U.S.
      SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549





FORM
      10-QSB





(Mark
      One)


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





For
      the
      quarterly period ended: December 31, 2007





OR





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





For
      the
      transition period from to





NACEL
      ENERGY CORPORATION


(Exact
      name of Registrant as specified in its charter)





WYOMING
            4911
            20-4315791(State
                or other Jurisdiction of
            (Standard
                Industrial
            (I.R.S.
                EmployerIncorporation
                or Organization)
            Classification
                Code Number)
            Identification
                No.)





301
                Thelma Drive #501, Casper, Wyoming
            82609(Name
                and address of principal executive offices)
            (Zip
                Code)Registrant's
                telephone number, including area code:
            307-461-4221





SEC
        File
        Number: File No. 333-142860


Check
      whether the issuer: (1) filed all reports required to be filed by Section13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes x No
o






1






APPLICABLE
      ONLY TO CORPORATE ISSUERS





State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date: 21,400,000 shares of common stock outstanding
      as of February 14, 2007.





Transitional
      Small Business Disclosure Format (check one): Yes o No x






2





NACEL
      ENERGY CORPORATION





INDEX





FOR
      THE QUARTERLY PERIOD ENDED DECEMBER 31, 2007




PART
                  I. FINANCIAL INFORMATION
              4Item
                  1. Financial Statements
              4Consolidated
                  Balance Sheets
              4Consolidated
                  Statements of Expenses
              5Consolidated
                  Statements of Cash Flows
              6Item
                  2. Management’s Discussion and Analysis or Plan of
                  Operation
              9Item
                  3. Controls and Procedures
              14PART
                  II. OTHER INFORMATION
              14Item
                  1. Legal Proceedings
              14Item
                  2. Unregistered Sales of Equity Securities and Use of
                  Proceeds
              14Item
                  3. Defaults Upon Senior Securities
              15Item
                  4. Submission of Matters to a Vote of Security Holders
              15Item
                  5. Other Information
              15Item
                  6. Exhibits
              16Signatures
              17


3







**PART
      I. FINANCIAL INFORMATION**




***Item
      1. Financial Statements***





The
      accompanying unaudited financial statements have been prepared in accordance
      with generally accepted accounting principles for interim financial reporting
      and pursuant to the rules and regulations of the Securities and Exchange
      Commission. While these statements reflect all normal recurring adjustments
      which are, in the opinion of management, necessary for fair presentation of
      the
      results of the interim period, they do not include all of the information and
      footnotes required by generally accepted accounting principles for complete
      financial statements. For further information, refer to the financial statements
      and footnotes thereto, contained in Nacel Energy’s registration statement on
      Form SB-2.






**Nacel
      Energy Corporation**


**(A
      Development Stage Company)**


**Consolidated** **Balance
      Sheets**


**(Unaudited)**


**31-Dec-07**
              
              **31-Mar-07**ASSETSCurrent
                  assetsCash
                  & cash equivalents
              
              $
              22,826
              
              $
              20,258Marketable
                  securities
              
              
              4,695
              
              
              5,318TOTAL
                  ASSETS
              
              $
              27,521
              
              $
              25,576Liabilities
                  and stockholders’ deficitShareholder
                  line of credit
              
              $
              121,419
              
              $
              52,449Stockholders’
                  deficitCommon
                  stock, $.001 par value, 50,000,000 shares authorized; 21,400,000
                  and
                  11,000,000 shares issued and outstanding
              
              
              21,400
              
              
              11,000Additional
                  paid in capital
              
              
              1,227,033
              
              
              (9,425
              )Deficit
                  accumulated during the development stage
              
              
              (170,525
              )
              
              (28,221
              )Subscription
                  receivable
              
              
              (1,172,288
              )
              
              -Accumulated
                  other comprehensive income (loss):Unrealized
                  gain (loss) on marketable securities
              
              
              482
              
              
              (227
              )Total
                  stockholders’ deficit
              
              
              (93,898
              )
              
