006, Mr. Thomas received 2,500,000
            shares of
            our restricted common stock which we value at $450,000 as payment for
            the
            Agreement for Licensing, Joint Venture Agreement and Manufacturing Agreement.
  
 NOTE
            4 -
            STOCKHOLDERS' DEFICIENCY
 
 On
            October 12, 2005, 7,400,000 shares were issued for the comprehensive
            Agreement
            for Licensing, Joint Venture Agreement, and Manufacturing Agreement with
            Regent
            Machine Products, LLC. Additionally, in the quarter ended June 30, 2006,
            2,500,000 shares were issued under this agreement. A total of 9,900,000
            shares
            have been issued under this agreement.
  F-10
 21
 
 
 **RENEWABLE
                ENERGY RESOURCES, INC.**
 **NOTES
              TO AUDITED FINANCIAL STATEMENTS**
  NOTE
            4 -
            STOCKHOLDERS' DEFICIENCY - continued
  During
            the year ended December 31, 2002, HSI 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 the Company’s 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 and December 31, 2005,
            the
            Company did not issued any of these shares to creditors. No shares were
            issued
            in 2006.
 
 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 were
            initially
            placed into escrow, including fifty percent (50%) of the Langley Shares
            to be
            deposited into escrow as Downside Price Protection (the "Langley Escrow
            Shares").
 
 On
            November 3, 2004, the Company sold 441,389 shares of Langley Park Investment,
            (London Exchange: LPI) for $193,388 (approximately .44 cents per share).
            This
            was the first liquidation pursuant to the Agreement. These gross proceeds
            represented a loss of $697,237 based upon the difference between the
            selling
            price on November 3, 2004 and the Company’s trading price on July 29,
            2004.
 
 The
            balance of the 441,389 shares owned by the Company are valued at the
            market
            price of the Langley Park Investments Plc as listed on the London Stock
            Exchange
            ("LSE") with the difference being carried as a component of comprehensive
            income
            in the equity section of the Company’s financial statements.
 
 Pursuant
            to the terms and conditions of the Purchase Agreement, on the two 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 will be released from escrow
            to the
            Company. In October 2006 the company sold 413,935 shares for proceeds
            of
            $7,820.16. The company still has 27,454 shares.
 
 The
            Company was approached with the investment by Langley, at a time when
            the two
            year lock up of the shares to be issued was voted on by the Board of
            Directors
            as being acceptable for purposes of investment given the stock price
            and
            discount proposed by Langley. The escrowed shares were analyzed on December
            31,
            2004 and accounted for as if they would eventually be sold at the two
            year mark
            as investment holding period. At the time of the investment and at the
            time of
            the accounting determination, management believed that the Company would
            meet
            the criteria as set forth in the Langley agreement which would allow
            the sale of
            the remaining shares in the fund. The Company recorded an additional
            unrealized
            loss of $100,409 on this investment at December 31, 2005 due to this
            provision.
            The additional write down was calculated on the basis of the quoted value
            of the
            Langley shares less the pro-rata value of shares that would be returned
            to
            Langley based on the trading value of the Company's common stock at December
            31,
            2005.
  F-11
 22
 
 
 **RENEWABLE
                ENERGY RESOURCES, INC.**
 **NOTES
              TO AUDITED FINANCIAL STATEMENTS**
  NOTE
            5 -
            COMMON AND PREFERRED STOCK
 
 The
            Company’s Articles of Incorporation authorize the issuance of up to 200,000,000
            shares of common stock, with a par value of $.001 and the issuance of
            up to
            70,000,000 shares of preferred stock, with a par value of $.001.
 
 **COMMON
            STOCK**
 During
            the year ended December 31, 2006, the Company engaged in various transactions
            affecting stockholders’ equity, as follows:
 
 The
            Company issues shares of common stock from time to time to compensate
            consultants as consideration for services rendered. These shares are
            valued at
            the trading value on the date of grant. For the year ended, December
            31, 2006, a
            total of 42,312,753 shares of common stock were issued to 42 individuals
            and
            organizations as payment for services totaling $5,908,902.
 
 During
            2006 the company issued 3,015,000 of shares to Regent per agreement totaling
            $509,900.
 
 For
            the
            year ended December 31, 2006, 7,702,784 shares of common stock were issued
            as
            payment for loans totaling $820,077. Loans are non-interest bearing and
            are paid
            by discounted stock valued as of the date of the loan. Pursuant to the
            terms of
            the loan, if the loan can not be repaid within a specified time period,
            then
            shares are issued to the lender equal to the amount of the loan. The
            shares are
            discounted approximately 50%.
 
 **PREFERRED
            STOCK**
 The
            Company's has designated the issuance of up to 70,000,000 shares of Series
            A
            Convertible Preferred Stock, with a par value of $.001. Series A Convertible
            Preferred Stock can be exchanged at the option of the stockholder into
            shares of
            common stock at the rate of one share of Series A Convertible Preferred
            Stock
            for one share of Common Stock at any time after the first anniversary
            of the
            original date of issuance. The Series A Convertible Preferred Stock shall
            rank,
            as to dividends and upon liquidation senior and prior to the Company’s Common
            Stock and to all other classes or class of stock issued by the Company,
            except
            as otherwise approved by the affirmative vote or consent of the holders
            of a
            majority of the shares of Series A Convertible Preferred Stock. In addition,
            so
            long as any share of Series A Convertible Preferred Stock shall be outstanding,
            the holders of such convertible preferred stock shall be entitled to
            receive out
            of any funds legally available, when, as and if declared by the Board
            of
            Directors of the Company, preferential dividends at the rate of ten percent
            (10%) per annum, payable upon the first anniversary date of the original
            issue
            date, then quarterly with payment to be made in either cash or in the
            issuance
            of additional share of Series A Convertible Preferred Stock. Such dividends
            shall be cumulative and begin to accrue from the original issue date,
            whether or
            not declared and whether or not there shall be net profits or net assets
            of the
            Company legally available for the payment of those dividends. To date,
            no
            dividend has been declared by the Board of Directors. The Series A Convertible
            Preferred stockholders shall be entitled to vote on all matters requiring
            a
            shareholder vote of the Company. Each Series A Convertible Preferred
            shareholder
            of record shall have one vote for each share of Series A Convertible
            Preferred
            stock outstanding. During 2006 6,112,265 preferred shares were converted
            to
            common stock. On December 31, 2006 there were 1,055,180 shares of preferred
            outstanding.
  There
            were $105,518 in unpaid and undeclared cumulative dividends accrued during
            the year ending December 31, 2006. Total cumulative dividends unpaid
            and
            undeclared as of December 31, 2006 are $316,554.
 
