Table of Contents  UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X]  QUARTERLY  REPORT  PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2007.  [   ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ________  Commission file no.      333-125678  PROBE MANUFACTURING, INC. (Exact name of issuer as specified in its charter)  NEVADA
(State or other jurisdiction of
Incorporation or organization)20-2675800
(I.R.S. Employer
Identification No.)   25242 Arctic Ocean Drive Lake Forest, California 92630 (Address of principal executive offices including zip code)  (949) 206-6868 (Issuers telephone number, including area code)  Securities registered under Section 12(b) of the Exchange Act:     NONE.  Securities registered under Section 12(g) of the Exchange Act:  COMMON STOCK, PAR VALUE $0.001 PER  SHARE. (Title of class)  Check whether the Issuer (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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X   No ______  Indicate by check mark whet her the registrant is a shell company (as defined by Rule 12b-2 of the Security Exchange Act)   Yes ______   NoX    .  As of June 30, 2007, the Issuer had 10,273,321 shares of common stock outstanding.  Transitional Small Business Disclosure Format (check one): Yes _____ NoX    .  1   ______________________________________________________________________________________  Table of Contents   PROBE MANUFACTURING, INC. 10-QSB  TABLE OF CONTENTS   PART I.  FINANCIAL INFORMATIONPage  Item 1.Financial StatementsReport of independent registered public accounting firmF - 1Balance Sheet as of June 30, 2007 and December 31, 2006    (Unaudited)F - 2Statement of Operations for the three months ended June 30, 2007 and 2006   (Unaudited)F - 3Statements of Cashflows for the three months ended June 30, 2007 and 2006F  4Foot Notes to the Financial StatementsF  5Item 2.Managements Discussion and Analysis of Financial Condition and Plan of Operations3Item 3.Controls and Procedures12   PART II.  OTHER  INFORMATIONItem 1.Legal  Proceedings13Item 2.Unregistered Sales of Equity Securities and Use of  Proceeds13Item 3.Defaults  Upon  Senior  Securities13Item 4.Submission  of  Matters  to  a  Vote  of  Security  Holders13Item 5.Other  Information13Item 6.Exhibits14Item 7.Reports on Form 8-k18   2   ______________________________________________________________________________________  Table of Contents   Item 1.       Financial statements   JASPERS + HALL, PC CERTIFIED PUBLIC ACCOUNTANTS  9175 E Kenyon Avenue Denver, CO 80237 303-796-0099     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To the Board of Directors Probe Manufacturing, Inc. Costa Mesa, CA  We have reviewed the accompanying balance sheet of Probe Manufacturing, Inc. as of June 30, 2007, and the related statements of operations and cash flows for the three and six month periods ended June 30, 2007. These financial statements are the responsibility of the Companys management. We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1, conditions exist which raise 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/ Jaspers + Hall, PC August 8, 2007       F - 1 ______________________________________________________________________________________  Table of Contents   PROBE MANUFACTURING, INC.Balance SheetUnauditedJune 30, 2007December 31, 2006AssetsCurrent Assets:Cash$                13,022$        42,580Accounts receivable - trade - net882,305902,767Inventory919,4781,022,931Total Current Assets1,814,8051,968,278Property And Equipment - Net307,274317,843Total Assets$           2,122,079$   2,286,121Liabilities And Stockholders' DeficitCurrent Liabilities:Accounts payable - trade$              675,774$      629,598Accrued Expenses222,658273,487Notes payable-23,496Current Portion of LT Debt1,195,0521,174,383Total Current Liabilities2,093,4842,100,964Long-Term Debt:Other long-term debt1,171,6981,346,595Capital lease settlement obligations384,025758,408Less Current portion of Long Term Debt(1,195,052)(1,174,383)Total Long-Term Debt360,671930,620Total Liabilities2,454,1553,031,584Stockholders' Deficit:Common Stock to issue37,80842,533Common stock, $.001 par value; 200,000,000 shares authorized; 10,273,321 and 10,162,608 shares issued and outstanding respectively10,27310,162Additional paid-in capital102,85360,431Accumulated deficit(483,010)(858,589)Total Stockholders' Deficit(332,075)(745,463)Total Liabilities And Stockholders' Deficit$       2,122,079$      2,286,121  See Accountants review report    F - 2 ______________________________________________________________________________________  Table of Contents   Probe Manufacturing, Inc.Statement of Operationsfor the three and six month periods endedJune 30, 2007 and 2006 respectivelyUnauditedUnauditedThree-month period endedSix-month period ended2007200620072006Sales$1,807,543$2,715,600$3,684,633$4,762,435Cost Of Goods Sold1,338,8302,098,1552,725,3583,521,546Gross Profit468,713617,446959,2741,240,889General And Administrative375,813489,204791,554929,951Research and Development43,79143,791Net Profit / (Loss) From Operations49,109128,241123,929310,938Other Income / (Expenses)1881,183154(37,867)Gain on Debt Settlement324,330324,330Interest Expense(37,000)(74,289)(72,836)(153,133)Net Profit / (Loss) Before Income Taxes336,62755,135375,577119,938Income Tax Expense----Net Profit / (Loss)$336,627$55,135$375,577$119,938Per Share Information:Basic weighted average numberof common shares outstanding10,310,1373,482,32610,292,0313,425,795Net Profit / (Loss) per common share$0.033$0.016$0.036$0.035Per Share Information:Diluted, weighted average numberof common shares outstanding14,841,89216,955,56814,705,63516,824,599Diluted, Net Profit / (Loss) per common share$0.023$0.003$0.026$0.007  See Accountants review report    F - 3 ______________________________________________________________________________________  Table of Contents   PROBE MANUFACTURING, INC.Statements of Cash Flowsfor the six months ended June 30, 2007UnauditedUnaudited20072006Cash Flows from Operating Activities:Net Income / ( Loss )$         375,577$         119,938Adjustments to reconcile net loss to net cashused in operating activities:Depreciation and amortization135,96299,135Gain on debt settlement(324,330)Stock issued for Interest-28,542Stock issued for Services37,80950,000Changes in assets and liabilities:(Increase) decrease in accounts receivable20,462(199,759)(Increase) decrease in inventory103,453(285,150)(Increase) decrease in other assets-(12,234)(Decrease) increase in accounts payable46,176243,517Other (Decrease) increase in accrued expenses(50,829)154Net Cash provided / (Used) In Operating Activities344,28044,143Cash Flows from Investing ActivitiesPurchase of property and equipment(125,393)(3,495)Cash Flows Used In Investing Activities(125,393)(3,495)Cash Flows from Financing ActivitiesBank Overdraft / (Repayment)-(112,084)Borrowings / (Payments) under line of credit, net-(27,838)Payments on capital lease settlement obligations(50,053)(52,328)Proceeds / (Payments) on notes payable(198,393)151,602Cash Flows Provided / (used)  By Financing Activities(248,446)(40,648)Net (Decrease) Increase in Cash and Cash Equivalents(29,559)-Cash and Cash Equivalents at Beginning of Period42,580-Cash and Cash Equivalents at End of Period$           13,021$                   -Supplemental Information:Interest Paid$           35,426$         153,133Income Taxes Paid$                   -$                   -Current Lines of credit converted to Long term Notes Payable$         705,000  See Accountants review report   F - 4 ______________________________________________________________________________________  Table of Contents   PROBE MANUFACTURING, INC. Notes to Financial Statements (Unaudited)   Notes 1- GENERAL  The Company Probe Manufacturing Industries, Inc. was incorporated on July 7, 1995. On April 21, 2005, the Company was re-domiciled from California to Nevada and changed its name to Probe Manufacturing, Inc.  Probe Manufacturing, Inc. (the Company or Probe) is a leading provider of advanced electronics manufacturing services, or EMS, to original equipment manufacturers, or OEMs, primarily in the industrial, instrumentation, alternative fuel, medical device, and aerospace segments. This includes end-to-end manufacturing solutions ranging from engineering to manufacturing of printed circuit card assembly, cable assembly, enclosures, complete system integration and testing, as well as global order fulfillment.  Going Concern The financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the normal course of business. The Company had a net profit of $375,577, generated $344,280 in net cash from operations and improved their total stockholders deficit by $413,388 for the six months ended, June 30, 2007.  However, they still had a working capital deficit of 278,679 and a shareholder deficit of $332, 075 as of June 30, 2007. Therefore the ability of the Company to operate as a going concern is still dependent upon its ability (1) to obtain sufficient debt and/or equity capital and/or (2) to continue generating positive cash flow from operations.  Management is taking the following steps to address this situation: (a) continue improving operational efficiencies by: (i) re-negotiating direct material cost with all of our suppliers, (ii) by setting up Managed inventory Solutions, such as bonded inventory levels and auto-release programs with our major suppliers, whereby they maintain stock at their facilities and deliver Just-in-Time.  This will improve the utilization of our line of credits with suppliers and maintains inventory at its lowest value point; however from time to time inventory levels may increase temporarily, due to scheduling issues and acquisition of new customers and/or products;  (iii) by improving all systems and processes across operations and streamlining production lines; (b) we have refinanced our lines of credit with agreement(s) that have more attractive terms, as well as increased our credit lines with suppliers; (c) To increase revenue; (i) we are acquiring new customers that are a better fit for us, (ii) and we are  growing the business with our existing customers with offering more value added; and finally (iii) were focusing on more stable customer base such as medical device manufacturers and aerospace industries that have a better chance of  maintaining their manufacturing in Southern California instead of moving it to low cost and offshore regions;  (e)  to ensure long term sustainability of the Company, were planning on focusing more of our resources within the alternative energy industry while continuing to operate our EMS business. The future success of the Company is likely dependent on its ability to attain additional capital to support growth and ultimately, upon its ability to continue profitable operations.  There can be no assurance that the Company will be successful in obtaining such financing, or that it will continue to generate sufficient positive cash flow from operations.  The successful outcome of these or any future activities cannot be determined at this time and there is no assurance that if achieved, the Company will have sufficient funds to execute its business plans. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.   