              (26,873
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS’ DEFICIT
              
              $
              27,521
              
              $
              25,576







4







**Nacel
      Energy Corporation**


**(A
      Development Stage Company)**


**Consolidated
      Statements of Expenses**


**(Unaudited)**





**For
                the three months ended**
            
            **For
                the nine months ended**
            
            **For
                the period from February 7, 2006 (inception)
                to****31-Dec-07**
            
            **31-Dec-06**
            
            **31-Dec-07**
            
            **31-Dec-06**
            
            **31-Dec-07**General
                and administrative expenses
            
            $
            93,273
            
            $
            -
            
            $
            135,732
            
            $
            9,095
            
            $
            162,958Other
                (income) expenseInterest
                expense
            
            
            3,070
            
            
            -
            
            
            6,858
            
            
            -
            
            
            7,883Interest
                income
            
            
            -
            
            
            -
            
            
            (178
            )
            
            -
            
            
            (183
            )Dividend
                income
            
            
            -
            
            
            -
            
            
            (108
            )
            
            -
            
            
            (133
            )Net
                loss
            
            
            (
                96,343
            )
            
            -
            
            
            (142,304
            )
            
            (9,095
            )
            
            (170,
                525
            )Other
                comprehensive income :
              unrealized gain (loss) on marketable securities
            
            
            (98
            )
            
            -
            
            
            (709
            )
            
            -
            
            
            (482
            )Comprehensive
                net loss
            
            $
            (
                96,441
            )
            $
            -
            
            $
            (143,013
            )
            $
            (9,095
            )
            $
            (
                171,007
            )Basic
                and diluted net loss per share
            
            $
            (0.00
            )
            $
            (0.00
            )
            $
            (0.01
            )
            $
            (0.00
            )
            
            n/aBasic
                and diluted weighted average common shares outstanding
            
            
            20,434,783
            
            
            11,000,000
            
            
            14,534,545
            
            
            11,000,000
            
            
            n/a








5





**Nacel
        Energy Corporation**
 **(A
        Development Stage Company)**
 **Consolidated
        Statements of Cash Flows**
 **(unaudited)**





**For
                  the nine months ended**
              
              **For
                  the period fromFebruary 7, 2006****31-Dec-07**
              
              **31-Dec-06**
              
              **(inception)
                  to 31-Dec-07**CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  loss
              
              $
              (142,304
              )
              $
              (9,095
              )
              $
              (170,525
              )Adjustments
                  to reconcile net loss to cash used in operating
                  activities:Stock
                  for services
              
              
              -
              
              
              -
              
              
              550Imputed
                  interest
              
              
              6,858
              
              
              -
              
              
              7,883Changes
                  in assets and liabilities:Marketable
                  securities
              
              
              1,332
              
              
              -
              
              
              (4,213
              )Cash
                  used in operating activities
              
              
              (134,114
              )
              
              (9,095
              )
              
              (166,305
              )CASH
                  FLOW FROM FINANCING ACTIVITIESProceeds
                  from shareholder line of credit
              
              
              68,970
              
              
              12,247
              
              
              121,419Proceeds
                  from warrant exercise
              
              
              27,712
              
              
              -
              
              
              27,712Proceeds
                  from sale of stock
              
              
              40,000
              
              
              -
              
              
              40,000Cash
                  provided by financing activities
              
              
              136,682
              
              
              12,247
              
              
              189,131Net
                  change in cash
              
              
              2,568
              
              
              3,152
              
              
              22,826Cash,
                  beginning of period
              
              
              20,258
              
              
              -
              
              
              -Cash,
                  end of period
              
              $
              22,826
              
              $
              3,152
              
              $
              22,826Non-cash
                  investing and financing activities:Subscription
                  receivable
              
              $
              1,172,288
              
              $
              -
              
              $
              1,172,288SUPPLEMENTAL
                  CASH FLOW INFORMATIONInterest
                  paid
              