 
  
  F-12
 23
 
 
 **RENEWABLE
                ENERGY RESOURCES, INC.**
 **NOTES
              TO AUDITED FINANCIAL STATEMENTS**
  NOTE
            6 -
            PROPERTY 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 to 5 years. Depreciation expense for the year ended December 31,
            2006 and
            2005 was $4,445 and $3,700, respectively.
 
 Property
            and equipment consisted of the following at December 31, 2006:
 
 Computer
                      and equipment
                  
                  $
                  41,266Less
                      accumulated depreciation
                  
                  
                  27,381Furniture
                      and equipment, net
                  
                  $
                  13,885
 
 NOTE
            7
            -  STOCK OPTIONS
 
 There
            were no stock options granted nor were there any pro forma effect of
            the vesting
            of options granted in previous periods in the years ended December 31,
            2006 and
            2005.
 
 NOTE
            8 -
            INCOME TAXES
 
 The
            Company has no income tax provision or benefit in the periods ended December
            31,
            2006 and 2005. Prior to the merger transaction with HSI the Company elected
            to
            be treated as an S-Corporation as prescribed under Section 1362 of the
            Internal
            Revenue Code.
 
 During
            the year ended December 31, 2006, the Company generated a tax benefit
            related to
            operating loss carryforwards of $3,029,460 that was equally offset by
            a
            valuation allowance.
 
 At
            December 31, 2006, the Company had federal net operating loss carry forwards
            of
            approximately $5,088,487 that expire from 2009 to 2026 and state net
            operating
            loss carryforwards of approximately $746,311 that expire from 2007 to
            2010.
            Substantially all of the deferred income tax asset of $5,834,798 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.
 
 Significant
            components of the Company’s deferred tax assets were as follows:
 
 2006
                  
                  
                  2005Net
                      operating losses
                  
                  $
                  13,569,300
                  
                  $
                  6,524,044Total
                      deferred tax assets
                  
                  
                  5,834,798
                  
                  
                  2,805,338Valuation
                      allowance
                  
                  
                  (5,834,798
                  )
                  
                  (2,805,338
                  )Net
                      deferred tax assets
                  
                  $
                  -
                  
                  $
                  -
 
 The
            valuation allowance increased by $3,029,460 during the year ended December
            31,
            2006.
 
 
 
 
  F-13
 24
 **RENEWABLE
                  ENERGY RESOURCES, INC.**
 **NOTES
                TO AUDITED FINANCIAL STATEMENTS**
  NOTE
            9 -
            COMMITMENTS AND CONTINGENCIES
 
 Prior
            to
            the merger of Internal Command with Home Services, the Company (HSVI)
            had
            incurred additional deficits in cash flow from operating activities.
            The Company
            had accrued approximately $906,900 in obligations to vendors, consultants
            and
            former employees. We are attempting to settle these obligations, primarily
            through the issuance of common stock. Management believes we will ultimately
            settle these obligations for no more than amounts accrued at December
            31, 2004.
            As a part of the Merger Agreement with Internal Command International,
            Inc.
            (ICI), our former Chief Executive Officer of HSVI, Jay Budd, had and
            did affirm
            that the outstanding debts of HSVI have been properly structured for
            management
            of the debt post-merger; namely, that the debt was 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 would be held harmless for this debt. In the summer
            of 2005,
            we released Harry Miller, PLLC and Fletcher & Associates from their duties
            as debt managers, taking control of such matters internally. To date,
            the shares
            issued to secure these debts are unissued, and held by both Harry Miller
            PLLC in
            trust, and with the Company, should the need arise for settlement of
            any such
            debts, if communication and demand for the same is made. To date no such
            verified debt demands have been made. Any settlements will be valued
            at the fair
            value of the stock at the time the settlement is reached, or some other
            amount
            as negotiated.
 
 The
            Company accrues a contingent payroll tax liability every quarter which
            accounts
            for any payroll and income taxes that the company would be liable for
            should the
            IRS determine that any of the people paid as independent contractors
            are
            employees. The Company believes that it is correctly paying all individuals
            as
            independent contractors, and therefore the liability is titled “contingent
            payroll tax”.
 
 NOTE
            10 -
            LOSS PER SHARE
 
 Outstanding
            warrants were not considered in the calculation for diluted earnings
            per share
            for the years ended December 31, 2006 and 2005 because the effect of
            their
            inclusion would be anti-dilutive.
 
 Warrants
            to purchase 3,107,497 shares of common stock were outstanding and excluded
            from
            the loss per share calculation at December 31, 2006.
 
 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.
 