F - 5 ______________________________________________________________________________________  Table of Contents  NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:  The Company follows United States Generally Accepted Accounting Principles. Certain of the principles involve selection among alternatives and choices of methods, which are described in the footnotes to the Companys reviewed financial statements.  Cash and Cash Equivalents The Company maintains the majority of its cash accounts at a commercial bank. The total cash balance is insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000 per commercial bank. For purposes of the statement of cash flows the Company considers all cash and highly liquid investments with initial maturities of one year or less to be cash equivalents.  Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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. Such estimates may be materially different from actual financial results. Significant estimates include the recoverability of long-lived assets, the collection of accounts receivable and valuation of inventory and reserves.  Accounts Receivable The Company grants credit to its customers located within the United States of America; and does not require collateral. The Companys ability to collect receivables is affected by economic fluctuations in the geographic areas and industries served by the Company.  Reserves for un-collectable amounts are provided, based on past experience and a specific analysis of the accounts.  Although the Company expects to collect amounts due, actual collections may differ from the estimated amounts. As of June 30, 2007, the Company had a reserve for potentially un-collectable accounts of $35,212.  Five (5) customers accounted for approximately 81% of accounts receivable as of June 30, 2007.  The Companys trade accounts primarily represent unsecured receivables.  Historically, the Companys bad debt write-offs related to these trade accounts have been insignificant.  Inventory Inventories are valued at the lower of weighted average cost or market value.   Our industry experiences changes in technology, changes in market value and availability of the raw materials, as well as changing customer demand.  The Company makes provisions for estimated excess and obsolete inventories based on regular audits and cycle counts of our on-hand inventory levels and forecasted customer demands and at times additional provisions are made.  Any inventory write offs are charged to the reserve account. As of June 30, 2007 the Company had a reserve for potentially obsolete inventory of $409,226.  Property and Equipment Property and equipment are stated at cost. Assets held under capital leases are recorded at lease inception at the lower of the present value of the minimum lease payments or the fair market value of the related assets.  The Company follows the practice of capitalizing property and equipment purchased over $5,000.  The cost of ordinary maintenance and repairs is charged to operations. Depreciation and amortization are computed on the straight-line method over the following estimated useful lives of the related assets:  Furniture and fixtures 3 to 7 years Equipment 7 to 10 years Leasehold improvements 2 years (life of the lease)   F - 6 ______________________________________________________________________________________  Table of Contents  Long Lived Assets The Companys management assesses the recoverability of its long-lived assets by determining whether the depreciation and amortization of long lived assets over their remaining lives can be recovered through projected undiscounted future cash flows. The amount of long lived asset impairment if any, is measured based on fair value and is charged to operations in the period in which long lived assets impairment is determined by management. There can be no assurance however, that market conditions will not change or demand for the Companys services will continue, which could result in impairment of long-lived assets in the future.  Revenue Recognition Revenue from product and services are recognized at the time goods are shipped or services are provided to the customer, with an appropriate provision for returns and allowances. Terms are generally FOB Origination with the right of inspection and acceptance. The Company has not experienced a material amount of rejected or damaged product.  Fair Value of Financial Instruments The carrying amount of accounts payable and accrued expenses are considered to be representative of their respective fair values because of the short-term nature of these financial instruments.  Other Comprehensive Income The Company has no material components of other comprehensive income (loss) and accordingly, net loss is equal to comprehensive loss in all periods.  Net Profit / (Loss) per Common Share Basic profit / (loss) per share is computed on the basis of the weighted average number of common shares outstanding.  At June 30, 2007 the Company had outstanding common shares of 10,273,321, and 78,363 shares to be issued for officer compensation, for a total of 10,351,684 used in the calculation of basic earnings per share.  Basic Weighted average common shares and equivalents at June 30, 2007 were 10,292,031.  As of June 30, 2007 the Company had outstanding warrants to purchase 4,076,250 additional common shares and options to purchase 455,505 additional common shares, which may dilute future earnings per share. Fully diluted weighted average common shares and equivalents at June 30, 2007 were 14,705,635.  Research and Development Cost Research and Development Costs incurred in association with the alternative fuels technology development (which include salaries and equipment) are expensed as incurred.  We expensed $43,791 in R&D in the 3 month ended June 30 2007. We purchased a 125 kilo-watt natural gas distributed power generator and are currently working on converting it to run on Hydrogen.  Segment Information We operate primarily in a single operating segment providing printed circuit boards and electronic assemblies.  Stock Based Compensation The Company has adopted the use of Statement of Financial Accounting Standards No. 123R , Share-Based Payment, (SFAS No. 123R)   This Statement requires an entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost is recognized over the period during which an employee is required to provide service in exchange for the awardthe requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.   This Statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance and eliminates the alternative to use Opinion 25s intrinsic value method of accounting that was provided in Statement 123 as originally issued.   F - 7 ______________________________________________________________________________________  Table of Contents  Income Taxes The Company accounts for income taxes under SFAS No. 109, which requires the asset and liability approach to accounting for income taxes.  Under this method, deferred tax assets and liabilities are measured based on differences between financial reporting and tax bases of assets and liabilities measured using enacted tax rates and laws that are expected to be in effect when differences are expected to reverse. The net profit for the six month period ended, June 30, 2007 of $375,577 is offset by previous losses.  As of June 30, 2007 the Company had a net operating loss carry forward of $(483,012). The Company has not booked any deferred tax asset as a result.  NOTE 3  INVENTORY  Inventories at June 30, 2007 by major classification were comprised of the following:  Raw Material$   1,068,891Work in Process254,509Finished Goods5,304Total1,328,704Less Reserve for excess or obsolete inventory(409,226)Total Inventory$     919,478    NOTE 4  PROPERTY AND EQUIPMENT  Property and equipment were comprised of the following at June 30, 2007:  Furniture and fixtures$       57,046Equipment2,390,927Leasehold improvements210,403Total2,658,376Less accumulated depreciation and amortization(2,351,102)Net Fixed Assets$      307,274   NOTE 5  ACCRUED EXPENSES  As of June 30, 2007, the Company had the following accrued expenses: Accrued Wages$21,105Accrued Interest6,157Accrued Rent10,234Accrued Professional Fees40,000Accrued Utilities54,000Accrued Vacation91,162Total Accrued Expenses$222,658   F - 8 ______________________________________________________________________________________  Table of Contents  NOTE 7 - CAPITAL LEASE SETTLEMENT OBLIGATIONS  On July 9, 1997 and December 21, 1997, the Company entered into two lease agreements, with Crocker capital, which subsequently assigned the leases to The CIT Group.  In September 2004 the Company had outstanding balances of $457,604 and $556,293 on the two leases and was unable to make the monthly lease payments. As a result, the Company entered into a forbearance agreement with The CIT Group, with monthly payments of $7,500 and an early payment schedule as follows:  The CIT Group would release the Company and its guarantors if one of the following payments were made, less the total of all monthly payments made to that date:  $375,000 if paid by October 25 , 2004 $425,000 if paid by December 25, 2004 $500,000 if paid by June 25, 2005 $550,000 if paid by December 25, 2005 $600,000 if paid by June 25, 2006 $650,000 if paid by December 25, 2006 $700,000 if paid by June 25, 2007  On June 1, 2007 an amended forbearance agreement was entered into:  1) In consideration of CIT entering into this Addendum, Probe will pay CIT the sum of $7,500 on or before June 25, 2007, which was paid. 2) Recital B is amended to state that as of June 25, 2007 Probes payment obligation to CIT totals $457,500. 3) Section 2.3 of the Forbearance Agreement is amended to state that probe will pay CIT the amount of $457,500 in sixty-one (61) monthly installments of $7,500 each, commencing on July 25, 2007 and ending on July 25, 2012. If at any time Probe elects to pay in full the remaining balance, upon 30 day written notice, CIT will provide a payoff figure for the remaining balance using a present value rate of 7.0%. 4) The Company imputed interest at 7% over the term of the payments, which resulted in a present value of $384,025 at June 30, 2007. 5) This resulted in a gain of  $324,330.  NOTE 8  NOTES PAYABLE  A) Note Payable  secured by deed of trust, 12% interest, originally due on September 2006 to Ashford Capital Transition Fund I, LP, and was subsequently extended to March 2006. The balance of $456,000 was paid in full on March 10, 2006.  B) Note Payable - dated March 10, 2006  special use, line of credit in the amount of $90,000, unsecured, 12% interest paid in cash due May 10, 2007, payable to Ashford Capital, LLC.  This note was converted to a term note payable, with an effective date of June 30, 2006, unsecured, 12% interest rate, with a 36 month amortization, payments of $1,997 and a balloon payment of $33,068 on April 15, 2008. As of June 30, 2007 the outstanding balance was $47,039.  C)  Note Payable  This Note was an operating line of credit, secured by the assets of the Company,   borrowings under this line of credit were at an interest rate of 20% (12% paid in cash and 8% paid in common stock in the Company) per annum, payable to Ed Lassiter.  This note was converted to a term note payable, with an effective date of June 30, 2006, un-secured, at 12% interest rate, with a 36 month amortization, monthly payments of $ $4,650 and a balloon payment of $77,014 on April 15, 2008.  As of June 30, 2007 the outstanding balance was $109,552.   