**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 |
|-----|-----------------------------------------------------------------------------------------------------------------------|

| or |
|----|

| [_] | 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 six month period ended June 30, 2007**

| **PART                I**    |                                                                                                                                                                  |   |
|------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                         |                                                                                                                                                                  |   |
| Item                  1 -    |  Financial                  Statements                                                                                                                           |   |
|                         |                                                                                                                                                                  |   |
|                         | Consolidated                  Balance Sheets for the six month period ended June 30, 2007 (unaudited)                  and the year ended December 31, 2006 (audited) |   |
|                         |                                                                                                                                                                  |   |
|                         | Consolidated                  Statement of Operations for the three and six month periods ended                  June 30,                  2007 and 2006 (unaudited)  |   |
|                         |                                                                                                                                                                  |   |
|                         | Consolidated                  Statement of Cash Flows for the six month periods ended June 30,                  2007 and                  2006 (unaudited)            |   |
|                         |                                                                                                                                                                  |   |
|                         | Notes                  to Consolidated Financial Statements                                                                                                           |   |
|                         |                                                                                                                                                                  |   |
| Item                  2 -    | Management's                  Discussion and Analysis or Plan of Operation                                                                                            |   |
|                         |                                                                                                                                                                  |   |
| Item                  3 -    | Controls                  and Procedures                                                                                                                              |   |
|                         |                                                                                                                                                                  |   |
| **PART                  II** |                                                                                                                                                                  |   |
|                         |                                                                                                                                                                  |   |
| Item                  1 -    | Legal                  Proceedings                                                                                                                                    |   |
|                         |                                                                                                                                                                  |   |
| 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                                                                                                                                                              |   |

