**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10 QSB**

*(Mark      One)*

| [X] | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 |
|-----|--------------------------------------------------------------------------------------------------------------------------------------|

| [__] | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 |
|------|---------------------------------------------------------------------------------------------------------------------------------------|

**US      ENERGY INITIATIVES CORPORATION**

*(Exact      name of registrant as specified in its charter)*

| **GEORGIA**                                                                   |   | **58                2267238**                       |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) |   | (I.R.S.                Employer Identification No.) |

** **

**12812      Dupont Circle, Tampa, Florida 33626**

**(813)      630-1229**

----

**US      ENERGY INITIATIVES**

**Report      on Form 10QSB**

**for      the three month period ended March 31, 2007**

| PART                  I                                                                                                                                                                         |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|
|                                                                                                                                                                                                 |         |
| Item                  1 - Financial Statements                                                                                                                                                  | 3  |
|                                                                                                                                                                                                 |    |
| Consolidated                  Balance Sheets for the three month period ended March 31, 2007                  (unaudited) and the year ended December 31, 2006                  (audited)  | 3       |
|                                                                                                                                                                                                 |    |
| Consolidated                  Statement of Operations for the three month period ended March                  31, 2007                  and 2006 (restated unaudited)                      | 4       |
|                                                                                                                                                                                                 |    |
| Consolidated                  Statement of Cash Flows for the three month period ended March 31,                  2007 and 2006 (restated unaudited)                                  | 5       |
|                                                                                                                                                                                                 |    |
| Notes                  to Consolidated Financial Statements                                                                                                                                     | 6       |
|                                                                                                                                                                                                 |    |
| Item                  2 - Management's Discussion and Analysis or Plan of Operation                                                                                                             | 17      |
|                                                                                                                                                                                                 |    |
| Item                  3 - Controls and Procedures                                                                                                                                               | 17      |
|                                                                                                                                                                                                 |    |
| PART                  II                                                                                                                                                                        |    |
|                                                                                                                                                                                                 |    |
| Item                  1 - Legal Proceedings                                                                                                                                                     | 18      |
|                                                                                                                                                                                                 |    |
| Item                  2 - Unregistered Sales of Equity Securities and Use of                  Proceeds                                                                                          | 19      |
|                                                                                                                                                                                                 |    |
| Item                  3 - Defaults Upon Senior Securities                                                                                                                                       | 19      |
|                                                                                                                                                                                                 |    |
| Item                  4 - Submission of Matters to a Vote of Security Holders                                                                                                                   | 19      |
|                                                                                                                                                                                                 |    |
| Item                  5 - Other Information                                                                                                                                                     | 19      |
|                                                                                                                                                                                                 |    |
| Item                  6 - Exhibits                                                                                                                                                              | 19      |

----

**US      ENERGY INITIATIVES CORPORATION**

**CONSOLIDATED      BALANCE SHEETS**

|                  **ASSETS**                                                                               |   |                  **March                  31, 2007****(unaudited)** |      | **December                  31, 2006****(audited)**  |   |
|----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|-----------|-----------------------------------------------------------|--------|
| ***Current                  Assets***                                                                          |   |                                                                |      |                                                 |   |
| Cash                                                                                                           |   | $                                                                        | 3,940     |                                                      | $      | 3,937 |   |
| Accounts                  Receivable, net of $72,800 allowance in 2007 and 2006                  respectively. |   |                                                                     | 256,230   |                                                      |   | 300,163 |   |
| Other                  assets                                                                                  |   |                                                                     |           |                                                      |   | 2,510 |   |
| Prepaid                  expenses and deposits                                                                 |   |                                                                     | 61,339    |                                                      |   | 46,060 |   |
| Inventories                                                                                                    |   |                                                                     | 616,382   |                                                      |   | 634,315 |   |
| Deferred                  consulting                                                                           |   |                                                                     | 94.538    |                                                      |   | 147,000 |   |
| Deferred                  debt costs                                                                           |   |                                                                     | 520,858   |                                                      |   | 1,021,707 |   |
| Total                  current assets                                                                          |   | $                                                                        | 1,553,287 |                                                      | $      | 2,155,692 |   |
|                                                                                                           |   |                                                                     |           |                                                      |   |  |   |
| Property,                  plant & equipment, net                                                          |   |                                                                     | 577,139   |                                                      |   | 554,722 |   |
| GoodwillPurchase                  price subject to allocation                                                  |   |                                                                     | 683,877   |                                                      |   | 683,877 |   |
|                                                                                                           |   |                                                                     |           |                                                      |   |   |   |
|                                                                                                           |   |                                                                     |           |                                                      |   |  |   |
| Total                  Assets                                                                                  |   | $                                                                        | 2,814,303 |                                                      | $      | 3,394,291 |   |
| **LIABILITIES                  AND SHAREHOLDERS' DEFICIT**                                                     |   |                                                                     |      |                                                      |   |   |   |