              $
              -
              
              $
              -
              
              $
              -Income
                  tax paid
              
              
              -
              
              
              -
              
              
              -
   6







NACEL
      ENERGY CORPORATION


**(A
      Development Stage Company)**


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS


UNAUDITED





1.  BASIS
      OF PRESENTATION





The
      accompanying unaudited interim financial statements of Nacel Energy Corporation
      have been prepared in accordance with accounting principles generally accepted
      in the United States of America and the rules of the Securities and Exchange
      Commission, and should be read in conjunction with the audited financial
      statements and notes thereto contained in Nacel Energy Annual Report filed
      with
      the SEC on Form SB-2. In the opinion of management, all adjustments, consisting
      of normal recurring adjustments, necessary for a fair presentation of financial
      position and the results of operations for the interim periods presented have
      been reflected herein. The results of operations for interim periods are not
      necessarily indicative of the results to be expected for the full year. Notes
      to
      the financial statements which substantially duplicate the disclosure contained
      in the audited financial statements for year end March 31, 2007, as reported
      in
      the Form SB-2 have been omitted.





2.  GOING
      CONCERN





As
      shown
      in the accompanying financial statements, Nacel Energy generated losses since
      inception and has negative working capital as of December 31, 2007. These
      conditions raise substantial doubt as to Nacel Energy's ability to continue
      as a
      going concern. Management is trying to raise additional capital through sales
      of
      common stock and loans. The financial statements do not include any adjustments
      that might result from the outcome of this uncertainty.





3.  EQUITY





On
      April
      12, 2007, Nacel Energy issued a warrant for 2,400,000 common shares with an
      exercise price of $0.50 per share to a third party for which the fair value
      of
      the warrants was nominal. The warrant expires in September 2010 and vests
      immediately. On November 19, 2007, the warrant was exercised and Nacel Energy
      issued 2,400,000 shares of common stock to the third party. Through the period
      ending December 31, 2007, Nacel received $27,712 of the $1,200,000 proceeds
      related to the warrant exercise. The remaining amount is recorded as a
      subscription receivable.


During
      the period ended September 30, 2007 Nacel Energy sold 8,000,000 shares of common
      stock for $40,000.





On
      October 20, 2007, Nacel Energy enacted a 1:20 forward split of its capital
      stock
      resulting in total issued and outstanding post-split common shares of
      21,400,000. All share and per share amounts including earnings per share have
      been adjusted to reflect the stock split as of the first date of the first
      period reported in this filing. There was no change to the warrant exercise
      price of $0.50.






7





On
      December 1, 2007, Nacel Energy reduced its total authorized post-split capital
      stock from 100,000,000 to 50,000,000 common shares.








8










***Item
      2. Management’s Discussion and Analysis or Plan of
      Operation***





*This
      10−QSB contains forward-looking statements. Our actual results could differ
      materially from those set forth as a result of general economic conditions
      and
      changes in the assumptions used in making such forward-looking statements.
      The
      following discussion and analysis of our financial condition and results of
      operations should be read together with the audited consolidated financial
      statements and accompanying notes and the other financial information* *contained*  *in
      Nacel Energy Corporation’s registration statement on Form SB-2 filed with the
      Commission.*





*The
      analysis set forth below is provided pursuant to applicable Securities and
      Exchange Commission regulations and is not intended to serve as a basis for
      projections of future events. Refer also to "Cautionary Note Regarding Forward
      Looking Statements," below.*


*The
      following discussion of our financial condition and results of operations as
      of
      December 31, 2007, should be read in conjunction with our financial statements
      and the related notes as provided under Item 1. With respect to the discussion
      within this Item 2, the terms “Nacel Energy,” “we,” “us,” and “our” refer to
      Nacel Energy Corporation.*





**Overview**





We
      intend
      to become a wind and hydro electric energy generation company. We intend to
      identify and evaluate the economic feasibility and resource potential of wind
      and hydro properties, predominantly in the States of Montana, Wyoming, Colorado,
      New Mexico, Texas, and in Canada, for the purposes of developing commercial
      scale wind and hydro turbine projects. We intend to participate in these
      projects with development partners and receive revenue from the sale of electric
      energy through our working interests in the partnerships. As of the time of
      this
      filing, we have not identified any suitable properties, project opportunities
      or
      development partners.