----

**US      ENERGY INITIATIVES CORPORATION**

**CONSOLIDATED      BALANCE SHEETS**

|   |   |  |   |  |   |
|--------|--------|--|--------|--|--------|

|                                                                                                                                                                                    |   | **June                  30, 2007****(unaudited)** |        |   | **December                  31, 2006****(audited)** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|-------------|--------|-----------------------------------------------------|--------|
| **ASSETS**                                                                                                                                                                              |   |                                              |        |   |                                                |   |
| ***Current                  Assets***                                                                                                                                                   |   |                                              |        |   |                                                |   |
| Cash                                                                                                                                                                                    |   | $                                                 | 274         |   |                                                | $      | 3,937 |   |
| Accounts                  Receivable, net of $73,800 and $72,800 allowance                  respectively                                                                                |   |                                              | 130,830     |   |                                                |   | 300,163 |   |
| Other                  assets                                                                                                                                                           |   |                                              |        |   |                                                |   | 2,510 |   |
| Prepaid                  expenses and deposits                                                                                                                                          |   |                                              | 116,205     |   |                                                |   | 46,060 |   |
| Inventories                                                                                                                                                                             |   |                                              | 623,532     |   |                                                |   | 634,315 |   |
| Deferred                  consulting                                                                                                                                                    |   |                                              | 21,000      |   |                                                |   | 147,000 |   |
| Deferred                  debt costs                                                                                                                                                    |   |                                              | 62,859      |   |                                                |   | 1,021,707 |   |
| Total                  current assets                                                                                                                                                   |   | $                                                 | 954,700     |   |                                                | $      | 2,155,692 |   |
|                                                                                                                                                                                    |   |                                              |        |   |                                                |   |   |   |
| Property,                  plant & equipment, net                                                                                                                                   |   |                                              | 557,019     |   |                                                |   | 554,722 |   |
| Goodwill                                                                                                                                                                                |   |                                              | 683,877     |   |                                                |   |   |   |
| Purchase                  price subject to allocation                                                                                                                                   |   |                                              |        |   |                                                |   | 683,877 |   |
|                                                                                                                                                                                    |   |                                              |        |   |                                                |   |   |   |
| Total                  Assets                                                                                                                                                           |   | $                                                 | 2,195,596   |   |                                                | $      | 3,394,291 |   |
|                                                                                                                                                                                    |   |                                              |        |   |                                                |   |   |   |
| LIABILITIES                  AND SHAREHOLDERS' DEFICIT                                                                                                                                  |   |                                              |        |   |                                                |   |   |   |
|                                                                                                                                                                                    |   |                                              |        |   |                                                |   |   |   |
| Current                  Liabilities                                                                                                                                                    |   |                                              |        |   |                                                |   |   |   |
| Accounts                  payable                                                                                                                                                       |   | $                                                 | 1,020,399   |   |                                                |   | 972,016 |   |
| Accounts                  payable in settlement                                                                                                                                         |   |                                              | 259,440     |   |                                                |   | 259,440 |   |
| Due                  to related parties                                                                                                                                                 |   |                                              | 227,429     |   |                                                |   | 214,849 |   |
| Due                  to related parties,convertible debt                                                                                                                                |   |                                              | 792,013     |   |                                                |   | 11,424 |   |
| Notes                  payable                                                                                                                                                          |   |                                              | 1,946,191   |   |                                                |   | 2,079,869 |   |
| Discount                  on debt                                                                                                                                                       |   |                                              |        |   |                                                |   | (82,231 | ) |
| Derivative                  liability                                                                                                                                                   |   |                                              | 121,825     |   |                                                |   | 77,046 |   |
| Other                  current liabilities                                                                                                                                              |   |                                              | 781,040     |   |                                                |   | 648,031 |   |
| Total                  Liabilities                                                                                                                                                      |   | $                                                 | 5,148,337   |   |                                                |   | 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; 213,305,672                  and                  198,146,858 shares issued and outstanding, respectively |   |                                              | 213,305     |   |                                                |   | 198,146 |   |
| Additional                  paid-in capital                                                                                                                                             |   |                                              | 28,861,991  |   |                                                |   | 27,221,863 |   |
| Deferred                  compensation                                                                                                                                                  |   |                                              | 0           |   |                                                |   |   |   |
| Accumulated                  deficit                                                                                                                                                    |   |                                              | (32,028,693 | )      |                                                |   | (28,206,818 | ) |
| Total                  shareholders' deficit                                                                                                                                            |   |                                              | (2,952,741  | )      |                                                |   | (786,153 | ) |
|                                                                                                                                                                                    |   |                                              |        |   |                                                |   |   |   |
| Total                  Liabilities and Shareholders' Deficit                                                                                                                            |   | $                                                 | 2,195,596   |   |                                                | $      | 3,394,291 |   |