F - 9 ______________________________________________________________________________________  Table of Contents  D)  Note Payable -- This Note was an operating line of credit, secured by the assets of the Company,   borrowings under this line of credit were at an interest rate of 20% (12% paid in cash and 8% paid in common stock in the Company) per annum, payable to William Duncan.  This note was converted to a term note payable, with an effective date of June 30, 2006, un-secured, at 12% interest rate, with a 36 month amortization, monthly payments of $1,661 and a balloon payment of $27,505 on April 15, 2008. As of June 30, 2007 the outstanding balance was $39,126.  E)  Note Payable  This Note was an operating line of credit, secured by the assets of the Company,   borrowings under this line of credit were at an interest rate of 20% (12% paid in cash and 8% paid in common stock in the Company) per annum, payable to Benner Exemption Trust.  This note was converted to a term note payable, with an effective date of June 30, 2006, un-secured, at 12% interest rate, with a 36 month amortization, payments of $4,650 and a balloon payment of $77,014 on April 15, 2008.   As of June 30, 2007 the outstanding balance was $109,552.  F) Note Payable  This note was an operating line of credit, secured by the assets of the Company.   Borrowings under this line of credit were at an interest rate of 20% (12% paid in cash and 8% paid in common stock in the Company) per annum, payable to Ashford Capital, LLC .  This note was converted to a term note payable, with an effective date of June 30, 2006, un-secured, at 12% interest rate, with a 36 month amortization, monthly payments of $3,321 and a balloon payment of $55,010 on April 15, 2008.  As of June 30, 2007 the outstanding balance was $78,252.  G) Note Payable  This Note was an operating line of credit, secured by the assets of the Company,   Borrowings under this line of credit were at an interest rate of 15% per annum, payable to Hoa Mai.  This note was converted to a term note payable, with an effective date of June 30, 2006, un-secured, at 12% interest rate, with a 36 month amortization, monthly payments of $ $1,661 and a balloon payment of $27,505 on April 15, 2008.  As of June 30, 2007 the outstanding balance was $39,126.  H) Note Payable  Term note payable, with an effective date of April 23, 2006, secured by assets of the Company, Payable to Hoa Mai at 15% interest rate, with a 12 month amortization, monthly payments of $ 2,166. As of June 30, 2007 the outstanding balance was $20,244.  Related Party  Notes payable I) Note Payable - dated March 10, 2006  related party, un-secured, 12% interest and ten monthly payments in the amount of $3,650 plus accrued interest. The 1st payment was due on April 10, 2006.  The note is payable to Kambiz Mahdi.  As of June 30, 2007 the balance was $ 0.  J) Note Payable - dated March 10, 2006  related party, un-secured, 12% interest, and ten monthly payments in the amount of $3,650 plus accrued interest. The 1st payment was due on April 10, 2006.  The note is payable to Reza Zarif.  As of June 30, 2007 the balance was $ 0.  K) Note Payable - dated March 10, 2006   related party, special use, line of credit in the amount of $45,000, unsecured, 20% interest (10% paid in Cash and 10% paid in Company stock),  due May 10, 2007.  This note was converted to a term note payable, with an effective date of June 30, 2006, un-secured, 12% interest rate, with a 36 month amortization, monthly payments of $1,001 and a balloon payment of $16,588 on April 15, 2008.  This note is payable to Kambiz Mahdi.  As of June 30, 2007 the outstanding balance was $23,597.  L) Note Payable - dated March 10, 2006   related party, special use, line of credit in the amount of $45,000, unsecured, 20% interest (10% paid in Cash and 10% paid in Company stock),  due May 10, 2007.   This note was converted to a term note payable, with an effective date of June 30, 2006, un-secured, 12% interest rate, with a 36 month amortization, monthly payments of $1,001 and a balloon payment of $16,588 on April 15, 2008.  This note is payable to Reza Zarif.  As of June 30, 2007, the outstanding balance was $23,597.   F - 10 ______________________________________________________________________________________  Table of Contents  M) Note Payable  related party, unsecured, 20% interest (10% paid in Cash and 10% paid in Company stock) due on May 10, 2007, Payable to Kambiz Mahdi.  This note was converted to a term note payable, with an effective date of June 30, 2006, un-secured, At 12% interest rate, with a 36 month amortization, monthly payments of $7,871 and a balloon payment of $130,366 on April 15, 2008.   As of June 30, 2007 the outstanding balance was $185,445.  N) Note Payable  related party, unsecured, 20% interest (10% paid in Cash and 10% paid in Company stock) due on May 10, 2007, Payable to Reza Zarif.  This note was converted to a term note payable, with an effective date of June 30, 2006, un-secured, At 12% interest rate, with a 36 month amortization, monthly payments of $7,871 and a balloon payment of $130,366 on April 15, 2008. As of June 30, 2007 the outstanding balance was $185,445.  O)  Note Payable  related party.  This note was an operating line of credit, secured by the assets of the Company. Borrowings under this line of credit were at an interest rate of 20% (12% paid in cash and 8% paid in common stock in the Company) per annum, payable to Rufina Paniego.  This note was converted to a term note payable, with an effective date of June 30, 2006, un-secured, 12% interest rate, with a 36 month amortization, monthly payments of $2,491 and a balloon payment of $41,257 on April 15, 2008.  As of June 30, 2007 the outstanding balance was $58,689.  P)  Note Payable  related party.  This note was an operating line of credit, secured by the assets of the Company.   Borrowings under this line of credit were at an interest rate of 20% (12% paid in cash and 8% paid in common stock in the Company) per annum, payable to eFund Capital Partners.  This note was converted to a term note payable, with an effective date of June 30, 2006, un-secured, at 12% interest rate, with a 36 month amortization, monthly payments of $4,982 and a balloon payment of $82,516 on April 15, 2008. As of June 30, 2007 the outstanding balance was $117,377.  Q)  Note Payable  related party.  This is a term note payable, secured by the assets of the Company. Borrowings under this term note were at an interest rate of 15%, with 12 months amortization, monthly payments of $2,256 payable to Rufina Paniego. As of June 30, 2007 the outstanding balance was $19,095.  Other Long-Term Debt Other long-term debt consists of, a settlements reached with I-Source, a supplier, with monthly payments of $2,500. As of June 30, 2007 their balance was $21,925. Payments continue through May, 2008.   NOTE 9  COMMITMENTS AND CONTIGENCIES  Operating Rental Leases On September 11, 2006 we entered into a sublease agreement for 10,000 sq ft. of manufacturing space which includes office space with Quantum Fuel System Technologies Worldwide, Inc. The initial lease is for two years with an option to renew for three years at $8,027 per month. The new facility is located at 25242 Arctic Ocean Drive, Lake Forest, CA 92630.  Litigation The Company may be involved from time to time in various claims, lawsuits, and disputes with third parties, action involving allegations or discrimination or breach of contract actions incidental in the normal operations of the business.  We believe that there are no other claims or litigation pending, the outcome of which could have a material adverse effect on our financial condition or operating results.  However, if litigation should arise and the Company was to receive an unfavorable ruling, there is a possibility that it would have a material adverse impact on our financial condition, results of operations, or liquidity of the period in which the ruling occurs, or future periods.   F - 11 ______________________________________________________________________________________  Table of Contents  NOTE 10  CAPITAL STOCK TRANSACTIONS On April 21, 2005, the Companys Board of Directors and shareholders approved the following capital stock transactions:  The Company re-domiciled in the state of Nevada, whereby increasing the number of authorized common shares to 200,000,000 and designating a par value of $.001 per share.  On May 25, 2006, the Companys Board of Directors and shareholders approved the following capital stock transactions:  An amendment to the Articles of Incorporation of the Company authorizing a new series of Preferred stock, which shall be designated as Series C, and shall consist of 15,000 shares.  Common Stock transactions: From June 16, 2004 to April 1, 2005 the Company sold 2,221,250 shares of common stock Private Placement Memorandum at $.80 per Share to 49 individuals generating net proceeds of $1,777,000, of which 715,000 shares were sold in 2005, generating net proceeds of $572,000.  During 2005 the Company issued 31,118 shares of common stock, in lieu of interest payments at $.80 per share for a total of $24,894.  In February 2006 the Company issued 13,438 shares of common stock, in lieu of interest payments at $.80 per share for a total of $10,751.  In May 2006 the Company issued 16,336 shares of common stock, in lieu of interest payments at $.80 per share for a total of $13,094.  On May 25, 2006, The Company issued 500,000 shares of common stock at .10 cents (Market value of shares on that date), for a total of $50,000,  to compensate its directors for services through a stock grant pursuant to Form S-8 in the following amounts:  NameAmount of Common Stock issuedKambiz Mahdi100,000Reza Zarif100,000Barrett Evans100,000Jeffrey Conrad100,000Dennis Benner100,000    F - 12 ______________________________________________________________________________________  Table of Contents  In August 2006 the Company issued 30,254 shares of common stock, in lieu of interest payments at $.80 per share for a total of $24,205.  In August 2006 the Company issued 11,678 shares of common stock, in lieu of interest payments at $.80 per share for a total of $9,343.  In August 2006 the Company issued 4,205 shares of common stock for officer compensation at $.80 per share for a total of $3,365.  In August 2006 the Company accrued 47,260 shares of common stock for officer compensation at $.10 per share (fair market value at time of accrual) for a total of $4,726. These shares had been classified as issued in quarterly filings.  In September 2006 the Company accrued 29,083 shares of common stock for officer compensation  at $ .65 per share (fair market value at time of accrual) for a total of $18,904.  In December 2006 the Company accrued 34,370 shares of common stock for officer compensation at $.55 per share (fair market value at time of accrual) for a total of $18,904.  In July 2006 the Company converted 12,500 shares from Preferred B to Preferred C, 14,040 shares.  In August 2006 the holders of Preferred series C elected to convert their 14,040 shares into 1,755,000   shares of common stock.  On August 14, 2006 the holders converted 440 shares of the Preferred Series A for 4,544,188 shares of the Companys common stock.  