| ***Current                  Liabilities***                                                                                                                                              |   |       |        |       |   |             |   |   |             |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|------------|--------|-------------|--------|--------|-------------|--------|
| Accounts                  payable                                                                                                                                                       |   |       |   |       | $      | 978,290     |   |   | 972,016     |   |
| Accounts                  payable in settlement                                                                                                                                         |   |       |   |       |   | 259,440     |   |   | 259,440     |   |
| Due                  to related parties                                                                                                                                                 |   |       |   |       |   | 224,929     |   |   | 214,849     |   |
| Due                  to related parties,convertible debt                                                                                                                                |   |       |   |       |   | 423,656     |   |   | 11,424      |   |
| Notes                  payable                                                                                                                                                          |   |       |   |       |   | 1,966,124   |   |   | 2,079,869   |   |
| Discount                  on debt                                                                                                                                                       |   |       |   |       |   | (5,133      | )      |   | (82,231     | )      |
| Derivative                  liability                                                                                                                                                   |   |       |   |       |   | 96,579      |   |   | 77,046      |   |
| Other                  current liabilities                                                                                                                                              |   |       |   |       |   | 691,317     |   |   | 648,031     |   |
| Total                  Liabilities                                                                                                                                                      |   |       |   |       | $      | 4,635,202   |   |   | 4,180,444   |   |
|                                                                                                                                                                                    |   |       |        |       |   |             |   |   |             |   |
| ***Shareholders'                  Deficit***                                                                                                                                            |   |       |        |       |   |             |   |   |             |   |
| Preferred                  Stock (.01 par value, 5,000,000 authorized)                                                                                                                  |   |       |   |       |   |        |   |   |        |   |
| Preferred                  A stock (.01 par value, 42,215 shares issued and                  outstanding                                                                                |   |       |   |       |   | 422         |   |   | 422         |   |
| Preferred                  B stock (.01 par value, 23,431 shares issued and                  outstanding)                                                                               |   |       |   |       |   | 234         |   |   | 234         |   |
| Common                  stock (.001 par value, 295,000,000 shares authorized; 210,698,734                  and                  198,146,858 shares issued and outstanding, respectively |   |       |   |       |   | 210,698     |   |   | 198,146     |   |
| Additional                  paid-in capital                                                                                                                                             |   | 28,422,922 |   | 27,221,863 |   |
| Accumulated                  deficit                                                                                                                                                    |   |       |   |       |   | (30,455,175 |   |   | (28,206,818 | )      |
| Total                  shareholders' deficit                                                                                                                                            |   |       |   |       |   | (1,820,899  | )      |   | (786,153    | )      |
|                                                                                                                                                                                    |   |       |        |       |   |             |   |   |             |   |
| Total                  Liabilities and Shareholders' Deficit                                                                                                                            |   |       |   |       | $      | 2,814,303   |   | $      | 3,394,291   |   |