----

**US      ENERGY INITIATIVES CORPORATION**

**CONSOLIDATED      STATEMENTS OF OPERATIONS**

|                                                                        |   | **Three                  Months****Ended****June                  30, 2007** |        |   | **Three****Months****Ended****June                  30,****2006** |   |        | **                      Six                  ****Months         ****Ended           ****June                  30,        ****  ****2007    ** |   |   | **Six****Months ****Ended****June                  30,****2006** |   |
|-----------------------------------------------------------------------------|--------|------------------------------------------------------------------------------|-------------|--------|-------------------------------------------------------------------|--------|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------|--------|
| Revenue                                                                     |   | $                                                                            | 246,372     |   |                                                              | $      | 257,585     |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $      | 626,246                                                               |   |   | $ | 425,685 |   |
| Cost                of sales                                                |   |                                                                         | 218,703     |   |                                                              |   | 38,649      |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 549,357                                                               |   |   |   | 197,740 |   |
| Gross                Profit                                                 |   |                                                                         | 27,669      |   |                                                              |   | 218,936     |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 76,889                                                                |   |   |   | 227,945 |   |
|                                                                        |   |                                                                         |        |   |                                                              |   |        |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |                                                                  |   |   |   |   |   |
| Operating                Expenses                                           |   |                                                                         |        |   |                                                              |   |        |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |                                                                  |   |   |   |   |   |
| Consulting                and professional                                  |   |                                                                         | 212,119     |   |                                                              |   | 735,310     |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 360,798                                                               |   |   |   | 1,095,707 |   |
| Research                & Development                                   |   |                                                                         | 24,353      |   |                                                              |   | 16,642      |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 36,639                                                                |   |   |   | 26,111 |   |
| Compensation                                                                |   |                                                                         | 315,749     |   |                                                              |   | 717,153     |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 1,066,491                                                             |   |   |   | 1,131,366 |   |
| Depreciation                and Amortization                                |   |                                                                         | 27,477      |   |                                                              |   | 45,007      |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 53,265                                                                |   |   |   | 89,925 |   |
| Impairment                Loss                                              |   |                                                                         |        |   |                                                              |   | 0           |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 1,310                                                                 |   |   |   | 0 |   |
| Rent                                                                        |   |                                                                         | 60,289      |   |                                                              |   | 44,609      |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 112,890                                                               |   |   |   | 72,989 |   |
| Insurance                                                                   |   |                                                                         | 61,466      |   |                                                              |   | 66,144      |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 126,179                                                               |   |   |   | 131,422 |   |
| Moving                Expense                                               |   |                                                                         |        |   |                                                              |   |        |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 10,100                                                                |   |   |   |   |   |
| Other                operating expenses                                     |   |                                                                         | 44,015      |   |                                                              |   | 85,077      |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 107,627                                                               |   |   |   | 173,597 |   |
|                                                                        |   |                                                                         | 745,468     |   |                                                              |   | 1,709,942   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 1,875,299                                                             |   |   |   | 2,721,117 |   |
|                                                                        |   |                                                                         |        |   |                                                              |   |        |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |                                                                  |   |   |   |   |   |
| ***Loss                from operations***                                   |   |                                                                         | (717,799    | )      |                                                              |   | (1,491,006  | )                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | (1,798,410                                                            | )      |   |   | (2,493,172 | ) |
|                                                                        |   |                                                                         |        |   |                                                              |   |        |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |                                                                  |   |   |   |   |   |
| Other                Expense (Income)                                       |   |                                                                         |        |   |                                                              |   |        |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |                                                                  |   |   |   |   |   |
| Derivative                loss (gain)                                       |   |                                                                         | 92,880      |   |                                                              |   | (357,878    | )                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | 306,139                                                               |   |   |   | 341,552 |   |
| Interest                expense                                             |   |                                                                         | 756,840     |   |                                                              |   | 1,325,227   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 1,717,329                                                             |   |   |   | 1,655,278 |   |
| Loss                on extinguishment of debt                               |   |                                                                         |        |   |                                                              |   | 53,443      |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |                                                                  |   |   |   | 53,443 |   |
| Other                income                                                 |   |                                                                         | (0          | )      |                                                              |   | (529        | )                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | (3                                                                    | )      |   |   | (1,108 | ) |
|                                                                        |   |                                                                         |        |   |                                                              |   |        |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |                                                                  |   |   |   |   |   |
| (Income)                loss from other expenses                            |   |                                                                         | 849,720     |   |                                                              |   | 1,020,263   |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 2,023,465                                                             |   |   |   | 2,049,165 |   |
|                                                                        |   |                                                                         |        |   |                                                              |   |        |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |                                                                  |   |   |   |   |   |
|  Net                Loss                                               |   | $                                                                            | (1,567,519  | )      |                                                              | $      | (2,511,269  | )                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $      | (3,821,875                                                            | )      |   | $ | (4,542,337 | ) |
|                                                                        |   |                                                                         |        |   |                                                              |   |        |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |                                                                  |   |   |   |   |   |
| Basic                and diluted weighted average common shares outstanding |   |                                                                         | 212,528,109 |   |                                                              |   | 114,161,347 |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 208,795,108                                                           |   |   |   | 110,443,645 |   |
|                                                                        |   |                                                                         |        |   |                                                              |   |        |                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |                                                                  |   |   |   |   |   |
| Basic                and diluted loss per share                             |   | $                                                                            | (0.007      | )      |                                                              | $      | (0.02       | )                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $      | (0.018                                                                | )      |   | $ | (0.04 | ) |