We
      are a
      development stage company that has generated no revenues from operations since
      our incorporation on February 7, 2006. We have incurred losses since our
      inception, have no operations and rely upon the sale of our securities and
      funds
      provided by management to cover expenses. In addition, our independent
      accountant has issued an opinion indicating that there is substantial doubt
      about our ability to continue as a going concern.





Since
      our
      inception, we have been primarily engaged in business planning activities,
      including researching wind and hydro energy technologies, developing our
      economic models and financial forecasts, performing due-diligence regarding
      potential development partners, investigating wind and hydro electric energy
      properties and project opportunities and raising capital.






9





On
      April
      12, 2007, we issued a warrant for 2,400,000 common shares with an exercise
      price
      of $0.50 per share to a third party for which the fair value of the warrant
      was
      nominal. The warrant expires in September 2010 and vests immediately. On June
      7,
      2007, the Securities and Exchange Commission declared effective the Company's
      registration statement on Form SB-2 (File No. 333-142860) relating to the offer
      and sale of 8,000,000 shares of the Company’s common stock, at a price of $0.005
      per share and 2,400,000 shares of the Company’s common stock underlying a
      warrant, at an exercise price of $0.50. The aggregate price of the offering
      amount registered is $1,240,000. On November 19, 2007, the warrant was exercised
      and Nacel Energy issued 2,400,000 shares of common stock to the third party.
      Through the period ended December 31, 2007, Nacel Energy received $27,712 of
      the
      total $1,200,000 proceeds related to the warrant exercise. The remaining amount
      is recorded as a subscription receivable. On October 20, 2007, Nacel Energy
      enacted a 1:20 forward split of its capital stock resulting in total issued
      and
      outstanding post-split common shares of 21,400,000. There was no change to
      the
      warrant exercise price of $0.50. On December 1, 2007 Nacel Energy reduced its
      total authorized post-split capital stock from 100,000,000 to 50,000,000 common
      shares.





**Plan
      of Operation**





Prior
      to
      generating any revenue from operations, we must complete the following
      steps:





1.
            Site
                and Development Partner Identification and
                Agreement





2.
            Due
                Diligence Data Collection to Determine Site
                Suitability





3.
            Complete
                and Secure Approval of an Environmental
                Assessment





4.
            Enter
                into Power Purchase Agreements





5.
            Finalize
                Land Use or Acquisition Terms with Government or Private Land
                Owner





6.
            Develop
                Access Roads to Our Site





7.
            Complete
                Interconnection Studies Concerning Connection with Power
                Grid





8.
            Complete
                Construction





We
      have
      not completed the work required on these steps. Additional financing must be
      obtained by us and our development partners to implement our business plan.
      There is no assurance that financing to cover the costs of implementing our
      business plan can be obtained.






10





**Results
      of Operations (Three Months Ended December 31, 2007 compared to the Three Months
      Ended December 31, 2006)**





We
      generated no revenues from our operations for the three months ended December
      31, 2007 (“Q3 2007 Period”) and for the three months ended December 31, 2006
      (“Q3 2006 Period”).





Our
      operating expenses were $93,273 for the Q3 2007 Period compared to no operating
      expenses reported for the Q3 2006 Period. Our operating expenses for the Q3
      2007
      Period included $62,500 in advertising expenses including corporate branding
      expenses, website development expenses and expenses relating to the production
      and distribution of our corporate brochure; $16,511 in other general and
      administrative expenses including transfer agent fees and miscellaneous
      expenses, $9,262 in legal and professional fees and $5,000 in travel
      expenses.





Our
      other
      expenses consisted of imputed interest expense of $3,070 for the Q3 2007 Period
      compared to no reported imputed interest expense for the Q3 2006 Period. The
      imputed interest expense is due to an unsecured, no-interest $250,000 line
      of
      credit facility from a Director which is repayable at an unspecified future
      date. Interest is being imputed at a rate of prime plus 2% or 10.25% at December
      31, 2007. We reported no other income for the Q3 2007 period and for the Q3
      2006
      Period. The Company reports other income derived from its non-operated wind
      energy stapled security holdings managed by Babcock and Brown Wind
      Partners.





