Internal Hydro Negotiates Chinese Market Entry of Low Impact Hydro Units, Receiving Interest for Large Production and Sales Venture


TAMPA, Fla., Oct. 12, 2006 (PRIMEZONE) -- Internal Hydro International, Inc., (OTCBB:IHDR) (www.internalhydro.com) announced today that it has had continued negotiations with Panda International Information Technology, Co. Ltd., a subsidiary of Panda Electronics Group Co., Ltd. (Panda), of the People's Republic of China, for sales, marketing, manufacturing and exclusive licensing via a joint venture to enter the China market of energy production with its positive displacement low hydro Energy Commander V (EC V) technology. IHDR has received a letter of interest to participate in manufacturing and marketing of the EC V in and for the greater China Region with ongoing licensing and joint venture discussions. This Chinese small hydro need and capability is expected to support a major joint venture to produce and sell under Panda. With the world's fourth largest hydro electric capacity, a burgeoning industrial base, and electrical need, IHDR's entry into China, and potential surrounding countries, will result in a third major market for the Energy Commander.

Panda Electronics Group is a wholly owned government entity; Panda International Information Technology is a new technology intake entity for China. IHDR has rejected other overtures for China entry, but sees this potential marketing, manufacturing, and sales venture as one which will ensure not only the intellectual property security, but give a likelihood of implementation of the units on a broad scale and certain revenue licensing milestones. IHDR is seeking a joint venture which secures milestones similar to those set for the EU in the number of units and revenue to IHDR in the China venture. IHDR and Panda will continue toward an agreeable joint venture in the near future for the goals of both entities.

Panda has researched and evaluated the low impact Energy Commander unit for implementation in natural, man made, and industrial flows, and is now negotiating with IHDR for an OEM manufacturing contract, sales milestones for China, licensing fee, along with the joint venture structure for the region. Panda's exclusive agent for the venture, Wieshong Yan, CEO of ASA International Group, LLC, stated, "Since being invited to address this exciting opportunity, our team members have collaborated to produce a preliminary plan that we believe will provide long term benefits for China and the global environment." Due to China's new implementation of renewable energy laws in 2006, the search and finding of the Energy Commander solution to add to power output in China is seen by Mr. Yan as one that will benefit both IHDR, Panda and the world. Yan stated, "We understand that we are at the beginning of a 'new day' in renewable energy and through our combined efforts our children's children will breath easier in the future."

The efficiency of the EC V using low flows of water into the twelve piston radial system to create clean electricity, is now being shown in demonstrations in Mobile, Alabama, before larger scale production handover to IHDR's European partner, Cm2 of Italy. The EC V low impact hydro unit, is the first low hydro system to ever utilize positive displacement by cylinders set in a radial engine form, instead of traditional turbines.

Panda Electronics Group is regarded as the cradle of China's electronic industry. Panda is ranked as number 39 of China's top 500 manufacturing enterprises. It is one of China's core high tech enterprises and high tech electronics information enterprises in the Asian-Pacific region. The company has five state level engineering R/D laboratories, one post-doctoral working station and 10 research centers for developing new products. The Company is listed as Nanjing Panda Electronics Company, Ltd., on the Shanghai Stock Exchanges (A shares) and Hong Kong Stock Exchanges (H shares). In 2003, the company's sales volume reached RMB 26.3 billion with exports of over US$930 million.

About Internal Hydro:

Internal Hydro International, Inc. is an alternative energy company that developed a clean energy power system, the Energy Commander Systems, that utilizes a patented technology, using waste water, fluid or gas flow from any source where flow pressure is present, and yet wasted, to create electricity. Internal Hydro has licensed a tire remediation to fuel and ethanol waste (DDG) to biofuels technology for use on ethanol plants domestically. IHDR is international in scope, with European production and marketing for its core technologies, and is preparing to enter the market with its core Energy Commander systems. Internal Hydro is well positioned to gain major market share and dominate the niche of hydro and renewable energy in the fragmented alternative energy marketplace. For more information, please visit the Company's Web site at www.InternalHydro.com.

Forward-Looking Statements: This release contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Expressions of future goals and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements involve a number of risks and uncertainties, including the timely development and market acceptance of products and technologies, successful integration of acquisitions, the ability to secure additional sources of financing, the ability to reduce operating expenses and other factors. The actual results that the company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. The company undertakes no obligations to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.


            

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