----

**US      ENERGY INITIATIVES CORPORATION**

**CONSOLIDATED      STATEMENTS OF OPERATIONS**

|                                                                        |   | **Three                Months****Ended****March                31, 2007** |        | **Three                Months****Ended****March                31, 2006** |   |
|-----------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|-------------|---------------------------------------------------------------------------|--------|
|                                                                        |   |                                                                      |        | **(restated)**                                                            |   |
|                                                                        |   |                                                                      |        |                                                                      |   |
| Revenue                                                                     |   | $                                                                         | 385,874     |                                                                      | $      | 168,100 |   |
| Cost                of sales                                                |   |                                                                      | 329,557     |                                                                      |   | 159,091 |   |
| Gross                Profit                                                 |   |                                                                      | 56,317      |                                                                      |   | 9,009 |   |
|                                                                        |   |                                                                      |             |                                                                      |   |  |   |
|                                                                        |   |                                                                      |             |                                                                      |   |  |   |
| Operating                Expenses                                           |   |                                                                      |             |                                                                      |   |  |   |
| Consulting                and professional                                  |   |                                                                      | 148,679     |                                                                      |   | 360,397 |   |
| Research                & Development                                   |   |                                                                      | 12,286      |                                                                      |   | 9,469 |   |
| Compensation                                                                |   |                                                                      | 750,742     |                                                                      |   | 414,213 |   |
| Depreciation                and Amortization                                |   |                                                                      | 25,788      |                                                                      |   | 44,918 |   |
| Loss                on sale of fixed asset                                  |   |                                                                      | 1,310       |                                                                      |   | 0 |   |
| Rent                                                                        |   |                                                                      | 52,601      |                                                                      |   | 28,380 |   |
| Insurance                                                                   |   |                                                                      | 64,713      |                                                                      |   | 65,278 |   |
| Other                operating expenses                                     |   |                                                                      | 74,813      |                                                                      |   | 88,520 |   |
|                                                                        |   |                                                                      | 1,130,932   |                                                                      |   | 1,011,175 |   |
|                                                                        |   |                                                                      |             |                                                                      |   |  |   |
| ***Loss                from operations***                                   |   |                                                                      | (1,074,615  | )                                                                         |   | (1,002,166 | ) |
|                                                                        |   |                                                                      |             |                                                                      |   |  |   |
| Other                Expense (Income)                                       |   |                                                                      |             |                                                                      |   |  |   |
| Derivative                loss (gain)                                       |   |                                                                      | 213,259     |                                                                      |   | 699,430 |   |
| Interest                expense                                             |   |                                                                      | 960,486     |                                                                      |   | 705,051 |   |
| Other                income                                                 |   |                                                                      | (3          | )                                                                         |   | (529 | ) |
|                                                                        |   |                                                                      |        |                                                                      |   |   |   |
| (Income)                loss from other expenses                            |   |                                                                      | 1,173,742   |                                                                      |   | 1,403,952 |   |
|                                                                        |   |                                                                      |        |                                                                      |   |   |   |
|  Net                Loss                                               |   |                                                                      | (2,248,357  | )                                                                         |   | (2,406,118 | ) |
|                                                                        |   |                                                                      |        |                                                                      |   |   |   |
| Basic                and diluted weighted average common shares outstanding |   |                                                                      | 210,698,734 |                                                                      |   | 106,709,351 |   |
|                                                                        |   |                                                                      |             |                                                                      |   |  |   |
| Basic                and diluted loss per share                             |   | $                                                                         | (0.01       | )                                                                         | $      | (0.02 | ) |