----

**US      ENERGY INITIATIVES CORPORATION**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                                                                  |   | **Six****Months****Ended****June                30, 2007** |       |   |   | **Six****Months****Ended****June                30, 2006** |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|------------|--------|--------|------------------------------------------------------------|--------|
| Cash                flows from operating activities                                                                   |   |                                                       |       |   |   |                                                       |   |
| Net                Loss                                                                                               |   | $                                                          | (3,821,875 | )      |   |                                                       | $      | (4,542,337 | ) |
| Adjustments                to reconcile net income to net cash provided (used) by operating                activities |   |                                                       |       |   |   |                                                       |   |   |   |
| Common                stock issued for services                                                                       |   |                                                       | 391,004    |   |   |                                                       |   | 576,313 |   |
| Depreciation                                                                                                          |   |                                                       | 53,265     |   |   |                                                       |   | 43,960 |   |
| Amortization                of deferred compensation                                                                  |   |                                                       |       |   |   |                                                       |   | 150,000 |   |
| Amortization                of deferred debt cost  and debt discount                                        |   |                                                       | 381,200    |   |   |                                                       |   | 941,097 |   |
| Amortization                of  deferred interest costs                                                     |   |                                                       | 745,879    |   |   |                                                       |   |   |   |
| Amortization                of deferred consulting                                                                    |   |                                                       | 161,000    |   |   |                                                       |   | 307,998 |   |
| Amortization                of intangibles                                                                            |   |                                                       |       |   |   |                                                       |   | 45,965 |   |
| Impairment                of asset                                                                                    |   |                                                       | 1,310      |   |   |                                                       |   |   |   |
| Conversion                benefit on related party advance                                                            |   |                                                       | 552,730    |   |   |                                                       |   | 418,000 |   |
| Loss                on extinguishment of debt                                                                         |   |                                                       |       |   |   |                                                       |   | 53,443 |   |
| Derivative                (income) expense                                                                            |   |                                                       | 306,139    |   |   |                                                       |   | 341,552 |   |
| Advance                Deposits                                                                                       |   |                                                       |       |   |   |                                                       |   | 21,400 |   |
|                                                                                                                  |   |                                                       |       |   |   |                                                       |   |   |   |
| Change                in operating assets and liabilities                                                             |   |                                                       |       |   |   |                                                       |   |   |   |
| Accounts                Receivable                                                                                    |   |                                                       | 149,334    |   |   |                                                       |   | 184,413 |   |
| Inventory                                                                                                             |   |                                                       | 10,783     |   |   |                                                       |   | 23,175 |   |
| Prepaid                & deposits                                                                                 |   |                                                       | (11,562    | )      |   |                                                       |   | (8,756 | ) |
| Other                assets                                                                                      |   |                                                       | 200        |   |   |                                                       |   | (1,400 | ) |
| Accounts                payable                                                                                       |   |                                                       | 47,516     |   |   |                                                       |   | (153,625 | ) |
| Related                Party payable                                                                                  |   |                                                       | 5,750      |   |   |                                                       |   |   |   |
| Accrued                liabilities                                                                                    |   |                                                       | 129,480    |   |   |                                                       |   | 74,403 |   |
| Other                current liabilities                                                                              |   |                                                       | (12,032    | )      |   |                                                       |   |   |   |
|                                                                                                                  |   |                                                       |       |   |   |                                                       |   |   |   |
| Net                Cash Provided (used) by operating activities                                                       |   |                                                       | (909,879   | )      |   |                                                       |   | (1,524,399 | ) |
|                                                                                                                  |   |                                                       |       |   |   |                                                       |   |   |   |
| Cash                flows from Investing                Activities                                          |   |                                                       |       |   |   |                                                       |   |   |   |
| Purchase                of property and equipment                                                                     |   |                                                       | (20,374    | )      |   |                                                       |   | (26,397 | ) |
| Proceeds                from sale of equipment                                                                        |   |                                                       | 1,000      |   |   |                                                       |   |   |   |
| Business                acquisition                                                                                   |   |                                                       |       |   |   |                                                       |   | (292,635 | ) |
| Cash                acquired in business acquisition                                                                  |   |                                                       |       |   |   |                                                       |   | 63,049 |   |
|                                                                                                                  |   |                                                       |       |   |   |                                                       |   |   |   |
| Net                cash provided (used) by investing activities                                                       |   |                                                       | (19,374    | )      |   |                                                       |   | (255,983 | ) |
|                                                                                                                  |   |                                                       |       |   |   |                                                       |   |   |   |
| Cash                flows from Financing Activities                                                                   |   |                                                       |       |   |   |                                                       |   |   |   |
| Loans                from related parties                                                                             |   |                                                       | 780,590    |   |   |                                                       |   | 418,000 |   |
| Payment                to related parties                                                                             |   |                                                       |       |   |   |                                                       |   | (162,290 | ) |
| Payment                on notes payable                                                                               |   |                                                       |       |   |   |                                                       |   | (964,935 | ) |
| Proceeds                from convertible debt – Dutchess                                                        |   |                                                       | 145,000    |   |   |                                                       |   | 1,812,394 |   |
|                                                                                                                  |   | ________                                                   |       |   |   |                                                       |   |   |
| Net                cash provided (used) by                financing activities                              |   |                                                       | 925,590    |   |   |                                                       |   | 1,103,169 |   |
|                                                                                                                  |   |                                                       |       |   |   |                                                       |   |   |   |
| Net                increase (decrease) in cash and cash equivalents                                                   |   |                                                       | (3,663     | )      |   |                                                       |   | (677,213 | ) |
| Beginning                cash and cash equivalents                                                                    |   |                                                       | 3,937      |   |   |                                                       |   | 818,557 |   |
|                                                                                                                  |   |                                                       |       |   |   |                                                       |   |   |   |
| Ending                cash and cash equivalents                                                                       |   | $                                                          | 274        |   |   |                                                       | $      | 141,344 |   |
|                                                                                                                  |   |                                                       |       |   |   |                                                       |   |   |   |
| Supplement                disclosure of cash flow information                                                         |   |                                                       |       |   |   |                                                       |   |   |   |
| Cash                paid during the year for interest                                                                 |   | $                                                          | 5,000      |   |   |                                                       | $      | 38,045 |   |
| Common                stock issued for services                                                                       |   | $                                                          | 402,468    |   |   |                                                       | $      | 576,314 |   |
| Common                stock issued for conversion of convertible note                                                 |   | $                                                          | 566,087    |   |   |                                                       | $      | 1,457,345 |   |
| Amortization                of common stock issued for deferred compensation                                          |   |                                                       |       |   | $      |                                                       | $      | 150,000 |   |
| Common                stock issued for discount on debt                                                               |   | $                                                          | 64,000     |   |   |                                                       | $      | 366,026 |   |
| Common                stock issued to raise convertible debt                                                          |   |                                                       |       |   |   |                                                       | $      | 418,000 |   |