  
  F-14
 25
 **RENEWABLE
                  ENERGY RESOURCES, INC.**
 **NOTES
                TO AUDITED FINANCIAL STATEMENTS**
  NOTE
            11 -
            INVESTMENTS - continued
  Investment
            in Langley and Kinetic securities consisted of the following at December
            31,
            2006:
  Cost
                  Gross
                      Gains
                  Unrealized
                      Losses
                  Impairment
                      Write-down
                  Fair
                      ValueLangley
                    
                    Kinetic
                  $
                      890,625
                    
                    $187,500
                  $
                      15,817
                    
                    $
                      -
                  $
                      83,786
                    
                    $
                      0
                  $
                      (784,718)
                    
                    $
                      (118,750)
                  $
                      6,304
                    
                    $
                      68,750
 
 
 During
            the year ended December 31, 2005, the Company determined that the decline
            in
            value of the Langley shares was other than temporary. However, there
            was no
            basis to determine a forecasted recovery of fair value up to (or beyond)
            the
            cost of the investment. Therefore, the Company wrote the carrying value
            down by
            $784,718 to the investtment's quoted trading value at September 30,
            2005.
 
 Proceeds
            from sales of equity securities were $193,388 and gross realized losses
            were
            $697,237 for the year ended December 31, 2004. The fair value at December
            31,
            2005 is determined based on the trading price of Langley and translated
            to U.S.
            dollars at the exchange rate on December 31, 2005.
 
 The
            value
            on December 31, 2006 is determined based on the trading price of Langley
            and
            translated to U.S. dollars at the exchange rate on December 31,
            2006.
 
 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 be
            $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. The investment
            was
            written down by $118,750 on September 30 2005 to reflect slower than
            anticipated
            development progress by Kinetic. The Company owns 2,000,000 voting preferred
            shares of Kinetic Energy Systems, Inc. Kinetic has 10,000,000 preferred
            shares
            issued and outstanding and 1,000,000 common shares outstanding. The Company’s
            interest in Kinetic is approximately 18%. The Company exercises no management
            control and therefore, the cost method was used.
 
 NOTE
            12 -
            SHAREHOLDER LOANS
 
 As
            of
            December 31, 2006, the Company had outstanding loans from our two directors
            totaling $155,000. The loans have no repayment terms.
 
 NOTE
            13 -
            SUBSEQUENT EVENT
 
 On
            March
            14, 2007, a lawsuit was filed in the Circuit Court of the Thirteenth
            Judicial
            Circuit of the State of Florida, in and for Hillsborough County Circuit
            Civil
            Division (Case No.: 07-003056). The Plaintiff in the case is Lior Segal,
            the
            former CFO of Renewable Energy Resources, Inc. and the defendant is Renewable
            Energy Resources, Inc.
  Mr.
            Segal
            claims he is owed compensation of $4,500 for his work while employed
            by
            Renewable Energy Resources, Inc. and in addition, he had taken restricted
            shares
            of stock in lieu of cash compensation and since he is no longer with
            the
            company, would like to return the restricted shares of stock and receive
            $22,500
            is cash compensation in lieu of the restricted stock.
 
 Management
            believes that this case is without merit and the $26,500 is not accrued
            in the
            financial statements as management has determined that this payment currently
            is
            not yet probable.










F-15
 26




**ITEM
        8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
        DISCLOSURE**
 
 **None.**
 
 **ITEM
        8A. CONTROLS AND PROCEDURES**
 
 Kenneth
        Brown, our Chief Executive Officer and Acting Principal Financial Officer
        has
        evaluated our controls and procedures as of December 31, 2006. He has concluded
        that our disclosure controls and procedures are appropriate and effective.
 
 During
        the quarter ended December 31, 2006, there were no changes in our internal
        controls over financial reporting that have materially affected, or are
        reasonably likely to materially affect, the small business issuer’s internal
        control over financial reporting.
 
 **ITEM
        8B. OTHER INFORMATION**
 
 **None**





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





None.





**ITEM
      8A. CONTROLS AND PROCEDURES**





Kenneth
      Brown, our Chief Executive Officer and Acting Principal Financial Officer has
      evaluated our controls and procedures as of December 31, 2006. He has concluded
      that our disclosure controls and procedures are appropriate and effective.





During
      the quarter ended December 31, 2006, there were no changes in our internal
      controls over financial reporting that have materially affected, or are
      reasonably likely to materially affect, the small business issuer’s internal
      control over financial reporting.





**ITEM
      8B. OTHER INFORMATION**





None







**PART
      III**





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








**CURRENT
      OFFICERS AND DIRECTORS**





The
      following table sets forth the name, age, and position of each executive officer
      and director of the Company as of March 15, 2007:




NAME
              AGE
              POSITIONKenneth
                  Brown
              48
              Chief
                  Executive Officer and Acting Principal Financial
                  OfficerR.
                  Edward Hart
              50
              Chief
                  Operating Officer and Corporate SecretaryCraig
                Huffman
              40
              Executive
                Vice
                President and Acting Chairman of the BoardJames
                Thomas
              40
              Director




27




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




**Kenneth
      Brown, age 48**


Kenneth
      Brown was appointed Chief Executive Officer on January 17, 2007 and was
      appointed to the position of Acting Principal Financial Officer on February
      13,
      2007. From
      October 2005 through December 2006, Mr. Brown was Vice President and a Director
      of EarthFirst Americas, Inc. with responsibilities for all biodiesel sales
      and
      new business development. From December 1999 through October 2005, Mr. Brown
      was
      Chief Executive Officer and a Board Member of ACQUA America, Inc. Mr. Brown
      received his Juris Doctor from the University of Florida College of Law in
      1987
      and his BBA from Mercer University in 1980.