----

**US      ENERGY INITIATIVES CORPORATION**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                                                                  |   |   | **Three                Months****Ended****March                31, 2007**  |   |   | **Three                Months****Ended****March                31, 2006****(restated)**  |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------|--------|
| Cash              flows from operating activities                                                                     |   |   |                                                                            |   |   |                                                                                          |   |
| Net                Loss                                                                                               |   |   | (2,248,357                                                                      | )      |   | (2,406,118                                                                                    | )      |
| Adjustments                to reconcile net income to net cash provided (used) by operating                activities |   |   |                                                                                 |   |   |                                                                                               |   |
| Common                stock issued for services                                                                       |   |   | 375,000                                                                         |   |   | 52,813                                                                                        |   |
| Depreciation                                                                                                          |   |   | 25,788                                                                          |   |   | 21,935                                                                                        |   |
| Amortization                of deferred compensation                                                                  |   |   |                                                                            |   |   | 75,000                                                                                        |   |
| Amortization                of deferred debt cost and debt discount                                                   |   |   | 293,067                                                                         |   |   | 342,131                                                                                       |   |
| Amortization                of deferred interest costs                                                                |   |   | 370,879                                                                         |   |   |                                                                                          |   |
| Amortization                of deferred consulting                                                                    |   |   | 87,462                                                                          |   |   | 153,999                                                                                       |   |
| Amortization                of intangibles                                                                            |   |   |                                                                            |   |   | 22,983                                                                                        |   |
| Loss                on sale of equipment                                                                              |   |   | 1,310                                                                           |   |   |                                                                                          |   |
| Conversion                benefit on related party advance                                                            |   |   | 288,675                                                                         |   |   | 68,000                                                                                        |   |
| Derivative                (income) expense                                                                            |   |   | 213,259                                                                         |   |   | 914,509                                                                                       |   |
|                                                                                                                  |   |   |                                                                                 |   |   |                                                                                               |   |
| Change                in operating assets and liabilities                                                             |   |   |                                                                                 |   |   |                                                                                               |   |
| Accounts                Receivable                                                                                    |   |   | 43,934                                                                          |   |   | 66,494                                                                                        |   |
| Inventory                                                                                                             |   |   | 17,933                                                                          |   |   | 26,310                                                                                        |   |
| Prepaid                & deposits                                                                                 |   |   | (50,277                                                                         | )      |   | (57,385                                                                                       | )      |
| Other                assets                                                                                      |   |   | 200                                                                             |   |   |                                                                                               |   |
| Accounts                payable                                                                                       |   |   | 12,237                                                                          |   |   | (57,450                                                                                       | )      |
| Related                Party payable                                                                                  |   |   | 3,250                                                                           |   |   | (150,000                                                                                      | )      |
| Accrued                liabilities                                                                                    |   |   | (63,845                                                                         | )      |   | (4,122                                                                                        | )      |
| Other                current liabilities                                                                              |   |   | 92,087                                                                          |   |   | 49,808                                                                                        |   |
|                                                                                                                  |   |   |                                                                                 |   |   |                                                                                               |   |
| Net                Cash Provided (used) by operating activities                                                       |   |   | (537,398                                                                        | )      |   | (881,093                                                                                      | )      |
|                                                                                                                  |   |   |                                                                                 |   |   |                                                                                               |   |
| Cash                flows from Investing Activities                                                         |   |   |                                                                                 |   |   |                                                                                               |   |
| Purchase                of property and equipment                                                                     |   |   | (5,599                                                                          | )      |   | (20,771                                                                                       | )      |
| Proceeds                from sale of equipment                                                                        |   |   | 1,000                                                                           |   |   |                                                                                          |   |
|                                                                                                                  |   |   |                                                                            |   |   |                                                                                               |   |
|                                                                                                                  |   |   |                                                                                 |   |   |                                                                                               |   |
| Net                cash provided (used) by investing activities                                                       |   |   | (4,599                                                                          | )      |   | (20,771                                                                                       | )      |
|                                                                                                                  |   |   |                                                                                 |   |   |                                                                                               |   |
| Cash                flows from Financing Activities                                                                   |   |   |                                                                                 |   |   |                                                                                               |   |
| Loans                to employees                                                                                     |   |   |                                                                            |   |   | (2,200                                                                                        | )      |
| Loans                from related parties                                                                             |   |   | 397,000                                                                         |   |   | 68,000                                                                                        |   |
| Payment                on notes payable                                                                               |   |   |                                                                            |   |   | (852,537                                                                                      | )      |
| Proceeds                from convertible debt - Dutchess                                                              |   |   | 145,000                                                                         |   |   | 1,040,000                                                                                     |   |
| Proceeds                from sale of common stock                                                                     |   |   |                                                                                 |   |   | 223,847                                                                                       |   |
|                                                                                                                  |   |   |                                                                                 |   |   |                                                                                               |   |
| Net                cash provided (used) by financing activities                                             |   |   | 542,000                                                                         |   |   | 447,110                                                                                       |   |
|                                                                                                                  |   |   |                                                                                 |   |   |                                                                                               |   |
| Net                increase (decrease) in cash and cash equivalents                                                   |   |   | 3                                                                               |   |   | (424,754                                                                                      | )      |
| Beginning                cash and cash equivalents                                                                    |   |   | 3,937                                                                           |   |   | 818,557                                                                                       |   |
|                                                                                                                  |   |   |                                                                                 |   |   |                                                                                               |   |
| Ending              cash and cash equivalents                                                                         |   | $      | 3,940                                                                           |   | $      | 393,803                                                                                       |   |
|                                                                                                                  |   |   |                                                                                 |   |   |                                                                                               |   |
| Supplement                disclosure of cash flow information                                                         |   |   |                                                                                 |   |   |                                                                                               |   |
| Cash                paid during the year for interest                                                                 |   |   |                                                                            |   | $$     | 30,900                                                                                        |   |
| Common                stock issued for services                                                                       |   | $      | 386,464                                                                         |   |   |                                                                                          |   |
| Common                stock issued for conversion of convertible note                                                 |   | $      | 474,470                                                                         |   | $      | 341,765                                                                                       |   |
| Amortization                of common stock issued for deferred compensation                                          |   | $      | 200,000                                                                         |   | $      | 75,000                                                                                        |   |
| Amortization                of debt discount                                                                          |   |   |                                                                            |   | $$     | 78,296                                                                                        |   |
| Common                stock issued for discount on debt                                                               |   | $      | 64,000                                                                          |   | $      | 366,026                                                                                       |   |