In the 1st quarter of 2007, the Company issued 110,713 common shares which were accrued but un-issued as of December 31, 2006. For the six months ended, June 30, 2007 the Company accrued 78,363 common shares for officer compensation, which were accrued but un-issued.  COMMON STOCK Our Articles of Incorporation authorize us to issue 200,000,000 shares of common stock, par value $0.001 per share. As of June 30, 2007 and December 31, 2006 there were 10,270,863 and 10,162,608 shares of common stock issued and outstanding, respectively. All outstanding shares of common stock are, and the common stock to be issued in this offering will be, fully paid and non-assessable.  Each share of our common stock has identical rights and privileges in every respect. The holders of our common stock are entitled to vote upon all matters submitted to a vote of our shareholders and are entitled to one vote for each share of common stock held. There are no cumulative voting rights.  The holders of our common stock are entitled to share equally in dividends and other distributions that our Board of Directors may declare from time to time out of funds legally available for that purpose, if any, after the satisfaction of any prior rights and preferences of any outstanding preferred stock. If we liquidate, dissolve or wind up, the holders of shares of common stock will be entitled to share ratably in the distribution of all of our assets remaining available for distribution after satisfaction of all our liabilities and our obligations to holders of our outstanding preferred stock.   F - 13 ______________________________________________________________________________________  Table of Contents   PREFERRED STOCK Our Articles of Incorporation authorize us to issue 10,000,000 shares of preferred stock.  We authorized 440 shares of Series A Convertible Preferred Stock and 20,000 shares of Series B Convertible Preferred Stock.  On May 25th, 2006 the Articles of Incorporation were amended authorizing 15,000 shares Series C Convertible Preferred Stock.  Preferred Series A As of June 30, 2006, there were 440 shares of Convertible A Preferred Stock outstanding, with a stated value of $1,000.  Each share is convertible into 0.1% percent of the shares of our common stock outstanding at the date of conversion, which shall convert upon election of the holder.  The holders of  series A Preferred stock have the right to vote with the holders of common stock on any matter to which the common stock holders are entitled to vote and they are entitled to vote number of shares of common stock into which the series A Preferred Stock is convertible. If we are liquidated, distribute our assets, dissolve or wind-up, the holders of Convertible A Preferred Stock shall receive the greater of (i) $2,500 per share of Convertible A Preferred Stock they hold at the time of such liquidation, or (ii) their pro rata share of the total value of our assets and funds to be distributed, assuming the Convertible A preferred stock is converted to common stock.  On August 14, 2006 the holders converted 440 shares of the Preferred Series A for 4,544,188 shares of the Companys common stock.  Preferred Series B As of March 31, 2006 there were 12,500 shares of Series B Convertible stock outstanding, with a stated value of $100. Each share of Series B Stock shall be converted into a number of shares of common stock that is equal to each share being divided by the average of the 3 lowest intraday bids in the twenty (20) days prior to conversion multiplied by 100 (1 divided by x, multiplied by 100), or 125 shares per Series B, whichever is greater.  The minimum conversion price which Series B shareholders shall convert their Series B shares to common stock shall be $0.10.  Exchange of Preferred Series B to Preferred Series C On May 25th the Board of Directors approved the exchange of Series B Convertible Preferred Stock for Series C No-Par, Convertible Preferred Stock for its Series B stockholders.  After the exchange took place Series B Convertible Preferred Stock was cancelled.  The Series C Convertible Preferred Stock carries the same rights as Series B Convertible Preferred Stock except that Series C Convertible Preferred Stock can be redeemed by the Company.  At any time, the Company may, in its sole discretion, redeem some or all of the outstanding shares of Series C Stock at a Redemption Price equal to the greater of $120.00 per share for the first year from the date of this certificate and after which the redemption price shall increase by twelve percent (12%) per year until all outstanding shares of Series C have been redeemed.  To redeem Series C Stock, the Company, at least five (5) days prior to the date on which it desires to redeem such stock (the Redemption Date), shall send the applicable holder of Series C Stock a notice of the redemption provided, however, that failure to give such notice or any defect therein or in the mailing thereof shall not affect the validity of the proceedings for the redemption of any shares of Series C Stock.  Such notice shall state:  (i) the redemption date; (ii) the redemption price; and (iii) the number of shares of Series C Stock to be redeemed.  Furthermore, the holders of Series C Convertible Preferred Stock shall receive one A Warrant and one B Warrant for every Ten (10) shares of common stock received from converting a share of Series C Convertible Preferred stock of the Company.  This series A and B Warrants are pursuant to the terms and conditions of the Companys Series A and B warrant agreement as amended.   F - 14 ______________________________________________________________________________________  Table of Contents  Preferred Series C As of June 30, 2006 there were 14,040 shares of Convertible C Preferred Stock outstanding.   Originally as filed on May 25, 2006 each share of Series C Stock shall be converted into a number of shares of Common Stock that is equal to each share being divided by the average of the 3 lowest intraday bids in the twenty (20) days prior to conversion or $0.10, which ever is greater, multiplied by 100 (1 divided by x, multiplied by 100), or 125 shares per Series C, whichever is greater. However, on August 07, 2006 the terms of Series C were amended as follows: Each share of Series C stock shall be converted into a number of shares of Common Stock that is equal to each share being divided $0.80 multiplied by 100 (1 divided by $0.80, multiplied by 100).  On August 14, 2006, the holders of Preferred Series C elected to convert their shares into common stock. As a result 14, 040 shares of Preferred Series C were converted into 1,755,000 shares of common stock.  Our Board of Directors has the authority to issue additional shares of preferred stock in one or more series, and fix for each series, the designation of and number of shares to be included in each such series. Our Board of Directors is also authorized to set the powers, privileges, preferences, and relative participating, optional or other rights, if any, of the shares of each such series and the qualifications, limitations or restrictions of the shares of each such series.  Unless our Board of Directors provides otherwise, the shares of all series of preferred stock will rank on parity with respect to the payment of dividends and to the distribution of assets upon liquidation. Any issuance by us of shares of our preferred stock may have the effect of delaying, deferring or preventing a change of our control or an unsolicited acquisition proposal. The issuance of preferred stock also could decrease the amount of earnings and assets available for distribution to the holders of common stock or could adversely affect the rights and powers, including voting rights, of the holders of common stock.  Warrants Series A - Common Stock Warrants: We currently have 407,625 Series A Warrants issued and outstanding.  Each warrant gives the holder the right to purchase 5 shares of common stock at $1.00 per share.  The Series A Warrants will expire on November 15, 2007.  Series B - Common Stock Warrants We currently have 407,625 Series B Warrants issued and outstanding.  Each warrant gives the holder the right to purchase 5 shares of common stock at $1.50  per share.  The Series B Warrants will expire on May 15, 2008.  Warrants Activity for the Period and Summary of Outstanding Warrants From June 16, 2004 to April 1, 2005 the Company sold 222,125 common stock units pursuant to a private placement memorandum at $8.00 per unit to 49 individuals generating net proceeds of $1,777,000.  The Company also issued 10,000 units of common stock for compensation.  On August 14, 2006, 14,040 shares of preferred series C were converted into 1,755,000 shares of the Companys, common stock.  Each Unit consists of ten (10) shares of common stock.  In addition, each unit entitles the holder to purchase a total of 10 shares of Probe Common Stock through the exercise of Warrants as follows: Class A Warrants, for 5 shares at a price of $1.00 per share which would expire on November 16, 2005, which has been subsequently extended to November 15, 2007 and Class B Warrants, for 5 shares at a price of $1.50 per share which would expire on May 16, 2005, which was subsequently extended to May 15, 2008.  As of June 30, 2007 no warrants were exercised.  On August 14, 2006, the holders of Preferred Series C elected to convert their shares into common stock. As a result 14, 040 shares of Preferred Series C were converted into 1,755,000 shares of common stock. Furthermore, the holders of Series C Convertible Preferred Stock shall receive one A Warrant and one B warrant for every Ten (10) shares of common stock received from converting a share of Series C convertible Preferred stock of the Company.  This series A and B Warrants are pursuant to the terms and conditions of the Companys Series A and B warrant agreement as amended.   F - 15 ______________________________________________________________________________________  Table of Contents  A summary of warrant activity for the periods is as follows:  No. of WarrantsWeighted Average Exercise priceWarrants exercisableWeighted Average Exercise priceOutstanding December 31, 2003--Granted321,250$1.25321,250$1.25Exercised--Outstanding December 31, 2004321,250$1.25321,250Granted143,000$1.25143,000$1.25Exercised--Outstanding December 31, 2005464,250$1.25464,250$1.25Granted351,000$1.25351,000$1.25Exercised--Outstanding December 31, 2006815,250$1.25815,250$1.25Granted-$1.25-$1.25Exercised--Outstanding June 30, 2007815,250$1.25815,250$1.25    Warrants OutstandingWarrants ExercisableRange of Warrant Exercise PriceNo. of WarrantsWeighted Average Exercise priceWeighted Average Remaining Contractual lifeNo. of WarrantsWeighted Average Exercise price$1.00407,625$1.000.37407,625$1.00$1.50407,625$1.500.85407,625$1.50    F - 16 ______________________________________________________________________________________  Table of Contents  STOCK OPTIONS On February 8, 2007, pursuant to the Companys 2006 Incentive Option Plan which was adopted by the Companys Board of Directors granted Company employees an incentive stock option to purchase up to 205,505 shares of common stock in the Company.  These options were granted at $.52 cents, the fair market value of the Company at the time of the grant. These options expire on February 8, 2017.  On February 8, 2007, the Company granted stock options to its key employees, to purchase up to 250,000 shares of the Companys common stock, which was approved by the companys Board of Directors.  