**Results
      of Operations (Nine Months Ended December 31, 2007 compared to the Nine Months
      Ended December, 2006)**





We
      generated no revenues from our operations for the nine months ended December
      31,
      2007 (“Fiscal 2007 Period”) and for the nine months ended December 31, 2006
      (“Fiscal 2006 Period”).





Our
      operating expenses were $135,732 for the Fiscal 2007 Period compared to
      operating expenses of $9,095 reported for the Fiscal 2006 Period. Our operating
      expenses for the Fiscal 2007 Period included; $62,500 in advertising expenses
      compared to none reported for the Fiscal 2006 period; our advertising expenses
      included corporate branding expenses, website development expenses and expenses
      relating to the production and distribution of our corporate brochure; $25,325
      in other general and administrative expenses compared to none reported for
      the
      Fiscal 2006 period; our other general and administrative expenses included
      transfer agent fees and miscellaneous expenses; $41,563 in legal and
      professional fees compared to $9,095 for the Fiscal 2006 period; the $32,468
      additional legal and professional fees during the Fiscal 2007 Period were
      incurred as a result the Company’s decision to proceed with an SB-2 registration
      of common stock and our reporting obligations as a public company.





Our
      other
      expenses for the Fiscal 2007 period were $6,572 compared to none reported for
      the Fiscal 2006 period; our other expenses included imputed interest expense
      of
      $6,858 compared to no reported imputed interest expense for the Fiscal 2006
      Period; interest is being imputed at a rate of prime plus 2% or 10.25% at
      December 31, 2007 due to an unsecured, no-interest $250,000 line of credit
      facility from a Director which is repayable at an unspecified future date.
      We
      had other income of $286 for the Fiscal 2007 period compared to none reported
      for the Fiscal 2006 period. Our other income for the Fiscal 2007 period included
      interest income of $178 and dividend income of $108. The Company reports other
      income from its non-operated wind energy stapled security holdings managed
      by
      Babcock and Brown Wind Partners.






11





**Liquidity
      and Capital Resources**





We
      had
      total assets of $27,521 as of December 31, 2007, which consisted of cash of
      $22,826 and marketable securities of $4,695. We had total liabilities of
      $121,419 as of December 31, 2007. The Company entered into an agreement with
      a
      Director with respect to an unsecured, no-interest $250,000 line of credit
      facility repayable at an unspecified future date. Interest is being imputed
      at
      Prime plus 2% for a total of $3,070 of imputed interest expense in the three
      months ended December 31, 2007. $128,581 was available for borrowing as of
      December 31, 2007.





At
      December 31, 2007 we had paid-in capital of $1,227,033 and subscription
      receivable of $1,172,288.





We
      have
      had net losses since inception and had an accumulated deficit of $170,525 at
      December 31, 2007.





We
      had
      net cash used in operating activities of $134,114 for the nine months ended
      December 31, 2007. We had a net loss of $142,304 including $286 of other income
      and imputed interest of $6,858.





We
      had
      $136,682 in net cash provided by financing activities for the nine months ended
      December 31, 2007, including $68,970 from our shareholder line of credit,
      $27,712 proceeds from a warrant exercise and $40,000 proceeds from sales of
      stock.





At
      inception, February 7, 2006, we issued 11,000,000 shares of common stock at
      par
      value to two founders for reimbursement of $550 of expenses paid by the two
      founders.





On
      April
      12, 2007, we issued a warrant for 2,400,000 common shares with an exercise
      price
      of $0.50 per share to a third party for which the fair value of the warrant
      was
      nominal. The warrant expires in September 2010 and vests
      immediately.





On
      June
      7, 2007, the Securities and Exchange Commission declared effective the Company's
      registration statement on Form SB-2 (File No. 333-142860) relating to the offer
      and sale of 8,000,000 shares of the Company’s common stock, at a price of $0.005
      per share and 2,400,000 shares of the Company’s common stock underlying a
      warrant, at an exercise price of $0.50. The aggregate price of the offering
      amount registered is $1,240,000. On September 24, 2007, we closed our offering,
      having sold all 8,000,000 common shares to 50 investors for proceeds of $40,000.
      On November 19, 2007, all 2,400,000 post-split shares underlying the warrant
      were exercised and delivered to the warrant holder.