----

**US      ENERGY INITIATIVES CORPORATION**

**Notes      to Consolidated Financial Statements**

***Note      1 - BASIS OF PRESENTATION***

***Note      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES***

*a.      Principles of Consolidation*

*b.      Use of Accounting Estimates*

*c..      Cash and Cash Equivalents*

*d.      Accounts Receivable*

*e      Inventories*

*f.      Property, Plant and Equipment Net*

----

*g      Goodwill and other Intangible Assets*

*"Goodwill      and Other Intangibles"*

*h.      Impairment of Assets*

*i.      Income Taxes*

*"Accounting      for Income Taxes"*

*j.      Earnings (Loss) Per Common Share*

*k.      Revenue Recognition*

*l.      Stock Based Compensation*

*"Accounting      for Stock Based Compensation"*

----

*m.      Research and Development Costs*

*n.      Fair Value of Financial Instruments*

*Cash,      Accounts Receivable, Accounts Payable and Accrued Expenses*

*Long-Term      Obligations*

*o.      Accounting For Financial Instruments*

*p.      Reclassifications*

*Certain      reclassifications have been made to the financial statements for the three      months ended March 31, 2006 to conform to the presentation for the three months      ended March 31, 2007*

*q.      Going concern:*

----

***Note      3 - Related Party Transactions***

*License      Agreement*

***Note      4- Shareholders' Equity***

*Preferred      Stock*

----

***Note      5 - Goodwill***

|                                                                   |   | March                31, 2007   |   | March                31, 2006 |   |
|------------------------------------------------------------------------|--------|-------------------------------------------|--------|-------------------------------|--------|
|  Goodwill                                                         |   |                                      |   |                          | $      |  61,820 |   |
|  Less              accumulated amortization                       |   |                                      |   |                          |   |   |   |
|  Less              Impairment       |   |  $                                   |   |                          | $      |  |   |
|  Total                                                            |   |                                      | 0.00   |                          | $      | 61,820 |   |

***Note      6 - Intangible Assets***

|                                                                     |   | March                  31, 2007   |   | March                  31, 2006 |   |
|--------------------------------------------------------------------------|--------|---------------------------------------------|--------|---------------------------------|--------|
|  Intellectual                Property                               |   |                                        |   |                            | $      | 1,146,925 |   |
|  Less                accumulated amortization                       |   |                                        |   |                            |   | (296,565 | ) |
|  Less                Impairment       |   |                                        |   |                            | $      | $ |   |
|  Total                                                              |   |                                        | 0.00   |                            | $      | 850,360 |   |

----

***Note      7 - Debt in Default***

|                                                                      |   | March                31, 2007   |    |                March                31, 2006 |   |
|---------------------------------------------------------------------------|--------|-------------------------------------------|---------|---------------------------------------------------|--------|
| Payroll              and sales taxes                  |   | $                                         | 274,247 |                                              | $      | 51,410 |   |
|  Accrued              penalties and interest     |   |                                      | 21,800  |                                              |   | 8,388 |   |
|                                                                      |   | $                                         | 296,047 |                                              | $      | 59,798 |   |

***Note      8 - Litigation***

----

***Note      9 - Stock Options and Warrants***

***Note      10 - Derivative Financial Instruments***

| **Issue                Date**                                                                                                      | **Expiration                Date** | **Instrument**                                                    | **Exercise                Price Per Share** | **Value                at Issue Date** | **Value                at 3/31/07** |
|------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|-------------------------------------------------------------------|---------------------------------------------|----------------------------------------|-------------------------------------|
| 3/05/05                                                                                                                            | 3/05/10                            | 1,600,000                warrants issued to Alpha Capital         | $0.19                                       | $928,000                               | $68,640                             |
| 11/4/05                                                                                                                            | 11/4/10                            | 314,815                warrants issued to Dutchess Private Equity | $0.27                                       | $85,000                                | $13,411                             |
| Fair                value of freestanding derivative instrument liabilities for options                and                warrants | 82,051                             |

----

| **Issue                Date**                                                     | **Expiration                Date** | **Instrument**                               | **Exercise                Price Per Share** | **Value                at Issue Date** | **Value                at 3/31/07** |
|-----------------------------------------------------------------------------------|------------------------------------|----------------------------------------------|---------------------------------------------|----------------------------------------|-------------------------------------|
| 12/20/05                                                                          | 12/21/06                           | Dutchess                $1,362,500 term note | $0.27                                       | $302,778                               | $1,175                              |
| 3/23/06                                                                           | 3/23/07                            | Dutchess                $1,412,500 term note | $0.27                                       | $470,833                               | $11,028                             |
| 7/13/06                                                                           | 10/13/07                           | Dutchess                $845,000 term note   | $0.27                                       | $338,169                               | $2,325                              |
| Fair                value of embedded conversion features for term notes          | 14,528                             |
| Total                fair value of freestanding derivative instrument liabilities | 96,579                             |

| Expected                term ranging from           | .22                to 3.5 years |
|-----------------------------------------------------|---------------------------------|
| Stock                Price at March 31, 2007        | $0.086                          |
| Expected                dividend yield              | $0.00                           |
| Expected                stock price volatility      | 103%                            |
| Risk-free                interest rate ranging from | 4.54%                to 5.06%   |