These options were granted at $.52 cents, the fair market value of the Company at the time of the grant.  These options expire on February 8, 2017.   NOTE 11  RELATED PARTY TRANSACTIONS  Jeffrey Conrad provides legal services for the Company and receives a monthly retainer of $2,500 and is one of the Company directors.  Jeffrey Conrad is also a venture partner of eFund Capital Partners, LLC. Jeffrey Conrad does not have an equity stake in eFund Capital Partners, LLC.  eFund Capital Partners, LLC received their shares pursuant to an investment agreement with us in April of 2004. Total payments for the six months ended June 30, 2007 were $5,000.  South Coast Marketing, LLC is associated with eFund Capital Partners and administrated SB-2 filing. Total payments for the six months ended June 30, 2007 were $25,000.  On May 25, 2006 the holders of Series B Convertible Preferred Stock exchanged their stock for Series C Convertible Preferred Stock.  Pursuant to the exchange Reza Zarif, our CEO, received 4,500 shares of Series C; Kambiz Mahdi received 4,500 shares of series C; and eFund Capital Partners, LLC received 5,040 shares of series C.  As originally filed on May 25, 2006 each share of Series C Stock shall be converted into a number of shares of Common Stock that is equal to each share being divided by the average of the 3 lowest intraday bids in the twenty (20) days prior to conversion or $0.10, which ever is greater, multiplied by 100 (1 divided by x, multiplied by 100), or 125 shares per Series C, whichever is greater.  However, on August 07, 2006 the terms of Series C were amended as follows: Each share of Series C Stock shall be converted into a number of shares of Common Stock that is equal to each share being divided $0.80 multiplied by 100 (1 divided by $0.80, multiplied by 100).    F - 17 ______________________________________________________________________________________  Table of Contents  Item 2.   Managements Discussion and Analysis of Financial Condition and Plan of Operations  We intend that our forward-looking statements be subject to the safe harbors created by the Exchange Act. The forward-looking statements are generally accompanied by words such as intend, anticipate, believe, estimate, expect and other similar words and statements and variations or negatives of these words. Our forward-looking statements are based on current expectations, forecasts and assumptions and are subject to risks, uncertainties and changes in condition, significance, value and effect, including those discussed under the heading Risk Factors in this report filed with the Securities and Exchange Commission. Such risks, uncertainties and changes in condition, significance, value and effect could cause our actual results to differ materially from our anticipated outcomes. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate. Therefore, we can give no assurance that the results implied by these forward-looking statements will be realized. The inclusion of forward-looking information should not be regarded as a representation by our company or any other person that the future events, plans or expectations contemplated by Probe Manufacturing, Inc. will be achieved. We disclaim any intention or obligation to update or revise any forward-looking statements contained in the documents incorporated by reference herein, whether as a result of new information, future events or otherwise.  Overview Probe Manufacturing, Inc. was founded in 1995 and is one of Southern California's highest quality, medium volume Electronics Manufacturing Services (EMS) companies. We provide a range of quality manufacturing and integrated supply chain services at affordable prices to companies who design and market electronic products, Original Equipment Manufacturers (OEM). Currently, our revenue is generated from sales of our services primarily to customers in the medical devise, aerospace, industrial, and alternative fuel products manufacturers. The Company provides OEMs with lowest cost of ownership, flexibility, and quality that improves their competitive advantage. Probe's service offerings include new product introduction, collaborative design, materials management, product manufacturing, product warranty repair, and end-of-life support. Because our core business is a service company, were impacted by our customers ability to appropriately predict market demand for their products. While we work with our customers to understand their demand needs, we are removed from the actual end-market served by our customers. Consequently to determine future trends and estimates of activity can be very difficult. To provide for long term sustainability, the Company is in the process of leveraging its manufacturing and commercializing competencies combined with product knowledge to develop its own propriety products for alternative energy technologies to enable vehicles and generators to operate on clean alternative fuels. Probe Manufacturing's headquarters are located in Lake Forest, California.  3 ______________________________________________________________________________________    Table of Contents  Plan of Operations: The Company had a net profit of $375,577, generated $344,280 in net cash from operations and improved our total stockholders deficit by $413,388 for the six months ended, June 30, 2007.  However, we still had a working capital deficit of 278,679 and a shareholder deficit of $332, 075 as of June 30, 2007. Therefore the ability of the Company to operate as a going concern is still dependent upon its ability (1) to obtain sufficient debt and/or equity capital and/or (2) to continue generating positive cash flow from operations.  Management is taking the following steps to address this situation: (a) continue improving operational efficiencies by: (i) re-negotiating direct material cost with all of our suppliers, (ii) by setting up Managed inventory Solutions, such as bonded inventory levels and auto-release programs with our major suppliers, whereby they maintain stock at their facilities and deliver Just-in-Time.  This will improve the utilization of our line of credits with suppliers and maintains inventory at its lowest value point; however from time to time inventory levels may increase temporarily, due to scheduling issues and acquisition of new customers and/or products;  (iii) by improving all systems and processes across operations and streamlining production lines; (b) we have refinanced our lines of credit with agreement(s) that have more attractive terms, as well as increased our credit lines with suppliers; (c) To increase revenue; (i) we are acquiring new customers that are a better fit for us, (ii) and we are  growing the business with our existing customers with offering more value added; and finally (iii) were focusing on more stable customer base such as medical device manufacturers and aerospace industries that have a better chance of  maintaining their manufacturing in Southern California instead of moving it to low cost and offshore regions;  (e)  to ensure long term sustainability of the Company, were planning on focusing more of our resources within the alternative energy industry while continuing to operate our EMS business. The future success of the Company is likely dependent on its ability to attain additional capital to support growth and ultimately, upon its ability to continue profitable operations.  There can be no assurance that the Company will be successful in obtaining such financing, or that it will continue to generate sufficient positive cash flow from operations.  The successful outcome of these or any future activities cannot be determined at this time and there is no assurance that if achieved, the Company will have sufficient funds to execute its business plans. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.  4 ______________________________________________________________________________________    Table of Contents  Selected financial data: The following selected historical financial information of Probe Manufacturing, Inc. has been derived from the historical financial statements and should be read in conjunction with financial statement and notes included herein and with previous filings.  Statement of Operations Probe Manufacturing, Inc.Statement of Operationsfor the three and six month periods endedJune 30, 2007, 2006 and 2005 respectivelyUnauditedUnauditedThree-month period endedSix-month period ended200720062005200720062005Sales$1,807,543$2,715,600$1,520,670$3,684,633$4,762,435$4,236,270Cost Of Goods Sold1,338,8302,098,1551,280,8692,725,3583,521,5463,379,024Gross Profit468,713617,446239,801959,2741,240,889857,247General And Administrative375,813489,204424,640791,554929,951913,844Research and Development43,79143,791Net Profit / (Loss) From Operations49,109128,241(184,839)123,929310,938(56,598)Other Income / (Expenses)1881,18374,223154(37,867)-Gain on Debt Settlement324,330324,330Interest Expense(37,000)(74,289)(35,551)(72,836)(153,133)-Net Profit / (Loss) Before Income Taxes336,62755,135(146,167)375,577119,938(56,598)Income Tax Expense-----18,808Net Profit / (Loss)$336,627$55,135$(146,167)$375,577$119,938$(75,406)Per Share Information:Basic weighted average numberof common shares outstanding10,310,1373,482,3263,328,12510,292,0313,425,7953,090,833Net Profit / (Loss) per common share$0.033$0.016$(0.044)$0.036$0.035$(0.024)Per Share Information:Diluted, weighted average numberof common shares outstanding14,841,89216,955,568N/A14,705,63516,824,599N/ADiluted, Net Profit / (Loss) per common share$0.023$0.003N/A$0.026$0.007N/A  5 ______________________________________________________________________________________    Table of Contents  Condensed Balance sheet data:  PROBE MANUFACTURING, INC.Condensed Balance SheetAs of June 30,200720062005Working Capital$(278,679)$(28,533)$(338,281)Total Assets2,122,0792,805,9742,648,728Long term Debt360,6711,123,4291,031,204Stockholders Equity$(332,075)$(851,169)$(752,039)   Summary of Results: For the quarter ended June 30, 2007 we generated a net profit of $336,627 compared to net profit of $55,135 for the same period in 2006 and net losses of $(146,167) for the same period in 2005.  For the six month period ended June 30, 2007 we generated a net profit of $375,577 compared to net profit of $119,938 and net losses of $(324,759) for the same period in 2006 and 2005 respectively. For the quarter ended June 30, 2007 our revenue decreased by 33% to $1,806,859 compared to $2,715,600 in the same period in 2006 and it increased by 18% from 1,520,670 in the same period in 2005.  In six month period ended June 30, 2007 our revenue deceased by 22% to 3,684,633 compared to $4,762,435 in the same period in 2006 and it increased by 26% from 2,929276 in the same period in 2005. For the quarter ended, June 30, 2007 our cost of goods sold, was 74% compared to 77% and 84%  in the same period in 2006 and 2005 respectively. For the quarter ended, June 30, 2007 our gross margins were 26% compared to 23% and 16% in the same period in 2006 and 2005 respectively. For the quarter ended, June 30, 2007 our SG&A cost was 21% compared to 18% and 28% in the same period in 2006 and 2005 respectively. As of June 30, 2007 we still had a working capital deficit of $(278,679) compared to working capital deficit of $(28,533) and working capital deficit of $(338,281) for the same period in 2006 and 2005 respectively.  