**R.
      Edward Hart, age 50**


R.
      Edward
      Hart was appointed Chief Operating Officer on January 17, 2007 and was appointed
      Corporate Secretary on March 16, 2007. Mr.
      Hart
      was actively involved as President of Encore Energy Solutions, LLC from October
      31, 2003 to January 15, 2007. Encore consults for large
      commercial and industrial end users, manages their natural gas and electric
      purchases and develops power generation projects. From 2001 to October 31,
      2003,
      Mr. Hart was the Manager for National Industrial Development for TECO Partners,
      Inc. a subsidiary of TECO Energy.  Mr. Hart is also a partner in Niagara
      Biomass Power, LLC which is a special purpose entity created to
      purchase a power plant in New York.  Mr. Hart has over 25 years of
      experience in the energy (petroleum, natural gas, and electricity) business
      in
      marketing, management, and consulting. During his career, Mr. Hart has worked
      for one of the nation’s largest independent refining and marketing companies, a
      large electric and gas utility, and also founded a natural gas marketing and
      exploration company.







**EXECUTIVE
      OFFICERS AND DIRECTORS AS OF DECEMBER 31, 2006**





The
      following table sets forth the name, age, and position of each executive officer
      and director of the Company as of December 31, 2006.




NAME
              AGE
              POSITIONCraig
                  Huffman
              40
              President
                  and Chief Executive Officer (see biography above)Lior
                  Segal
              36
              Chief
                  Financial OfficerAnthony
                  J. Pecoraro
              42
              Chairman
                  of the Board of DirectorsJames
                  Thomas
              40
              Director  (see biography above)Wade
                  Kenyon
              66
              DirectorTony
                  Council
              50
              DirectorMichael
                  Scionti
              36
              Director





**OFFICERS
      AND DIRECTORS AS OF DECEMBER 31, 2006.**





**Craig
      Huffman, age 40**


Craig
      Huffman was appointed our Executive Vice President and Chairman of the Board
      of
      Directors on January 17, 2007. Mr. Huffman previously served as President/CEO
      from January 2, 2004 until January 17, 2007. Mr. Huffman was the co-founder
      of
      our predecessor, Internal Command International in 2001. From 2001 through
      2004
      he served as president of ICI. From 1997 to the present, Mr. Huffman has also
      had a private law practice. Mr. Huffman received a BA from the, University
      of
      Tampa in 1989 and a Juris Doctor from Stetson University College of Law in
      1997.




**Lior
      Segal, age 36**


Lior
      Segal was appointed CFO on May 1, 2006 and resigned effective February 13,
      2007. From
      March 16, 2006 to May 1, 2006, Mr. Segal served as our Treasurer. From August
      2003 to the present, Mr. Segal has also served as the CFO of Sun Rayz Products
      Inc., a company engaged in the marketing and distribution of products containing
      the "FLA-USA" label. From August 2001 to August 2003, Mr. Segal served as a
      legal assistant for Lentz & Gengaro, P.A.





**Anthony
      J. Pecoraro, age 42**


Anthony
      Pecoraro was appointed as Chairman of the Board of Directors on January 18,
      2006
      and resigned effective January 17, 2007. Mr. Pecoraro was the Vice President
      and
      Founder of Regent Machine Products Inc. in 2005 where he completed the design
      phase of the EC V. Mr. Pecoraro currently serves as our Vice President of New
      Technology Development. He was heavily involved in the production and
      development of the IHDR EC III and IV models, and is the inventor of numerous
      systems improvement for the HydroCam/EC5. For the last 5 years, Mr. Pecoraro
      has
      served in a continuing technical support role for Internal Hydro International
      and our predecessor company.


28





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




**James
      A. Thomas, age 40**


James
      A.
      Thomas was appointed to the Board of Directors on January 3, 2006. Since
      1997, Mr. Thomas has run a legal practice in Tampa, Florida. Mr. Thomas received
      his BA in English from the University of South Florida (1992) and his JD from
      Stetson University College of Law (1996). Mr. Thomas is a founding partner
      of
      the predecessor company, Internal Command International and since that time
      has
      served at the direction of the board and senior management in the areas of
      investor relations and special projects.





**Wade
      Kenyon, age 66**


Wade
      Kenyon was appointed to the Board of Directors on January 2, 2004 and resigned
      effective January 17, 2007. From 2000 to the present, Mr. Kenyon has been the
      Professional Sales Manager for Baring Industries, Inc., overseeing the
      activities of two other project management teams. From 1997 to 2000 he was
      with
      Johnson Lancaster as a Project Manager where he 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. From 1991 to 1997, he was president of Kenyon and Kenyon,
      Inc. - Food Facilities and Laundry Design and Consulting. From 1991 to 1997,
      he
      was with Sherman Robinson Associates, Atlanta. From 1990 to 1991 Judy Ford
      Stokes and Associates -Contracted Consultant - responsibilities included
      participation in design and project management of several major food service
      in
      the southeast and Washington, D.C. From 1985 to 1990, Mr. Kenyon worked with
      Greitzer, Inc., as 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.
      He
      received his BA Degree University of South Florida - Majoring in Chemistry,
      Minor Zoology. Mr. Kenyon is the Co-founder of Internal Command
      Industries.





**Tony
      Council, age 50**


Tony
      Council was appointed to the Board of Directors on January 18, 2006 and resigned
      effective January 17, 2007. From January 1991 to the present, Mr. Council has
      been the founder and President of TLC Engineering, Inc. where he oversees the
      daily management of engineering, inspection and administrative matters,
      including contracting, and bid processing for large scale engineering projects.
      Mr. Council is a Professional Engineer with over two decades of experience
      in
      the oil and gas arena. Mr. Council received a BS degree in mechanical
      engineering from North Carolina ANT State University in 1978. He currently
      holds
      a current license in Texas for Professional Engineer that he has held 1993.
      From
      1992 - 2000 was a Senior Consulting Engineer and Project Manager with Mustang
      Engineering, Inc. of Houston, Texas, where he had a very successful and renowned
      career in charge of engineering design and project manager of assigned oil
      and
      gas projects.