***Note      11- Debt Financing***

***Note      12 - Acquisitions***

----

| Purchase                  Price                                 |   | $      | 490,250  |   |
|-----------------------------------------------------------------|--------|--------|----------|--------|
|                                                            |   |   |     |   |
| Less:                  values currently assigned to assets      |   |   |     |   |
| Cash                                                            |   |   | (63,049  | )      |
| Accounts                  Receivable net                        |   |   | (133,357 | )      |
| Inventory                                                       |   |   | (153,003 | )      |
| Fixed                  Assets net                               |   |   | (60,285  | )      |
| Other                  assets                                   |   |   | (2,310   | )      |
|                                                            |   |   |     |   |
| Plus:                  values currently assigned to liabilities |   |   |     |   |
|                                                            |   |   |     |   |
| Accounts                  Payable and accrued expense           |   |   | 205,501  |   |
| Credit                  Line Payable                            |   |   | 400,130  |   |
| Purchase                  price subject to allocation           |   | $      | 683,877  |   |

***Note      13 - Segment Information***

|                                                                   |   |                        |       |          |   |      |   |
|------------------------------------------------------------------------|--------|-----------------------------|------------|---------------|--------|-----------|--------|
|                                                                   |   | Hybrid                Fuels |       | Manufacturing |   | Total     |   |
| Revenue                                                                |   |                        | 18,226     |          |   | 367,648   |   |   | 385,874 |   |
| Cost                of sales                                           |   |                        | 8,174      |          |   | 321,383   |   |   | 329,557 |   |
| Gross                Profit                                            |   |                        | 10,052     |          |   | 46,265    |   |   | 56,317 |   |
|                                                                   |   |                        |       |          |   |      |   |   |  |   |
| Operating                Expenses                                      |   |                        |       |          |   |      |   |   |  |   |
| Consulting                and professional                             |   |                        | 144,292    |          |   | 4,387     |   |   | 148,679 |   |
| Research                & development                              |   |                        | 12,286     |          |   |      |   |   | 12,286 |   |
| Compensation                                                           |   |                        | 670,428    |          |   | 80,314    |   |   | 750,                742 |   |
| Depreciation                and amotization                            |   |                        | 20,662     |          |   | 5,126     |   |   | 25,788 |   |
| Impairment                loss                                         |   |                        |       |          |   | 1,310     |   |   | 1,310 |   |
| Rent                                                                   |   |                        | 32,180     |          |   | 20,421    |   |   | 52,601 |   |
| Insurance                                                              |   |                        | 47,409     |          |   | 17,304    |   |   | 64,713 |   |
| Other                operating expenses                                |   |                        | 50,289     |          |   | 24,524    |   |   | 74,813 |   |
|                                                                   |   |                        | 977,546    |          |   | 153,386   |   |   | 1,130,932 |   |
| Loss                from operations                                    |   |                        | (967,494   | )             |   | (107,121  | )      |   | (1,074,615 | ) |
|                                                                   |   |                        |       |          |   |      |   |   |  |   |
| Other                income (expense)                                  |   |                        |       |          |   |      |   |   |  |   |
|  Derivative                (loss)                                 |   |                        | 213,259    |          |   |      |   |   | 213,259 |   |
|  Interest                expense                                  |   |                        | 957,951    |          |   | 2,535     |   |   | 960,486 |   |
|  Miscellaneous                                                    |   |                        | (3         | )             |   |      |   |   | (3 | ) |
|                                                                   |   |                        | 1,171,207  |          |   | 2,535     |   |   | 1,173,742 |   |
| Loss                from continuing operations                         |   |                        | (2,138,701 | )             |   | (109,656  | )      |   | (2,248,357 | ) |
| Net                loss for reportable segments                        |   |                        | (2,138,701 | )             |   | (109,656  | )      |   | (2,248,357 | ) |
| Total                Assets                                            |   |                        | 1,706,659  |          |   | 1,107,644 |   |   | 2,814,303 |   |
|                                                                   |   |                        |            |          |   |           |   |   |  |   |
| Reconciliation                of Segment Amounts Reported to Condensed |   |                             |       |          |        |      |
| Consolidated                Amounts                                    |   |                        |            |          |   |           |   |   |  |   |
| Revenue                                                                |   |                        |            |          |   |           |   |   |   |   |
|  Total                revenues for reportable segments            |   | 385,874                     |       |          |   |      |
|  Total                consolidated revenue                        |   |                        |            |          |   | 385,874   |   |   |  |   |
|                                                                   |   |                        |            |          |   |      |   |   |  |   |
| Net                loss                                                |   |                        |            |          |   |      |   |   |  |   |
|  Net                loss for reportable segments                  |   | 2,248,357                   |       |          |        |      |
|  Net                loss consolidated                             |   |                        |            |          |   | 2,248,357 |   |   |  |   |
|                                                                   |   |                        |       |          |   |           |   |   |  |   |