From June 30, 2006 to June 30 2007 our stockholders equity improved by $519,094. Our improvements in performance for the quarter ended, June 30, 2007 compared to the same period in 2005 were primarily due to increase in revenues and continuation of process improvement efforts initiated in the 4th quarter of 2005.    However, the reduction in revenue compared to the same period in 2006 was due primarily to changing our customer base.  We disengaged with one of our major customers that accounted for 26% of our sales for the first 6 months of 2006.  Despite disengaging with this major customer, we were able to diversify our customer base and maintain our profitability.  In addition to diversification, we are in the process of refocusing our sales on more stable customer base such as medical device manufacturers and aerospace industries that have a better chance of maintaining their manufacturing in Southern California instead of moving it to low cost and offshore regions.  Key performance indicators:  3 months ended June 30,6 months ended June 30,200720062005200720062005Inventory Turns3.723.583.593.794.893.10Days Sales in Backlog109120122147137146Days Receivables Outstanding432941423037Days Payables Outstanding655877646178  6 ______________________________________________________________________________________    Table of Contents  Inventory turns: are calculated as the ratio of cost of material compared to the average inventory for the quarter. Despite major changes in our customer base, our inventory turns improved to 3.72 as of June 30 2007 compared to 3.58 and 3.59 in the same period in 2006 and 2005 respectively.  Days Sales in Backlog is calculated based on our back log divided by average daily sales during the quarter.  For the quarter ended, June 30, 2007, Days Sales in Backlog was 109 days compared to 120 days and 122 days in the same period in 2006 and 2005 respectively.  Days Receivables Outstanding, is calculated as the ratio of average accounts receivable for the quarter compared to average daily sales for the same period. For the quarter ended, June 30, 2007, Days Receivables Outstanding was 43 days compared to 29 days and 41 days in the same period in 2006 and 2005 respectively.  Days Payable Outstanding, is calculated as the ratio of average accounts payable during the quarter  compared to daily cost of sales for the same period. For the quarter ended, June 30, 2007, Days Payable Outstanding was 65 days compared to 58 days and 77 days in the same period in 2006 and 2005 respectively.  Critical Accounting Policies  The Company follows United States generally accepted accounting principles. Certain of the principles involve selection among alternatives and choices of methods, which are described in the footnotes to the Companys reviewed financial statements.  Cash and Cash Equivalents The Company maintains the majority of its cash accounts at a commercial bank. The total cash balance is insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000 per commercial bank. For purposes of the statement of cash flows, the Company considers all cash and highly liquid investments with initial maturities of one year or less to be cash equivalents.  Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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. Such estimates may be materially different from actual financial results. Significant estimates include the recoverability of long-lived assets, the collection of accounts receivable and valuation of inventory and reserves.  Accounts Receivable The Company grants credit to its customers within the United States of America and does not require collateral. The Companys ability to collect receivables is affected by economic fluctuations in the geographic areas and industries served by the Company.  Reserves for un-collectable amounts are provided, based on past experience and a specific analysis of the accounts.  Although the Company expects to collect amounts due, actual collections may differ from the estimated amounts. As of June 30, 2007, the Company had a reserve for potentially un-collectable accounts of $35,212.  Five (5) customers accounted for approximately 81% of accounts receivable at June 30, 2007.  The Companys trade accounts primarily represent unsecured receivables.  Historically, the Companys bad debt write-offs related to these trade accounts have been insignificant.  7 ______________________________________________________________________________________    Table of Contents  Inventory Inventories are valued at the lower of weighted average cost or market value.   Our industry experiences changes in technology, changes in market value and availability of the raw materials, as well as changing customer demand.  The Company makes provisions for estimated excess and obsolete inventories based on regular audits and cycle counts of our on-hand inventory levels and forecasted customer demands and at times additional provisions are made.  Any inventory write offs are charged to the reserve account. As of June 30, 2007 the Company had a reserve for potentially obsolete inventory of $409,226.  Property and Equipment Property and equipment are stated at cost. Assets held under capital leases are recorded at lease inception at the lower of the present value of the minimum lease payments or the fair market value of the related assets.  The Company follows the practice of capitalizing property and equipment purchased over $5,000.  The cost of ordinary maintenance and repairs is charged to operations. Depreciation and amortization are computed on the straight-line method over the following estimated useful lives of the related assets are as follows:  Furniture and fixtures 3 to 7 years Equipment 7 to 10 years Leasehold improvements 2 years (life of the lease)  Long Lived Assets The Companys management assesses the recoverability of its long-lived assets by determining whether the depreciation and amortization of long lived assets over their remaining lives can be recovered through projected undiscounted future cash flows. The amount of long lived asset impairment if any, is measured based on fair value and is charged to operations in the period in which long lived assets impairment is determined by management. There can be no assurance however, that market conditions will not change or demand for the Companys services will continue, which could result in impairment of long-lived assets in the future.  Revenue Recognition Revenue from product and services are recognized at the time goods are shipped or services are provided to the customer, with an appropriate provision for returns and allowances. Terms are generally FOB Origination with the right of inspection and acceptance. The Company has not experienced a material amount of rejected or damaged product.  Fair Value of Financial Instruments The carrying amount of accounts payable and accrued expenses are considered to be representative of their respective fair values because of the short-term nature of these financial instruments.  Other Comprehensive Income The Company has no material components of other comprehensive income (loss) and accordingly, net loss is equal to comprehensive loss in all periods.  Net Profit / (Loss) per Common Share Basic profit / (loss) per share is computed on the basis of the weighted average number of common shares outstanding.  At June 30, 2007 the Company had outstanding common shares of 10,273,321, and 78,363 shares to be issued for officer compensation, for a total of 10,273,321 used in the calculation of basic earnings per share.  Basic Weighted average common shares and equivalents at June 30, 2007 were 10,292,031.  As of June 30, 2007 the Company had outstanding warrants to purchase 4,076,250 additional common shares and options to purchase 455,505 additional common shares, which may dilute future earnings per share. Fully diluted weighted average common shares and equivalents at June 30, 2007 were 14,705,635. For the period ended June 30, 2005, all of the Company's common stock equivalents were excluded from the calculation of diluted loss per common share because they were anti-dilutive, due to the Company's net loss in that period.  8 ______________________________________________________________________________________    Table of Contents  Segment Information We operate in a single operating segment, offering printed circuit boards and electronic assemblies.  Stock Based Compensation The Company has adopted the use of Statement of Financial Accounting Standards No. 123R , Share-Based Payment, (SFAS No. 123R)   This Statement requires an entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost is recognized over the period during which an employee is required to provide service in exchange for the awardthe requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.   This Statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance and eliminates the alternative to use Opinion 25s intrinsic value method of accounting that was provided in Statement 123 as originally issued.  Income Taxes The Company accounts for income taxes under SFAS No. 109, which requires the asset and liability approach to accounting for income taxes.  Under this method, deferred tax assets and liabilities are measured based on differences between financial reporting and tax bases of assets and liabilities measured using enacted tax rates and laws that are expected to be in effect when differences are expected to reverse. The net profit for the six month period ended, June 30, 2007 of $375,577 is offset by previous losses.  As of June 30, 2007 the Company had a net operating loss carry forward of $(483,012). The Company has not booked any deferred tax asset as a result.  Result of operations: The following table summarizes certain items in the statements of operations as a percentage of net sales. The financial information and the discussion below should be read in conjunction with the accompanying financial statements and notes thereto.  Probe Manufacturing, Inc.Statement of Operations  Percentage BasedFor the three months ended June 30,200720062005Sales100%100%100%Cost of goods sold74%77%84%Gross profit26%23%16%General and administrative21%18%27%Net profit / (loss) from operations3%5%-12%Other income / (expenses)0%0%5%Gain on Debt Settlement18%Interest expense-2%-3%-2%Net profit / (loss) before income taxes19%2%-10%Income tax expense / (benefit)0%0%0%Net profit / (loss)19%2%-10%   9 ______________________________________________________________________________________    Table of Contents  Net Sales For the quarter ended June 30, 2007 our revenue decreased by 33% to $1,806,859 compared to $2,724,696 in the same period in 2006.  In six month period ended June 30, 2007 our revenue deceased by 22% to 3,683,319 compared to the same period in 2006.  This decrease in sales was primarily due to changing customer base.  We disengaged with one of our major customers that accounted for 26% of our sales for the first 6 months of 2006.  Despite disengaging with this major customer, we were able to diversify our customer base and maintain our profitability.  In addition to diversification, we are in the process of refocusing our sales on more stable customer base such as medical device manufacturers and aerospace industries that have a better chance of maintaining their manufacturing in Southern California instead of moving it to low cost and offshore regions  Major Customers Our top 5 customers accounted for approximately 77% and 74% of net sales for the quarter ended June 30, 2007 and six months ended June 30, 2007 compared to 93%, and 90% for the same periods in 2006 respectively.  