**Michael
      Scionti, age 38**


Michael
      Scionti was appointed to the Board of Directors on January 3, 2006 and resigned
      effective January 17, 2007. From 2000 to the present, Mr. Scionti has been
      a
      Captain in the United States Army Reserves, Judge Advocate General’s Corps
      (JAG); Member, United States Military Court of Criminal Appeals. Captain, United
      States Army, He volunteered for active duty and served with the Third Infantry
      Division; Served in Operation Enduring Freedom and Iraqi Freedom in support
      of
      our nation’s efforts to fight the global war on terrorism, participating in the
      initial invasion of Iraq with 3 rd ID;
      Conducted damage assessments and consulted with Iraqi foreign nationals on
      cross-cultural awareness of humanitarian need for civilians in time of war;
      Was
      the responsible governing magistrate during the investigation of Abu Ghraib
      prisoner abuse; Decorated war veteran, receiving the Bronze Star for proven
      leadership and service during ground combat (2003 - 2004).





Mr.
      Scionti received his BS in 1990 from Florida State University and his JD from
      South Texas College of Law (1996); Recipient, American Jurisprudence Award
      for
      Torts and Langdell Scholar for Excellence Admitted to Practice in Florida
      (1996); Member, Florida Supreme Court; United States Supreme Court, United
      States Court of Appeal, Eleventh Circuit; United States District Court, Middle
      District of Florida.





Mr.
      Scionti was formerly an Assistant Attorney General and Assistant State Attorney,
      State of Florida (1996 - 2005); he worked with various State and Federal law
      enforcement agencies in successfully prosecuting statewide white-collar
      corruption, and racketeer influenced criminal organizations (RICO) including
      in
      the areas of banking and securities fraud. Currently he is in private practice
      in Tampa, Florida where he specializes in business and civil litigation.








**BOARD
      OF 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 discretion of the Board of Directors.




We
      currently do not have an audit committee or any committees. In the future,
      we
      may designate committees as necessary to conduct business. We believe this
      structure is adequate based on the size of our company.





During
      the fiscal year ended, December 31, 2006, we paid each of our Directors the
      equivalent of $5,000 per month for nine months by issuing shares of our
      restricted common stock. Each Director also received an annual bonus in the
      form
      of shares of our restricted common stock. Currently, our Directors are not
      compensated: however, in the future, we may compensate our Directors under
      a
      schedule to be developed by the Board of Directors. No such payment shall
      preclude any Director from serving the Corporation in any other capacity and
      receiving compensation.





There
      have been no material changes to the procedures by which security holders may
      recommend nominees to the board of directors.





29





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




**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
      us during or respecting our 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.





**CODE
      OF ETHICS**





We
      adopted a Code of Ethics for our Principal Executive and Senior Financial
      Officers. A copy of which was attached to our 10-KSB filed on May 19,
      2006.





**ITEM
      10. EXECUTIVE COMPENSATION**





The
      following table sets forth the compensation paid to our executive officers
      for
      the fiscal years ending December 31, 2005 and 2006.








**Summary
      Compensation Table**





Name
                and Principal Position
              
              (a)
            Year
              
              
              
              
              (b)
            Salary
              ($)
              
              
              
              (c)
            Bonus
              ($)
              
              
              
              (d)
            Stock
                Awards
              ($)
              
              
              (e)
            Option
                Awards
              ($)
              
              
              (f)
            Non-Equity
                Incentive Plan Compensation
              ($)
              
              (g)
            Nonqualified
                Deferred Compensation Earnings
              ($)
              (h)
            All
                other compensation
              ($)
              
              
              (i)
            Total
              ($)
              
              
              
              (j)Craig
                Huffman, President and CEO
            2005
            $15,875
            0
            $9,360
                1
            0
            0
            0
            0
            $25,2352006
            $85,000
            0
            $403,3522
            0
            0
            0
            0
            $488,352Lior
                Segal, Chief Financial Officer
            2005
            0
            0
            0
            0
            0
            0
            0
            02006
            $29,000
            0
            $383,0003
            0
            0
            0
            0
            $412,000Art
                Tanner, Chief Financial Officer, from March 1, 2006- May 1,
                2006
            2005
            0
            0
            0
            0
            0
            0
            0
            02006
            $6,000
            0
            $6,0004
            0
            0
            0
            0
            $12,000





1.  During
      2005, Mr. Huffman was issued 141,237 shares of our restricted common stock
      as
      compensation.


2.  During
      2006, Mr. Huffman was issued compensation of 218,354 shares of our common stock
      which were registered on Form S-8 and valued at $45,500. Mr. Huffman also
      received compensation of 1.264,153 shares of our restricted common stock which
      were valued at $357,852.


3.  During
      2006, Mr. Segal was issued compensation of 282,438 shares of our common stock
      which were registered on Form S-8 which were valued at $67,250. Mr. Segal also
      received compensation of 2,003,575 shares of our restricted common stock which
      were valued at $315,750.


4.  During
      2006, Mr. Tanner was issued compensation of 43,043 shares of our common stock
      which were registered on Form S-8 which were valued at $6,000.