***Note      14 - Restatements to the prior reporting period***

----

|                                                               |   |   | **March                  31, 2006****As                  Previously** **As**  |   |
|--------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------|--------|
|                                                               |   |   | **Reported**                                                                       |   |   | **Restated** ** **  |   |
| **Assets**                                                         |   |   |                                                                                    |   |   |   |   |
| Current                  assets                                    |   |   |                                                                                    |   |   |   |   |
| Cash                                                               |   | $      | 393,803                                                                                 |   | $ | 393,803 |   |
| Accounts                  receivable                               |   |   | 304,257                                                                                 |   |   | 304,257 |   |
| Inventory                                                          |   |   | 136,381                                                                                 |   |   | 136,381 |   |
| Prepaid                  and other current assets                  |   |   | 86,951                                                                                  |   |   | 86,951 |   |
| Deferred                  consulting                               |   |   | 422,259                                                                                 |   |   | 422,259 |   |
| Deferred                  debt costs                               |   |   | 659,006                                                                                 |   |   | 659,006 |   |
| Total                  current assets                              |   |   | 2,002,657                                                                               |   |   | 2,002,657 |   |
| Property                  and equipment, net                       |   |   | 564,250                                                                                 |   |   | 564,250 |   |
| Goodwill                                                           |   |   | 61,820                                                                                  |   |   | 61,820 |   |
| Intellectual                  property certifications, net         |   |   | 850,360                                                                                 |   |   | 850,360 |   |
|                                                               |   |   | -                                                                                       |   |   | - |   |
| Total                  assets                                      |   | $      | 3,479,087                                                                               |   | $ | 3,479,087 |   |
|                                                               |   |   |                                                                                    |   |   |   |   |
| **Liabilities                  and Stockholders' Equity**          |   |   |                                                                                    |   |   |   |   |
| Current                  liabilities                               |   |   |                                                                                    |   |   |   |   |
| Accounts                  payable                                  |   |   | 457,688                                                                                 |   |   | 457,688 |   |
| Accounts                  payable in settlement                    |   |   | 109,868                                                                                 |   |   | 109,868 |   |
| Due                  to related parties                            |   |   | 26,540                                                                                  |   |   | 26,540 |   |
| Due                  to related parties, convertible debt          |   |   | 1,148,752                                                                               |   |   | 1,148,752 |   |
| Notes                  payable                                     |   |   | 2,196,639                                                                               |   |   | 2,196,639 |   |
| Discount                  on debt                                  |   |   | (563,360                                                                                | )      |   | (563,360 | ) |
| Derivative                  Liability                              |   |   | 1,464,335                                                                               |   |   | 1,464,335 |   |
| Other                  current liabilities                         |   |   | 412,715                                                                                 |   |   | 412,715 |   |
|                                                               |   |   |  -                                                                                 |   |   | - |   |
| Total                  current liabilities                         |   |   | 5,253,177                                                                               |   |   | 5,253,177 |   |
| Long-term                  debt, less current portion              |   |   | -                                                                                       |   |   | - |   |
| Total                  liabilities                                 |   |   | 5,253,177                                                                               |   |   | 5,253,177 |   |
|                                                               |   |   |                                                                                    |   |   |   |   |
| **Stockholders'                  Equity**                          |   |   |                                                                                    |   |   |   |   |
| Preferred                  A stock; $.01 par value; 42,215 shares  |   |   |                                                                                    |   |   |   |   |
| authorized                  and outstanding                        |   |   | 422                                                                                     |   |   | 422 |   |
| Preferred                  B stock; $.01 par value; 954,563 shares |   |   |                                                                                    |   |   |   |   |
| authorized                  and outstanding                        |   |   | 1,952                                                                                   |   |   | 1,952 |   |
| Common                  stock; $.001 par value; 150,000,000 shares |   |   |                                                                                    |   |   |   |   |
| authorized;                  109,854,116 shares issued and         |   |   |                                                                                    |   |   |   |   |
| oustanding                                                         |   |   | 109,854                                                                                 |   |   | 109,854 |   |
| Paid-in                  capital                                   |   |   | 17,447,663                                                                              |   |   | 17,822,663 |   |
| Deferred                  compensation                             |   |   | (125,000                                                                                | )      |   | (125,000 | ) |
| Accumulated                  deficit                               |   |   | (19,208,981                                                                             | )      |   | (19,583,981 | ) |
| Total                  stockholders' equity                        |   |   | (1,774,090                                                                              | )      |   | (1,774,090 | ) |
|                                                               |   |   |                                                                                    |   |   |   |   |
| Total                  Liabilities and Stockholders' Equity        |   | $      | 3,479,087                                                                               |   | $ | 3,479,087 |   |
|                                                               |   |   |                                                                                    |   |   |   |   |
|                                                               |   |   |                                                                                    |   |   |   |   |
|                                                               |   |   |                                                                                    |   |   |   |   |
|                                                               |   |   | **March                    3,**2006                                                     |   |   |   |   |
|                                                                    |   |   |                                                                                    |   |   |   |   |
| Net                  loss, as previously reported                  |   | $      | (2,031,118                                                                              | )      |   |   |   |
| Interest                  expense                                  |   |   | (375,000                                                                                | )      |   |   |   |
| Net                  loss, as restated                             |   | $      | (2,406,118                                                                              | )      |   |   |   |
| Basic                  earnings per common share:                  |   |   |                                                                                    |   |   |   |   |
| As                  previously reported                            |   | $      | (0.02                                                                                   | )      |   |   |   |
| As                  restated                                       |   | $      | (0.02                                                                                   | )      |   |   |   |
|                                                               |   |   |                                                                                    |   |   |   |   |