In addition, the top 3 customer concentration was reduced to 63% for the quarter ended June 30, 2007 compared to 78% the same period in 2006.  We intend to diversify our customer base even further.  We believe that our ability to grow our core business depends on increasing sales to existing customers and on successfully attracting new customers. Customer contracts can be canceled and volume levels can be changed or delayed based on our customers performance and the end users markets which we have no control over. Although, we try to replace delayed, reduced or cancelled business as soon as possible, the timely replacement of delayed, canceled or reduced orders with new business cannot be ensured. In addition, we cannot assume that any of our current customers will continue to utilize our services. Consequently, our results of operations may be materially adversely affected.  Gross Profit For the quarter ended June 30, 2007 our gross profit was 26% compared to 23% and 16% in the same period in 2006 and 2005 respectively.   This improvement from 2005 to 2007 is primarily due to new customer base and improved operational efficiencies. Although our revenues were lower in 2007 than 2006, we were able to maintain profitability by improving our operations. Our gross profits could vary from period to period and is affected by a number of factors, including product mix, production efficiencies, component availability and costs, pricing, competition, customer requirements and unanticipated restructuring or inventory charges.  Selling, General and Administrative (SG&A) Expenses For the quarter ended June 30, 2007 our SG&A expenses was 21% compared to 18% and 27% in the same period in 2006 and 2005 respectively.   The 3% increase in SG&A from 2006 to 2007 was due to lower revenues in 2007.  The improvement in our SG&A expenses from 2005 to 2007 was primarily due to higher revenue levels and more suitable facilities.  In May 2006, we issued 500,000 shares of common stock, valued at $.10 $(50,000) to our Board of Directors for services, in March 2006 we paid a one time charge of $37K in late fees and payments to terminate our lease from Costa Mesa facility.  Both of these expenses were booked under SG&A expense.  Research and Development (R&D) expense Research and Development Costs incurred in association with the alternative fuels technology development (which include salaries and equipment) are expensed as incurred.  We expensed $43,791 in R&D in the 3 month ended June 30 2007. We purchased a 125 kilo-watt natural gas distributed power generator and are currently working on converting it to run on Hydrogen.  Net Income/ (Loss) from operations For the quarter ended June 30, 2007 our net income from operations was 3% compared to net income of 5% and losses of (12%) for the same period in 2006 and 2005 respectively.   Improvements in net profits in 2006 and 2007 compared to 2005 are primarily due to increased revenue and continued operational efficiencies.   10 ______________________________________________________________________________________    Table of Contents  Liquidity and Capital Resources:  PROBE MANUFACTURING, INC.Condensed Statements of Cash Flowsfor the three months ended June 30,200720062005Net Cash provided / (Used) In Operating Activities$344,280$44,143$(971,871)Cash Flows Used In Investing Activities(125,393)(3,495)(1,551)Cash Flows Provided / (used)  By Financing Activities(248,446)(40,648)1,019,988Net (Decrease) Increase in Cash and Cash Equivalents$(29,559)$0$46,620  For the quarter ended June 30, 2007, we provided net cash from our operating activities of $344,280 compared to net cash provided of $44,143 and net cash used in operating activities of $(971,871) for the same period in 2006 and 2005 respectively. For the six months ended June 30 2007, we invested $125,393 in a Lead Free Wave Solder machine and BGA (Ball Grid Array) rework stations to secure future business associated with Rohs European Directive.  We also continued to pay down debt by $248,446 compared to $40,648 and the raising of $1,019,988 from financing activities in the same period in 2006 and 2005 respectively. The following is a summary of certain obligations and commitments as of June 30, 2007 for continuing operations:  Capital Requirements for long-term Obligations2007200820092010Notes Payable285,487770,644--Other Long term debt48,81342,92523,822-Capital Lease Settlement  Obligations$45,000$90,000$90,000$90,000Total$379,300$903,569$113,822$90,000  We reduced our interest rate from 20% to 12% in August 2006 by refinancing our lines of credit into term notes.  On July 9, 1997 and December 21, 1997, the Company entered into two lease agreements, with Crocker capital, which subsequently assigned the leases to The CIT Group.  In September 2004 the Company had outstanding balances of $457,604 and $556,293 on the two leases and was unable to make the monthly lease payments. As a result, the Company entered into a forbearance agreement with The CIT Group, with monthly payments of $7,500 and an early payment schedule as follows:  The CIT Group would release the Company and its guarantors if one of the following payments were made, less the total of all monthly payments made to that date:  $375,000 if paid by October 25 , 2004 $425,000 if paid by December 25, 2004 $500,000 if paid by June 25, 2005 $550,000 if paid by December 25, 2005 $600,000 if paid by June 25, 2006 $650,000 if paid by December 25, 2006 $700,000 if paid by June 25, 2007   11 ______________________________________________________________________________________    Table of Contents  On June 1, 2007 an amended forbearance agreement was entered into:  6) In consideration of CIT entering into this Addendum, Probe will pay CIT the sum of $7,500 on or before June 25, 2007, which was paid. 7) Recital B is amended to state that as of June 25, 2007 Probes payment obligation to CIT totals $457,500. 8) Section 2.3 of the Forbearance Agreement is amended to state that probe will pay CIT the amount of $457,500 in sixty-one (61) monthly installments of $7,500 each, commencing on July 25, 2007 and ending on July 25, 2012. If at any time Probe elects to pay in full the remaining balance, upon 30 day written notice, CIT will provide a payoff figure for the remaining balance using a present value rate of 7.0%. 9) The Company imputed interest at 7% over the term of the payments, which resulted in a present value of $384,025 at June 30, 2007. 10) This resulted in a gain of $324,330.   Off-balance Sheet Arrangement We currently have no off-balance sheet arrangements.   12 ______________________________________________________________________________________    Table of Contents  Item 3.     Controls and procedures  As of, the end of the period covered by this Annual Report on Form 10-KSB, an evaluation was performed under the supervision and with the participation of our management,  including  the Chief Executive Officer and Chief Financial Officer, of  the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 of the Securities Exchange Act of  1934).  Based  on  that  evaluation,  our  Chief Executive Officer and Chief Financial  Officer  concluded  that  our  disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we  file  or  submit  under the Securities Exchange Act of 1934 (i) is recorded, processed,  summarized  and  reported  within  the  time  periods  specified  in Securities  and Exchange Commission rules and forms, and (ii) is accumulated and communicated  to our management, including our Chief Executive Officer and Chief Financial  Officer, as appropriate, to allow timely decisions regarding required disclosure.  Our disclosure controls and procedures are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Our disclosure controls and procedures include components of our internal control over financial reporting.  Management's  assessment  of the effectiveness  of our internal control over financial reporting is expressed at the  level  of  reasonable assurance that the control system, no matter how well designed  and operated, can provide only reasonable, but not absolute, assurance that  the  control  system's  objectives  will  be  met.  Changes in internal controls There  was  no  change  in  our  internal  control over financial reporting that occurred  during  the  fourth  quarter  covered  by  this Annual  Report on Form 10-KSB  that  materially  affected,  or  is  reasonably  likely  to  materially affect,  our  internal  control  over  financial  reporting.  13 ______________________________________________________________________________________    Table of Contents   PART II - OTHER INFORMATION   Item 1.     Legal proceedings  We believe that there are no other claims or litigation pending, the outcome of which could have a material adverse effect on our financial condition or operating results.  However, if litigation should arise and the Company was to receive an unfavorable ruling, there is a possibility that it would have a material adverse impact on our financial condition, results of operations, or liquidity of the period in which the ruling occurs, or future periods.    Item 2.  Unregistered sales of equity securities and use of proceeds.  None.   Item 3.  Defaults upon senior securities.  Not Applicable.   Item 4.  Submission of matters to a vote of security holders.  None.   Item 5.  Other information. None.   14 ______________________________________________________________________________________    Table of Contents  Item  6.  Exhibits  Exhibit