----

**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      and  six months ended June 30, 2006 to conform to the presentation for      the three and six months ended June 30, 2007*

*q.      Going concern:*

----

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

*License      Agreement*

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

*Preferred      Stock*

----

***Note      5 – Goodwill***

|                                             |   | June                30, 2007 |                                         |   | June                30, 2006 |   |
|--------------------------------------------------|--------|------------------------------|----------------------------------------------|--------|------------------------------|--------|
|  Goodwill                                   |   | $                            | 683,877                                      |   |                         | $      | 61,820 |   |
|  Less              accumulated amortization |   |                         |                                         |   |                         |   |   |   |
|  Less              Impairment          |   | $                            |                     |   |                         | $      |                       |   |
|  Total                       |   | $                            | 683,877                                      |   |                         | $      | 61,820 |   |

----

***Note      6 – Intangible Assets***

|                                               |   | June                  30, 2007 |                                           |   | June                  30, 2006 |   |
|----------------------------------------------------|--------|--------------------------------|------------------------------------------------|--------|--------------------------------|--------|
|  Intellectual                Property         |   | $                              |                                           |   |                           | $      | 1,146,925 |   |
|  Less                accumulated amortization |   |                           |                                           |   |                           |   |   |   |
|  Less                Impairment          |   | $                              |                       |   |                           | $      |  (319,548 | ) |
|  Total                         |   | $                              | 0.00                                           |   |                           | $      | 827,377 |   |