30





ITEM
      10.
      EXECUTIVE COMPENSATION - continiued




**Outstanding
      Equity Awards at December 31, 2006**





**OPTION
                AWARDS**
            **STOCK
                AWARDS**Name
              
              
              
              
              
              
              (a)
            Number
                of Securities Underlying Unexercised Options (#) Exercisable
              
              (b)
            Number
                of Securities Underlying Unexercised Options (#)
                Unexercisable
              
              (c)
            Equity
                Incentive Plan Awards: Number of Securities Underlying Unexercised
                Unearned Options
              (#)
              
              (d)
            Option
                Exercise Price ($)
              
              
              
              (e)
            Option
                Expiration Date
              
              
              
              (e)
            Number
                of Shares or Units of Stock that have not Vested (#)
              
              
              (g)
            Market
                Value of Shares or Units of Stock that have not Vested
              ($)
              
              (h)
            Equity
                Incentive Plan Awards: Number of Unearned Shares, Units or Other
                Rights
                that have not Vested
              ($)
              
              (i)
            Equity
                Incentive Plan Awards: Market or Payout Value of Unearned Shares,
                Units or
                Other Rights that have not Vested
              ($)
              
              (j)Craig
                Huffman, President and CEO
            0
            0
            0
            0
            0
            0
            0
            0
            0Lior
                Segal, Chief Financial Officer
            0
            0
            0
            0
            0
            0
            0
            0
            0Art
                Tanner, Chief Financial Officer from March 1, 2006-May 1,
                2006
            0
            0
            0
            0
            0
            0
            0
            0
            0








**Director
      Compensation**





The
      following table sets forth the compensation paid to our then existing directors
      for the fiscal year ending December 31, 2006.




Name
              
              
              
              
              
              (a)
            Fees
                Earned or Paid in Cash
              ($)
              
              
              (b)
            Stock
                Awards
              ($)
              
              
              
              (c)
            Option
                Awards
              ($)
              
              
              
              (d)
            Non-Equity
                Incentive Plan Compensation
              ($)
              
              
              (e)
            Nonqualified
                Deferred Compensation Earnings
              ($)
              
              (f)
            All
                Other Compensation
              ($)
              
              
              
              (g)
            Total
              ($)
              
              
              
              
              (h)Anthony
                Pecoraro, Chairman
            0
            $342,000
            0
            0
            0
            
            $342,0001Wade
                Kenyon
            0
            $114,000
            0
            0
            0
            0
            $114,0002Tony
                Council
            0
            $99,000
            0
            0
            0
            0
            $99,0003James
                A. Thomas
            0
            $
                752,160
            0
            0
            0
            0
            $752,1604Michael
                Scionti
            0
            ,$108,000
            0
            0
            0
            0
            $108,0005





1   Mr.
      Pecoraro was issued a total of 331,585 shares of our restricted common stock
      which represents $5,000 per month for nine months of board compensation. Mr.
      Pecoraro also received 2,500,000 shares of our restricted common stock valued
      at
      $270,000 as a year end bonus. Additionally, Mr. Pecoraro received a total of
      94,773 shares of our restricted common stock which represents $3,000 per month
      for three months for his participation on an executive committee.


2   Mr.
      Kenyon was issued a total of 591,585 shares of our restricted common stock
      which
      represents $5,000 per month for nine months of board compensation. Mr. Kenyon
      also received 500,000 shares of our restricted common stock valued at $54,000
      as
      a year end bonus.





31




ITEM 10. EXECUTIVE COMPENSATION - continiued





3   Mr.
      Council was issued a total of 341,585 shares of our restricted common stock
      which represents $5,000 per month for nine months of board compensation. Mr.
      Council also received 500,000 shares of our restricted common stock valued
      at
      $54,000 as a year end bonus.


4   Mr.
      Thomas was issued 341,585shares of our restricted common stock which represents
      $5,000 per month for nine months of board compensation. Mr. Thomas also received
      2,100,000 shares of our restricted common stock valued at $226,800 as a year
      end
      bonus. Additionally, Mr. Thomas received 94,733 shares of our restricted common
      stock which represents $3,000 per month for three months for his participation
      on an executive committee. Mr. Thomas also received 2,500,000 shares of our
      restricted common stock valued at $450,000 as part of the Agreement for
      Licensing, Joint Venture Agreement, and Manufacturing Agreement (see Exhibit
      10.2).


5   Mr.
      Scionti was issued 341,585 shares of our restricted common stock which
      represents $5,000 per month for nine months of board compensation. Mr. Scionti
      also received 500,000 shares of our restricted common stock valued at $54,000
      as
      a year end bonus. Mr. Scionti also received an additional 94,773 shares of
      our
      restricted common stock which represents $3,000 per month for three months
      for
      his participation on an executive committee.





**EMPLOYMENT
      AGREEMENTS**





We
      currently do not have an employment agreement with Mr. Brown.





As
      of
      December 31, 2006, Mr. Huffman was President and CEO. On November 22, 2004,
      we
      entered into an Employment Agreement with Craig Huffman to act as our President
      and Chief Executive Officer. In this agreement, Mr. Huffman was to be paid
      a
      salary of $96,000 per year, with enumerated other incentives. The base salary
      was subject to a ten percent incremental increase annually. A copy of Mr.
      Huffman’s employment agreement was attached as an exhibit to
      our
      Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005. This
      Employment Agreement terminated on December 1, 2006.








**ITEM
      11. SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND
      MANAGEMENT**





**PRINCIPAL
      SHAREHOLDERS; MANAGEMENT SHARE HOLDINGS**





The
      following table sets forth certain information at March 15, 2007 with respect
      to
      the beneficial ownership of shares of common stock by (i) each person known
      to
      us who owns beneficially more than 5% of the outstanding shares of common stock,
      (ii) each of our Directors, (iii) each of our Executive Officers and (iv) all
      of
      our Executive Officers and Directors as a group. Unless otherwise indicated,
      each stockholder has sole voting and investment power with respect to the shares
      shown. As of March 15, 2007, we had 155,930,961 shares of common stock
      outstanding and 885,180 shares of class “A” preferred stock
      outstanding.