12





On
      October 20, 2007 Nacel Energy enacted a 1:20 forward split of its capital stock
      resulting in total issued and outstanding post-split common shares of
      21,400,000. There was no change to the warrant exercise price of $0.50. The
      1:20
      forward split was enacted to increase of the aggregate price of our offering
      amount registered from $100,000 to $1,240,000.





On
      December 01, 2007 Nacel Energy reduced its total authorized post-split capital
      stock from 100,000,000 to 50,000,000 common shares. The Director’s determined
      the reduced capital stock was sufficient to accommodate our future capital
      requirements.





Historically,
      our cash has been provided by a line of credit facility from a Director bearing
      an imputed interest rate of prime plus 2% or 10.25% at December 31, 2007. We
      had
      no outstanding cash commitments as of December 31, 2007.





As
      we
      expand, we may need to make sizeable cash commitments to develop our wind and
      hydro power generation facilities, and the impact of this potential trend on
      our
      business is uncertain. We believe that our mix of capital resources will shift
      from short-term debt to equity-based financing, which will cause dilution of
      current shareholders. Because the Company generated no operating revenues,
      the
      predominant component of our liquidity is cash on hand.





Our
      ability to continue as a going concern is dependent upon our ability to
      successfully accomplish our business plans and secure additional funding sources
      and attaining profitable operations. We do not have any commitments or
      identified sources of additional capital from third parties or from our
      officers, directors or majority shareholders. Additional financing may not
      be
      available to us on favorable terms, if at all.





Accordingly,
      our accountants have indicated there is substantial doubt about our ability
      to
      continue as a going concern over the next twelve months. Revenues have not
      been
      sufficient to cover operating costs and to allow us to continue as a going
      concern. Our poor financial condition could inhibit our ability to continue
      in
      business or achieve our business plan.





Cautionary
      Note Regarding Forward Looking Statements





Some
      of
      the statements in this report are “forward-looking statements.” These
      forward-looking statements involve certain known and unknown risks,
      uncertainties and other factors which may cause our actual results, performance
      or achievements to be materially different from any future results, performance
      or achievements expressed or implied by these forward-looking statements. These
      factors include, among others, the factors set forth above under “Risk Factors.”
The words “believe,” “expect,” “anticipate,” “intend,” “plan,” and similar
      expressions identify forward-looking statements. We caution you not to place
      undue reliance on these forward-looking statements. We undertake no obligation
      to update and revise any forward-looking statements or to publicly announce
      the
      result of any revisions to any of the forward-looking statements in this
      document to reflect any future or developments. However, the Private Securities
      Litigation Reform Act of 1995 is not available to us as a penny stock issuer
      and
      thus we may not rely on the statutory safe harbor from liability for
      forward-looking statements. Further, Section 27A(b)(2)(D) of the Securities
      Act
      and Section 21E(b)(2)(D) of the Securities Exchange Act expressly state that
      the
      safe harbor for forward looking statements does not apply to statements made
      in
      connection with this offering.






13






***Item
      3. Controls and Procedures***





Evaluation
      of Disclosure Controls and Procedures





As
      of the
      end of the period covered by this report on Form 10-QSB, our Chief Executive
      Officer and our Chief Financial Officer performed an evaluation of the
      effectiveness of our disclosure controls and procedures as defined in Rule
      13a-15(e) or Rule 15d-15(e) under the Exchange Act. Based on that evaluation,
      our Chief Executive Officer and our Chief Financial Officer concluded that
      as of
      the end of the period covered by this report on Form 10-QSB, our disclosure
      controls and procedures were effective in timely recording, processing,
      summarizing and reporting material information required to be included in our
      Exchange Act filings.





Changes
      in Internal Control Over Financial Reporting





There
      were no changes in the Company’s internal control over financial reporting that
      occurred during the most recent fiscal quarter that have materially affected,
      or
      are reasonably likely to materially affect, its internal control over financial
      reporting for that period.