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

|                                                    |   | June                30, 2007 |    |   | June                30, 2006 |   |
|---------------------------------------------------------|--------|------------------------------|---------|--------|------------------------------|--------|
|  Payroll              and sales taxes         |   | $                            | 337,620 |   |                         | $      | 59,798 |   |
|  Accrued              penalties and interest  |   |                         | 24,498  |   |                         |   | 0 |   |
|                                                    |   | $                            | 362,118 |   |                         | $      | 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 6/30/07** |
|------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|----------------------------------------------------------------------|---------------------------------------------|----------------------------------------|-------------------------------------|
| 3/05/05                                                                                                                            | 3/05/10                            | 1,600,000                warrants issued to  Alpha Capital | $0.19                                       | $928,000                               | $76,160                             |
| 11/4/05                                                                                                                            | 11/4/10                            | 314,815                warrants issued to Dutchess Private Equity    | $0.27                                       | $85,000                                | $14,859                             |
| Fair                value of freestanding derivative instrument liabilities for options                and                warrants |                               |

| **Issue                Date**                                                                             | **Expiration                Date** | **Instrument**                               | **Exercise                Price Per Share** | **Value                at Issue Date** | **Value                at 6/30/07** |
|-----------------------------------------------------------------------------------------------------------|------------------------------------|----------------------------------------------|---------------------------------------------|----------------------------------------|-------------------------------------|
| 12/20/05                                                                                                  | 12/21/06                           | Dutchess                $1,362,500 term note | $0.27                                       | $302,778                               | $12,928                             |
| 3/23/06                                                                                                   | 3/23/07                            | Dutchess                $1,412,500 term note | $0.27                                       | $470,833                               | $17,330                             |
| 7/13/06                                                                                                   | 10/13/07                           | Dutchess                $845,000 term note   | $0.27                                       | $338,169                               | $548                                |
| Fair                value of freestanding derivative instrument liabilities for term                notes |                               |
| Total                fair value of freestanding derivative instrument                liabilities          |                               |

----

| Expected                term ranging from               | .5                to 3.25 years |
|---------------------------------------------------------|---------------------------------|
| Stock                Price at March  31, 2007 | $0.096                          |
| 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***