None
      of
      our officers or directors owned any preferred stock as of March 15,
      2007.





Title
                of class
            Name
                Beneficial Owner
            Amount
                and Nature of Beneficial Ownership
            Percentage
                of Class1Common
                Stock
            Kenneth
                Brown
              CEO
                and Acting Principal Financial Officer
            0
            0%Common
                Stock
            R.
                Edward Hart
              Chief
                Operating Officer and Corporate Secretary
            471,136
            Less
                than 1%Common
                Stock
            Craig
                Huffman
              Executive
                Vice President and Chairman of the Board of Directors
            10,375,586
            7%Common
              Stock
            James
                A. Thomas
              Director
            11,221,828
            7%**Common
              Stock**
            **All
              Officers and Directors as a group (total of 4)**
            **22,068,550**
            **14%**





32





ITEM
      11. SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND
      MANAGEMENT - continued





Title
                of class
            Name
                Beneficial Owner
            Amount
                and Nature of Beneficial Ownership
            Percentage
                of Class1Preferred
                Stock
            Dan
                Simonetti
            142,850
            13.5%Preferred
                Stock
            John
                F. Simonetti
            214,290
            20.3%Preferred
                Stock
            Kevin
                Pickard
            142,850
            13.5%Preferred
                Stock
            Mercatus
                & Partners LTD FBO
              Kent
                Lessman
            170,000
            16.1%Preferred
                Stock
            John
                P. Gordon
            250,000
            23.7%










(1)
            Under
                Rule 13d-3 promulgated under the Exchange Act, a beneficial owner
                of a
                security includes any person who, directly or indirectly, through
                any
                contract, arrangement, understanding, relationship, or otherwise
                has or
                shares: (i) voting power, which includes the power to vote, or to
                direct
                the voting of shares; and (ii) investment power, which includes the
                power
                to dispose or direct the disposition of shares. Certain shares may
                be
                deemed to be beneficially owned by more than one person (if, for
                example,
                persons share the power to vote or the power to dispose of the shares).
                In
                addition, shares are deemed to be beneficially owned by a person
                if the
                person has the right to acquire the shares (for example, upon exercise
                of
                an option) within 60 days of the date as of which the information
                is
                provided. In computing the percentage ownership of any person, the
                amount
                of shares is deemed to include the amount of shares beneficially
                owned by
                such person (and only such person) by reason of these acquisition
                rights.
                As a result, the percentage of outstanding shares of any person as
                shown
                in this table does not necessarily reflect the person’s actual ownership
                or voting power with respect to the number of shares of common stock
                actually outstanding on March 15, 2007. As of March 15, 2007, we
                had
                155,930,961shares of common stock outstanding and 885,180 shares
                of class
                “A” preferred stock outstanding.





**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**





Except
      as
      described below, none of the following persons has any direct or indirect
      material interest in any transaction to which we were or are a party since
      the
      beginning of our last fiscal year, or in any transaction to which we propose
      to
      be a party:





(A)
      any
      of our directors or executive officers;





(B)
      any
      nominee for election as one of our directors;





(C)
      any
      person who is known by us to beneficially own, directly or indirectly, shares
      carrying more than 5% of the voting rights attached to our common stock;
      or




(D)  any
      member of the immediate family (including spouse, parents, children, siblings
      and in-laws) of any of the foregoing persons named in paragraph (A), (B) or
      (C)
      above.





33





ITEM
      12.
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - continued





We
      borrow
      funds from officers and stockholders from time to time




Two
      individuals named in Item 403 of Regulation S-B have advanced us money for
      general and administrative expenses: Craig Huffman, our current Executive Vice
      President and Chairman of the Board and former President/CEO, and James Thomas,
      our current Director.





As
      of
      December 31, 2005, Mr. Huffman was owed a total of $46,000. Mr. Huffman received
      200,000 shares of restricted stock on 4/10/06 as payment for the $46,000 he
      was
      owed.





As
      of
      December 31, 2005, Mr. Thomas was owed a total of $37,500. Mr. Thomas received
      300,000 shares of restricted stock on 3/28/06 as payment for $5,500 that he
      was
      owed for a loan made on 6/23/2005.





As
      of
      December 31, 2006, Mr. Huffman is owed $25,500 and Mr. Thomas is owed $32,000.
      There have been no repayment terms specified for these loans. We have classified
      the loans as a current liability





In
      addition, Charles Pecoraro, the brother of Anthony Pecoraro, our former Chairman
      and Vice President of New Technology Development, was issued 950,000 shares
      of
      stock for consulting services valued at $491,500. He also received 100,000
      shares of stock as a commission/finders fee valued at $57,000. John Phillip
      Pecoraro, the brother of Anthony Pecoraro, our former Chairman and Vice
      President of New Technology Development, was issued 25,000 shares of stock
      for
      consulting services valued at $2,700. Phillip Pecoraro, the brother of Anthony
      Pecoraro, our former Chairman and Vice President of New Technology Development,
      was issued 10,000 shares of stock for consulting services valued at
      $2,000.