----

***Note      14 -Recent Accounting Pronouncements***

----

**Item      2 - Management's Discussion and Analysis or Plan of      Operations**

*This      Report contains forward-looking statements, within the meaning of Section 21E      of      the Securities Exchange Act of 1934, as amended, which reflect our expectation      or belief concerning future events that involve risks and uncertainties. Our      actions and performance could differ materially from what is contemplated by      the      forward-looking statements contained in this Report. Factors that might cause      differences from the forward-looking statements include those referred to or      identified under "Risk Factors" in our Annual Report on Form 10-KSB for the      year      ended December 31, 2005 and other factors that may be identified elsewhere      in      this Report. Reference should be made to such factors and all forward-looking      statements are qualified in their entirety by the above cautionary statements.      The following discussion and analysis provides information which management      believes is relevant to an assessment and understanding of the results of our      operations and financial condition. The discussion should be read in conjunction      with the financial statements and notes thereto.*

*Nature      of Business*

*Our      Business Strategy*

**Three      Months Ended March 31, 2007 Compared to Three Months Ended March 31,      2006**

----

**Item      3 Controls and Procedures**

*Evaluation      of Disclosure Controls and Procedures.*

*Changes      in internal controls.*

**PART      II**

**Item      1 - Litigation**

----

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

**Item      3 - Defaults Upon Senior Securities**

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

**Item      5 - Other Information**

**Item      6 - Exhibits**

**No.**
** **
**Description      of Exhibit**

| 31.1 | Certification                by Chief Executive Officer pursuant to Sarbanes-Oxley Section 302                (filed                herewith). |
|------|------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Certification                by Chief Financial Officer pursuant to Sarbanes-Oxley Section 302                (filed                herewith). |
|------|------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1 | Certification                by Chief Executive Officer pursuant to 18 U.S.C. Section 1350 (filed                herewith). |
|------|-----------------------------------------------------------------------------------------------------------------------------|

| 32.2 | Certification                by Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (filed                herewith) |
|------|----------------------------------------------------------------------------------------------------------------------------|

----

**SIGNATURES**

|                                              |                                                                              |                              |
|---------------------------------------------------|-----------------------------------------------------------------------------------|-----------------------------------|
|                                              | **US              ENERGY              INITIATIVES CORPORATION**                   |
|                                         |                                                                         |                         |
| Date: May              21,              2007 | By:                                                                     | /s/ MARK              CLANCY |
|                                              | Mark                Clancy                                                        |
|                                              | Chief              Executive Officer (Principal                Executive Officer) |

|                                              |                                                                                             |                                    |
|---------------------------------------------------|--------------------------------------------------------------------------------------------------|-----------------------------------------|
|                                              |                                                                                             |
|                                         |                                                                                        |                               |
| Date: May              21,              2007 | By:                                                                                    | /s/ MICHELLE              HAMILTON |
|                                              | Michelle              Hamilton                                                                   |
|                                              | Chief              Financial Officer (Principal                Financial and Accounting Officer) |