----

***Note      13 - Segment Information***

|                                                                   |   |                        |       |      |          |   |      |   |   |
|------------------------------------------------------------------------|--------|-----------------------------|------------|-----------|---------------|--------|-----------|--------|--------|
|                                                                   |   | Hybrid                Fuels |       |      | Manufacturing |   |      | Total  |   |
| Revenue                                                                |   |                        | 23,018     |      |          |   | 603,228   |   |   |   | 626,246 |   |
| Cost                of sales                                           |   |                        | 30,240     |      |          |   | 519,117   |   |   |   | 549,357 |   |
| Gross                Profit                                            |   |                        | (7,222     | )         |          |   | 84,111    |   |   |   | 76,889 |   |
|                                                                   |   |                        |       |      |          |   |      |   |   |   |   |   |
| Operating                Expenses                                      |   |                        |       |      |          |   |      |   |   |   |   |   |
| Consulting                and professional                             |   |                        | 350,098    |      |          |   | 10,700    |   |   |   | 360,798 |   |
| Research                & development                              |   |                        | 22,746     |      |          |   | 13,893    |   |   |   | 36,639 |   |
| Compensation                                                           |   |                        | 905,760    |      |          |   | 160,731   |   |   |   | 1,066,491 |   |
| Depreciation                and amotization                            |   |                        | 41,488     |      |          |   | 11,777    |   |   |   | 53,265 |   |
| Impairment                loss                                         |   |                        |       |      |          |   | 1,310     |   |   |   | 1,310 |   |
| Rent                                                                   |   |                        | 60,376     |      |          |   | 52,514    |   |   |   | 112,890 |   |
| Insurance                                                              |   |                        | 91,543     |      |          |   | 34,636    |   |   |   | 126,179 |   |
| Moving                expense                                          |   |                        | 2,900      |      |          |   | 7,200     |   |   |   | 10,100 |   |
| Other                operating expenses                                |   |                        | 74,204     |      |          |   | 33,423    |   |   |   | 107,627 |   |
|                                                                   |   |                        | 1,549,115  |      |          |   | 326,184   |   |   |   | 1,875,299 |   |
| Loss                from operations                                    |   |                        | (1,558,337 | )         |          |   | (242,073  | )      |   |   | (1,798,410 | ) |
|                                                                   |   |                        |       |      |          |   |      |   |   |   |   |   |
| Other                income (expense)                                  |   |                        |       |      |          |   |      |   |   |   |   |   |
|  Derivative                (loss)                                 |   |                        | 306,139    |      |          |   |      |   |   |   | 306,139 |   |
|  Interest                expense                                  |   |                        | 1,707,933  |      |          |   | 9,396     |   |   |   | 1,717,329 |   |
|  Miscellaneous                                                    |   |                        | (3         | )         |          |   |      |   |   |   | (3 | ) |
|                                                                   |   |                        | 2,014,069  |      |          |   | 9,396     |   |   |   | 2,023,465 |   |
| Loss                from continuing operations                         |   |                        | (3,570,406 | )         |          |   | (251,469  | )      |   |   | (3,821,875 | ) |
| Net                loss for reportable segments                        |   |                        | (3,570,406 | )         |          |   | (251,469  | )      |   |   | (3,821,875 | ) |
| Total                Assets                                            |   |                        | 1,221,059  |      |          |   | 974,537   |   |   |   | 2,195,596 |   |
|                                                                   |   |                        |       |      |          |   |      |   |   |   |   |   |
| Reconciliation                of Segment Amounts Reported to Condensed |   |                        |       |      |          |   |      |   |   |
| Consolidated                Amounts                                    |   |                        |       |      |          |   |      |   |   |   |   |   |
| Revenue                                                                |   |                        |       |      |          |   |      |   |   |   |   |   |
| Total                revenues for reportable segments                  |   |                        |       | 626,246   |          |   |      |   |   |
|  Total                consolidated                revenue         |   |                        |       |      |          |   | 626,246   |   |   |   |   |   |
|                                                                   |   |                        |       |      |          |   |      |   |   |   |   |   |
| Net                loss                                                |   |                        |       |      |          |   |      |   |   |   |   |   |
| Net                loss for reportable segments                        |   |                        |       | 3,821,875 |          |   |      |   |   |
|  Net                loss                consolidated              |   |                        |       |      |          |   | 3,821,875 |   |   |   |   |   |
|                                                                   |   |                        |       |      |          |   |      |   |   |   |