On
      March
      23, 2006, Mary Pecoraro was issued 100,000 shares valued at $30,500 for payment
      due under the Agreement for Licensing, Joint Venture Agreement, and
      Manufacturing Agreement (see Exhibit 10.2). Mary Pecoraro was our former
      Secretary and is the wife of Anthony Pecoraro, our former Chairman and Vice
      President of New Technology Development. On June 7, 2006, Mary Pecoraro was
      issued 300,000 shares valued at $20,000 for payment due under the Agreement
      for
      Licensing, Joint Venture Agreement, and Manufacturing Agreement (see Exhibit
      10.2)





During
      the fiscal year ended December 31, 2006, Mr. Thomas received 2,500,000 shares
      of
      our restricted common stock which we value at $450,000 as payment for the
      Agreement for Licensing, Joint Venture Agreement and Manufacturing Agreement
      (see Exhibit 10.2).


.


**Director
      Independence**





During
      2006, three of our Board of Directors, Wade Kenyon, Michael J. Scionti and
      Tony
      Council were independent Directors pursuant to the standards applicable to
      Regulation S-B. At this time, the company does not have any independent
      Directors as that term is defined in NASD Rule 4200.





**ITEM
      13. EXHIBITS**





**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
            Employment
                Agreement with Craig Huffman (2)10.2
            Agreement
                for Licensing, Joint Venture Agreement, and Manufacturing Agreement
                (2)14.1
            Code
                of Ethics (2)31.1
            Certification
                of Chief Executive Officer and Acting Principal Financial Officer
                of
                Renewable Energy Resources, Inc. required by Rule 13a - 14(1) or
                Rule 15d
                - 14(a) of the Securities Exchange Act of 1934, as adopted pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 200232.1
            Certification
                of Chief Executive Officer and Acting Principal Financial Officer
                of
                Renewable Energy Resources, Inc. pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C.
                63





(1)
            Incorporated
                by reference to our Registration Statement filed on Form 10-KSB dated
                March 1, 2000.


(2)
            Incorporated
                by reference to our Form10-KSB for the fiscal year ending December
                31,
                2005.





34







**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**




**AUDIT
      FEES**





Epstein,
      Weber & Conover, PLC billed us in the aggregate amount of $31,590 for
      professional services rendered for their audit of our annual financial
      statements and their reviews of the financial statements included in our Form
      10-KSB for the year ended December 31, 2005





Baumann,
      Raymondo & Company, P.A. billed us in the aggregate amount of $8,000 for
      professional services rendered for their audit of our annual financial
      statements and their reviews of the financial statements included in our Form
      10-KSB for the year ended December 31, 2006.





**AUDIT-RELATED
      FEES**





Epstein,
      Weber & Conover, PLC. did not bill us, or perform professional services, for
      assurance and related services that were related to the performance of audit
      or
      review of the financial statements for the fiscal year ended December 31, 2006





Baumann,
      Raymondo & Company, P.A. did not bill us, or perform professional services,
      for assurance and related services that were reasonably related to the
      performance of audit or review of the financial statements for the fiscal year
      ended December 31, 2006.





**FINANCIAL
      INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES**





For
      the
      fiscal year ended December 31, 2006, Epstein, Weber & Conover, PLC did not
      bill us for, nor perform, any financial information systems design or
      implementation. For the fiscal year ended December 31, 2005, we were not billed
      for professional services from any other accounting firm for information systems
      design or implementation.





For
      the
      fiscal year ended December 31, 2006, Baumann, Raymondo & Company, P.A. did
      not bill us for, nor perform, any financial information systems design or
      implementation. For the fiscal year ended December 31, 2006, we were not billed
      for professional services from any other accounting firm for information systems
      design or implementation.





**TAX
      FEES**





Epstein,
      Weber & Conover, PLC, L.L.P. billed us in the aggregate amount of $2,800 for
      professional services rendered for tax related services for the fiscal year
      ended December 31, 2005.





Baumann,
      Raymondo & Company, P.A. billed us in the aggregate amount of $1,250 for
      professional services rendered for tax related services for the fiscal year
      ended December 31, 2006.





**ALL
      OTHER FEES**





We
      were
      not billed for any other professional services for the fiscal year ended
      December 31, 2006.







35





**AUDITOR
      INDEPENDENCE**





Our
      Board
      of Directors considers that the work done for us in the year ended December
      31,
      2006 by Baumann, Raymondo & Company, P.A. is compatible with maintaining
      Baumann, Raymondo & Company, P.A.’s independence.





**AUDITOR'S
      TIME ON TASK**





All
      of
      the work expended by Baumann, Raymondo & Company, P.A. on our December 31,
      2006 audit was attributed to work performed by Baumann, Raymondo & Company,
      P.A. full-time, permanent employees.




**CERTIFICATION**
 
 
 **SIGNATURES**
 
 Pursuant
        to the requirements of section 13 or 15(d) of the Securities Exchange Act
        of
        1934, the undersigned has duly caused this Form 10-KSB to be signed on its
        behalf by the undersigned, there unto duly authorized, in the City of Tampa,
        Florida, on April 11, 2007.
 
    **RENEWABLE
                ENERGY RESOURCES, INC.**Date: April
                11, 2007
              By:
              /s/ *Kenneth
                Brown*Kenneth
                BrownTitle Chief
                Executive Officer and Acting Principal Financial
                Officer
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1933, this report has
        been
        signed below by the following persons on behalf of the registrant and in
        the
        capacities and on the date indicated.
 
 Date: April
                11, 2007
              By:
              /s/ Kenneth
                BrownKenneth
                BrownTitle Chief
                Executive Officer and Acting Principal Financial
                Officer
 Date: April
                11, 2007
              By:
              /s/ Craig
                HuffmanCraig
                HuffmanTitle Executive
                Vice Pesident and Acting Chairman of the Board of
                Directors
  Date: April
                11, 2007
              By:
              /s/ James
                ThomasJames
                ThomasTitle Director


36