No.Exhibit Description3.1Articles of Incorporation (included as exhibit 3.1 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).3.2Bylaws (included as exhibit 3.2 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).4.1Certificate of Designation for Series A Convertible Preferred Stock, dated May 20, 2004 (included as exhibit 4.1 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).4.2Certificate of Designation for Series B Convertible Preferred Stock dated December 31, 2004 (included as exhibit 4.2 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).4.3Sample Series A Warrant Purchase Agreement (included as exhibit 4.3 to the Form SB-2/A filed on September 26, 2005 and incorporated herein by reference).4.4Sample Series B Warrant Purchase Agreement (included as exhibit 4.4 to the Form SB-2/A filed on September 26, 2005 and incorporated herein by reference).4.5Sample Amended Series A Warrant Purchase Agreement (included as exhibit 4.5 to the Form SB-2/A filed on November 25, 2005 and incorporated herein by reference4.6Sample Amended Series B Warrant Purchase Agreement (included as exhibit 4.6 to the Form SB-2/A filed on November 25, 2005 and incorporated herein by reference).4.6Certificate of Designation for Series C Convertible Preferred Stock dated May 25, 2006 (included as exhibit 4.1 to Form 8-K filed on June 14, 2006 and incorporated herein by reference).4.7Amended Certificate of Designation for Series C Convertible Preferred Stock dated August 7, 2006 (included as exhibit 4.1 to Form 8-K filed on August 14, 2006 and incorporated herein by reference).4.8Amended Certificate of Designation of Series C Convertible Preferred Stock dated May 25, 2006 (included as exhibit 4.1 to the Form 8-K filed on August 14, 2006 and incorporated herein by reference).4.9Sample Amended Series A Warrant Purchase Agreement (included as exhibit 10.1 to the Form 8-k filed on November 15, 2006 and incorporated herein by reference).4.10Sample Amended Series B Warrant Purchase Agreement (included as exhibit 10.2 to the Form 8-k filed on November 15, 2006 and incorporated herein by reference).10.1Lease  Agreement between Probe Manufacturing, Inc. (F.K.A. Probe Manufacturing Industries, Inc. and Reza Zarif and Kambiz Mahdi, dated May 2, 1997 (included as exhibit 10.1 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.2Consulting  Agreement  between  Probe Manufacturing Industries and Anthony Reed dated December 31, 2004 (included as exhibit 10.2 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.3Legal retainer agreement between Probe Manufacturing, Inc. and Jeffrey Conrad dated (included as exhibit 10.3 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.4Line of Credit agreement between Probe Manufacturing, Inc. and eFund Capital Partners, LLC dated January 1, 2005 (included as exhibit 10.4 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).  15 ______________________________________________________________________________________    Table of Contents   10.5Line of Credit agreement between Probe Manufacturing, Inc. and Ashford Capital, LLC dated January 1, 2005 (included as exhibit 10.5 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.6Line of Credit agreement between Probe Manufacturing, Inc. and Benner Exemption Trust dated March 8, 2005 (included as exhibit 10.6 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.7Line of Credit agreement between Probe Manufacturing, Inc. and Edward Lassiter dated March 22, 2005 (included as exhibit 10.7 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.8Line of Credit agreement between Probe Manufacturing, Inc. and Rufina V. Paniego dated January 1, 2004  (included as exhibit 10.8 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.9Promissory Note between Probe Manufacturing, Inc and Ashford Transitional Fund, L.P. dated September 20, 2004 (included as exhibit 10.9 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.10Engagement Letter between Probe Manufacturing, Inc. and eFund Capital Partners, LLC dated May 20, 2004 (included as exhibit 10.10 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.11Series A Convertible Preferred Stock Purchase Agreement with eFund Capital Partners, LLC dated May 20, 2004 (included as exhibit 10.11 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.12Series A Convertible Preferred Stock Purchase Agreement with Reza Zarif dated May 20, 2004 (included as exhibit 10.12 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.13Series A Convertible Preferred Stock Purchase Agreement with Kambiz Mahdi dated May 20, 2004. (included as exhibit 10.13 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.14Series B Convertible Preferred Stock Purchase Agreement with eFund Capital Partners, LLC dated December 31, 2004 (included as exhibit 10.14 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10. 15Series B Convertible Preferred Stock Purchase Agreement with Reza Zarif dated December 31, 2004 (included as exhibit 10.15 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.16Series B Convertible Preferred Stock Purchase Agreement with Kambiz Mahdi dated December 31, 2004 (included as exhibit 10.16 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.17Agreement to Cancel and Return shares of common stock between Probe and eFund Capital Partners, LLC, Ashford Capital, LLC, Reza Zarif, Kambiz Mahdi, dated December 31, 2004 (included as exhibit 10.17 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.18Promissory note with eFund Capital Partners, LLC dated October 12, 2004 (included as exhibit 10.18 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.19Promissory note with Rufina V. Paniego dated July 1, 2004 (included as exhibit 10.19 to the Form SB-2/A filed on June 10, 2005 and incorporated herein by reference).10.20Sample purchase order agreement with Celerity, Inc (included as exhibit 10.20 to the Form SB-2/A filed on September 26, 2005 and incorporated herein by reference).10.21Sample purchase order agreement with Newport Corporation (included as exhibit 10.21 to the Form SB-2/A filed on September 26, 2005 and incorporated herein by reference).  16 ______________________________________________________________________________________    Table of Contents   10.22Sample purchase order agreement with Asymtek Corporation (included as exhibit 10.22 to the Form SB-2/A filed on September 26, 2005 and incorporated herein by reference).10.23Sample purchase order agreement with Jetline Engineering Corporation (included as exhibit 10.23 to the Form SB-2/A filed on September 26, 2005 and incorporated herein by reference).10.24Sample purchase order agreement with our supplier Future Active, Inc (included as exhibit 10.24 to the Form SB-2/A filed on September 26, 2005 and incorporated herein by reference).10.25Sample purchase order agreement with our supplier Arrow Electronics, Inc. (included as exhibit 10.25 to the Form SB-2/A filed on September 26, 2005 and incorporated herein by reference).10.26Lease Agreement between Probe Manufacturing, Inc. and Mitchell Fitch, LLC, dated November 15, 2005  (included as Exhibit 10.26 to the Form 10-KSB filed on April 14, 2006 and incorporated herein by reference).10.27Employment Agreement with Reza Zarif, Chief Executive Officer of Probe Manufacturing, Inc. (included as exhibit 10.1 to Form 8-K filed on June 14, 2006 and incorporated herein by reference).10.27Series C Convertible Preferred Exchange Agreement with eFund Capital Partners, LLC (included as exhibit 10.2 to Form 8-K filed on June 14, 2006 and incorporated herein by reference).10.28Series C Convertible Preferred Exchange Agreement with Reza Zarif (included as exhibit 10.3 to Form 8-K filed on June 14, 2006 and incorporated herein by reference).10.29Series C Convertible Preferred Exchange Agreement with Kambiz Mahdi (included as exhibit 10.4 to Form 8-K filed on June 14, 2006 and incorporated herein by reference).10.30Amended Series C Convertible Preferred Exchange Agreement with eFund Capital Partners, LLC (included as exhibit 10.1 to Form 8-K filed on August 14, 2006 and incorporated herein by reference).10.31Amended Series C Convertible Preferred Exchange Agreement with Reza Zarif (included as exhibit 10.2 to Form 8-K filed on August 14, 2006 and incorporated herein by reference).10.32Amended Series C Convertible Preferred Exchange Agreement with Kambiz Mahdi (included as exhibit 10.3 to Form 8-K filed on August 14, 2006 and incorporated herein by reference).10.33Amended Line of Credit agreement between Probe Manufacturing, Inc. and Kambiz Mahdi dated August 10, 2006 (included as exhibit 10.1 to the Form 8-K filed on August 23, 2006 and incorporated herein by reference).10.34Amended Line of Credit agreement between Probe Manufacturing, Inc. and Reza Zarif dated August 10, 2006 (included as exhibit 10.2 to the Form 8-K filed on August 23, 2006 and incorporated herein by reference).10.35Amended Line of Credit agreement between Probe Manufacturing, Inc. and Frank Kavanaugh dated August 10, 2006 (included as exhibit 10.3 to the Form 8-K filed on August 23, 2006 and incorporated herein by reference).10.36Amended Line of Credit agreement between Probe Manufacturing, Inc. and Kambiz Mahdi dated August 10, 2006 (included as exhibit 10.4 to the Form 8-K filed on August 23, 2006 and incorporated herein by reference).10.37Amended Line of Credit agreement between Probe Manufacturing, Inc. and Reza Zarif dated August 10, 2006 (included as exhibit 10.5 to the Form 8-K filed on August 23, 2006 and incorporated herein by reference).10.38Amended Line of Credit agreement between Probe Manufacturing, Inc. and Rufina Paniego dated August 10, 2006 (included as exhibit 10.6 to the Form 8-K filed on August 23, 2006 and incorporated herein by reference).  17 ______________________________________________________________________________________    Table of Contents   10.39Amended Line of Credit agreement between Probe Manufacturing, Inc. and eFund Capital Partners, LLC dated August 10, 2006 (included as exhibit 10.7 to the Form 8-K filed on August 23, 2006 and incorporated herein by reference).10.40Amended Line of Credit agreement between Probe Manufacturing, Inc. and Benner Exemption Trust dated August 10, 2006 (included as exhibit 10.8 to the Form 8-K filed on August 23, 2006 and incorporated herein by reference).10.41Amended Line of Credit agreement between Probe Manufacturing, Inc. and Ed Lassiter dated August 10, 2006 (included as exhibit 10.9 to the Form 8-K filed on August 23, 2006 and incorporated herein by reference).10.42Amended Line of Credit agreement between Probe Manufacturing, Inc. and William Duncan dated August 10, 2006 (included as exhibit 10.10 to the Form 8-K filed on August 23, 2006 and incorporated herein by reference).10.43Amended Line of Credit agreement between Probe Manufacturing, Inc. and Hoa Mai dated August 10, 2006 (included as exhibit 10.11 to the Form 8-K filed on August 23, 2006 and incorporated herein by reference).10.44Amended Line of Credit agreement between Probe Manufacturing, Inc. and Ashford Transition Fund dated August 10, 2006 (included as exhibit 10.12 to the Form 8-K filed on August 23, 2006 and incorporated herein by reference).10.45Employee Profit Sharing Plan (included as exhibit 10.13 to the Form 8-K filed on August 23, 2006 and incorporated herein by reference).10.46Probe Manufacturing 2006 Employee Incentive Stock Option Plan (included as exhibit 10.14 to the Form 8-K filed on August 23, 2006 and incorporated herein by reference).16.1Letter from Michael Johnson & Company, LLC dated January 04, 2006 (included as exhibit 10.20to the Form SB-2/A filed on September 26, 2005 and incorporated herein by reference).14.1Code of Ethics filed (included as Exhibit 14.1 to the Form 10-KSB filed on April 14, 2006 and incorporated herein by reference).21.1List  of  Subsidiaries (included as Exhibit 21.1 to the Form 10-KSB filed on April 14, 2006 and incorporated herein by reference).23.1Consent of Jaspers + Hall, PC - Independent Auditors to the Form 10-K filed
March  21,  2006, (included as Exhibit 23.1 to the Form 10-KSB filed on April 14, 2006 and incorporated herein by reference).31.1Certification of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley  Act  of  2002.31.2Certification of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley  Act  of  2002.32.1Certification  of  Officers pursuant to 18 U.S.C. Section 1350, as adopted
pursuant  to  Section  906  of  the  Sarbanes-Oxley  Act  of  2002.   Item  7.  Reports Filed on Form 8-K  None.  18 ______________________________________________________________________________________    Table of Contents  SIGNATURES  In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.   Date:  August 8, 2007 Probe Manufacturing, Inc.   /s/ Reza Zarif __________________ Reza Zarif Chief Executive Officer   Dated:   August 8, 2007  /s/ John Bennett ___________________ John Bennett Chief Financial Officer    19 ______________________________________________________________________________________