----

***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.*

| · | The                alternative fuels market segment through the design and sale of our                patent                dual-fuel, diesel-natural gas conversion systems for light and heavy-duty                diesel engines. We conduct our activities involving our dual-fuel                technology at a 10,000 square foot facility in PeachTree City, Georgia                in                which we operate one fully equipped engine room, control room and                house                various Horiba emission testing equipment. We completed the build-out                of                our engine rooms during September                2005. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | The                electronic manufacturing segment through the operations of our subsidiary                Automated Engineering Corporation (AEC). AEC is an ISO 9001 certified,                nineteen year-old company providing electronic design, prototype                and                production of electronic systems and components. We conduct our                electronics design and manufacturing at our facility in Tampa, Florida.                We                also house our executive offices in our Tampa, Florida                facility. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| · | On                June 26, 2007 we made a joint-public announcement with General Motors                Thailand (GMTh) stating that our technology had successfully completed                a                100,000 kilometer field durability trial and that GMTh intends to                market                our system in 49 countries commencing the third quarter                2007. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | During                2006 and early 2007, we completed two field trials with WeiChai Peterson                Motors, a China-based truck and bus OEM. Our sub-licensee for China                is                Wisconsin-based WITCO Systems. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | During                the fourth quarter, 2006, we entered a five-year contract with PS                Gas                Company, a Thailand-based bus company to convert their fleet of buses.                During the first quarter, 2007, we completed our field trials in                Thailand                and we are now determining a roll-out schedule that will not interrupt                our                clients business operations. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | During                the second quarter 2007, we entered an agreement with our US-based                sub-licensee BAF Technologies to partner our patent dual-fuel system                with                their SmartMuffler technology in order to make application to the                California Air Resource Board to gain a Level III Emission Certification.                If successful, this certification would make our system, together                with the                SmartMuffler, eligible for sale in the State of                California. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | In                those markets, costs to produce items such as our system are substantially                lower than the costs we currently pay for domestically manufactured                parts                and components. If we are unable to reduce the costs of our system                through                in-country manufacturing, it is unlikely we can successfully sell                our                system in those markets. We are currently in discussion with several                manufacturers in Thailand and Malaysia and we are confident our system                can                be manufactured at competitive rates at those                locations. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| · | The                process typically engaged by OEM's begins with a technology evaluation                on                an individual and competitive basis. As this is a documented procedure,                typically must follow a series of steps which can take an extended                period                of time. We have no control over this process or the length of time                each                OEM may dedicate to their respective                evaluation. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | The                physical separation between Thailand, China and our facilities in                Georgia                as well as interacting with technicians fluent in a foreign language                has                worked to slow down the pace of development. While we have not encountered                any serious complications based on this geographic separation, what                normally would take a day or so can extend into a week or longer.                We                anticipate that as we develop our foreign relationships and move                from a                development to a vendor status, the distance between our companies                will                not cause a meaningful problem. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | As                it relates to our electronic manufacturing capability, we employ                one                full-time outside sales persons and our Chief Executive Officer also                engages in direct sales. The services we offer through our ISO-9001                certified facility appeals to clients who desire a relatively smaller                production run that would not be economically feasible for larger                manufacturers. We believe this is a niche market that we can expand                and                develop. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| · | Calculating                the comparisons between our reporting periods                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Providing                meaningful insight into our product and manufacturing costs as well                as                expenses incurred in delivering our technology have been difficult                because                we have previously sold our systems at the rate of one or two a month                under federal and/or state grants. We have not had the ability for                our                product to take advantage of quantity discounts in our raw materials                and                component parts. Further, our labor costs in our present environment                would                appear unusually high given our revenues. However, in order for us                to                position our company to maximize opportunities, we have found it                necessary                to engage professionals and mechanics in sufficient number to complete                the                build-out of our facility in Atlanta as well as developing new                systems.  |

----

**Three      Months Ended June 30, 2007 Compared to the Three Months Ended June 30,      2006**

**Six      Months Ended June 30, 2007 Compared to the Six Months Ended June 30,      2006**

**Item      3 Controls and Procedures**

| (a)                *Evaluation of Disclosure Controls and Procedures.* As of the end                of the period covered by this report, we conducted an evaluation,                under                the supervision and with the participation of our Chief Executive                Officer                and Chief Financial Officer of our disclosure controls and procedures                (as                defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act).                Based                upon this evaluation, our Chief Executive Officer and Chief Financial                Officer concluded that our disclosure controls and procedures are                effective to ensure that information required to be disclosed by                us in the                reports that we file or submit under the Exchange Act is recorded,                processed, summarized and reported, within the time periods specified                in                the Commission's rules and forms and is accumulated and communicated                to                the Company’s management, including its Chief Executive Officer and Chief                Financial Officer, as appropriate, to allow timely decisions regarding                required disclosure. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)                *Changes in internal controls.* There were no changes in our                internal control over financial reporting identified in connection                with                the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15                under                the Exchange Act that occurred during the end of the period covered                by                this report that has materially affected, or is reasonably likely                to                materially affect our internal control over financial                reporting. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**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: August                14, 2007 | By:                                                  | /s/ PHILIP              RAPPA         |   |
|                                      |                                                 | Philip              Rappa                  |   |
|                                      |                                                 | Chief                Executive Officer     |   |
|                                      |                                                 | (Principal              Executive Officer) |   |
|                                    | MICHELLE              HAMILTON |                                                        |
|-----------------------------------------|--------------------------------|-------------------------------------------------------------|
|                                    |                           |                                                        |   |
| Date: August              14, 2007 | By:                            | /s/ Michelle              Hamilton                     |   |
|                                    |                           | Chief              Financial              Officer           |   |
|                                    |                           | (Principal                Financial and Accounting Officer) |   |
|                                    |                           |                                                        |   |