**PART
      II. OTHER INFORMATIO** **N**




***Item
      1. Legal Proceeding*** **s**




None




***Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds***





(a)  Unregistered
      Sales of Equity Securities.





On
      November 19, 2007, all 2,400,000 post-split shares underlying the warrant were
      exercised and delivered to the warrant holder.






14






(b)  Use
      of
      Proceeds.





On
      June
      7, 2007, the Securities and Exchange Commission declared effective the Company's
      registration statement on Form SB-2 (File No. 333-142860) relating to the offer
      and sale of 8,000,000 shares of the Company’s common stock, at a price of
      $$0.005 per share and 2,400,000 shares of the Company’s common stock underlying
      a warrant, at an exercise price of $0.50. The aggregate price of the offering
      amount registered is $1,240,000. On September 24, 2007, we closed our offering,
      having sold all 8,000,000 common shares to 50 investors for proceeds of $40,000.
      On November 19, 2007, all 2,400,000 post-split shares underlying the warrant
      were exercised and delivered to the warrant holder.





At
      December 31, 2007, we had expended proceeds of the offering including $62,500
      in
      advertising expenses, $16,042 in general and administrative expenses and $9,262
      in legal and professional fees.





The
      offering was conducted in a best efforts, no minimum, direct public offering
      without any involvement of underwriters or broker-dealers and the Company has
      not paid and will not pay commissions in connection with the sale of the shares.
      During the period covered by this Report on Form 10-QSB, the Company’s offering
      expenses (all of which were incurred to persons other than our directors,
      officers or ten percent or greater stockholders) were $0.





Nacel
      Energy has entered into an agreement with a Director with respect to an
      unsecured, no-interest $250,000 line of credit facility repayable at an
      unspecified future date. Interest is being imputed at Prime plus 2% or 10.25%
      for a total of $6,858 of interest expense in the nine months ended December
      31,
      2007. $128,581 was available for borrowing as of December 31, 2007. Our line
      of
      credit had a balance of $121,419 at December 31, 2007. To the extent amounts
      are
      outstanding the Company may use additional proceeds from the offering to pay
      amounts under the line of credit.




***Item
      3. Defaults Upon Senior Securities***





None




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





The
      Registrant did not submit any matters to a vote of its security holders during
      the three-months ended December 31, 2007.




***Item
      5. Other Information***





Not
      Applicable





15






***Item
      6. Exhibits***





a)  Exhibits





Exhibit
      Item





31.1  Certification
      of Principal Executive and Principal Financial Officer pursuant to Section
      302(a) of the Sarbanes-Oxley Act of 2002





32.1*  Certification
      of Principal Executive and Principal Financial Officer pursuant to Section
      302(a) of the Sarbanes-Oxley Act of 2002





*
      This
      exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities
      Exchange Act of 1934 or otherwise subject to the liabilities of that section,
      nor shall it be deemed incorporated by reference in any filing under the
      Securities Act of 1933 of the Securities Exchange Act of 1934, whether made
      before or after the date hereof and irrespective of any general incorporation
      language in any filings.





16







**Signatures**





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




Nacel
              Energy
              CorporationDate: February 14, 2008By:
            /s/ Brian
              M.
              Lavery(Authorized
              Officer and Principal Executive
              Officer)






EXHIBIT
      INDEX





Exhibit
      Item





31.1  Certification
      of Principal Executive and Principal Financial Officer pursuant to Section
      302(a) of the Sarbanes-Oxley Act of 2002





32.1*  Certification
      of Principal Executive and Principal Financial Officer pursuant to Section
      906
      of the Sarbanes-Oxley Act of 2002





*
      This
      exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities
      Exchange Act of 1934 or otherwise subject to the liabilities of that section,
      nor shall it be deemed incorporated by reference in any filing under the
      Securities Act of 1933 of the Securities Exchange Act of 1934, whether made
      before or after the date hereof and irrespective of any general incorporation
      language in any filings.







17