**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 nine month period ended September 30, 2007**

| **PART                I**  |                                                                                                                                                                    |  Page                            |
|----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|
|                       |                                                                                                                                                                    |                                  |
| Item                1 -    |  Financial                Statements                                                                                                                               |                                  |
|                       |                                                                                                                                                                    |                                  |
|                       | Consolidated                Balance Sheets for the nine month period ended September 30, 2007                (unaudited) and the year ended December 31, 2006 (audited) |  F-1                             |
|                       |                                                                                                                                                                    |                                  |
|                       | Consolidated                Statement of Operations for the three and nine month periods ended                September 30, 2007 and 2006 (unaudited)                   |  F-2                             |
|                       |                                                                                                                                                                    |                                  |
|                       | Consolidated                Statement of Cash Flows for the nine month periods ended September                30,                2007 and 2006 (unaudited)              |  F-3                             |
|                       |                                                                                                                                                                    |                                  |
|                  | Notes                to Consolidated Financial Statements                                                                                                               |  F-4                – F-14 |
|                       |                                                                                                                                                                    |                                  |
| Item                2 -    | Management's                Discussion and Analysis or Plan of Operation                                                                                                |  1                               |
|                       |                                                                                                                                                                    |                                  |
| Item                3 -    | Controls                and Procedures                                                                                                                                  |  4                               |
|                       |                                                                                                                                                                    |                                  |
| **PART                II** |                                                                                                                                                                    | 5                                     |
|                       |                                                                                                                                                                    |                                  |
| Item                1 -    | Legal                Proceedings                                                                                                                                        |  5                               |
|                       |                                                                                                                                                                    |                                  |
| Item                2 -    | Unregistered                Sales of Equity Securities and Use of Proceeds                                                                                              |  5                               |
|                       |                                                                                                                                                                    |                                  |
| Item                3 -    | Defaults                Upon Senior Securities                                                                                                                          |  5                               |
|                       |                                                                                                                                                                    |                                  |
| Item                4 -    | Submission                of Matters to a Vote of Security Holders                                                                                                      |  5                               |
|                       |                                                                                                                                                                    |                                  |
| Item                5 -    | Other                Information                                                                                                                                        |  6                               |
|                       |                                                                                                                                                                    |                                  |
| Item                6 -    | Exhibits                                                                                                                                                                |  6                               |

----

**US      ENERGY INITIATIVES CORPORATION**

**CONSOLIDATED      BALANCE SHEETS**

|                                                                                                                                                                              |   | **September                30, 2007****(unaudited)** |        |   | **December                31, 2006****(audited)** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|-------------|--------|---------------------------------------------------|--------|
| **ASSETS**                                                                                                                                                                        |   |                                                 |        |   |                                              |   |
| ***Current                Assets***                                                                                                                                               |   |                                                 |        |   |                                              |   |
| Cash                                                                                                                                                                              |   | $                                                    | 884         |   |                                              | $      | 3,937 |   |
| Accounts                Receivable, net of $76,000 and $72,800 allowance                respectively                                                                              |   |                                                 | 86,893      |   |                                              |   | 300,163 |   |
| Other                assets                                                                                                                                                       |   |                                                 | -           |   |                                              |   | 2,510 |   |
| Prepaid                expenses and deposits                                                                                                                                      |   |                                                 | 36,796      |   |                                              |   | 46,060 |   |
| Inventories                                                                                                                                                                       |   |                                                 | 638,993     |   |                                              |   | 634,315 |   |
| Deferred                consulting                                                                                                                                                |   |                                                 | -           |   |                                              |   | 147,000 |   |
| Deferred                debt costs                                                                                                                                                |   |                                                 | 14,500      |   |                                              |   | 1,021,707 |   |
| Due                from related party                                                                                                                                             |   |                                                 | 48,563      |   |                                              |   | - |   |
| Total                current assets                                                                                                                                               |   | $                                                    | 826,629     |   |                                              | $      | 2,155,692 |   |
|                                                                                                                                                                              |   |                                                 |        |   |                                              |   |   |   |
| Property,                plant & equipment, net                                                                                                                               |   |                                                 | 530,306     |   |                                              |   | 554,722 |   |
| Goodwill                                                                                                                                                                          |   |                                                 | 683,877     |   |                                              |   |   |   |
| Purchase                price subject to allocation                                                                                                                               |   |                                                 |        |   |                                              |   | 683,877 |   |
|                                                                                                                                                                              |   |                                                 |        |   |                                              |   |   |   |
| Total                Assets                                                                                                                                                       |   | $                                                    | 2,040,812   |   |                                              | $      | 3,394,291 |   |
|                                                                                                                                                                              |   |                                                 |        |   |                                              |   |   |   |
| LIABILITIES                AND SHAREHOLDERS' DEFICIT                                                                                                                              |   |                                                 |        |   |                                              |   |   |   |
|                                                                                                                                                                              |   |                                                 |        |   |                                              |   |   |   |
| Current                Liabilities                                                                                                                                                |   |                                                 |        |   |                                              |   |   |   |
| Accounts                payable                                                                                                                                                   |   | $                                                    | 1,109,295   |   |                                              |   | 972,016 |   |
| Debt                in settlement                                                                                                                                                 |   |                                                 | 459,977     |   |                                              |   | 259,440 |   |
| Due                to related parties                                                                                                                                             |   |                                                 | 226,852     |   |                                              |   | 214,849 |   |
| Due                to related parties,convertible debt                                                                                                                            |   |                                                 | 956,613     |   |                                              |   | 11,424 |   |
| Notes                payable                                                                                                                                                      |   |                                                 | 2,163,825   |   |                                              |   | 2,079,869 |   |
| Discount                on debt                                                                                                                                                   |   |                                                 |        |   |                                              |   | (82,231 | ) |
| Derivative                liability                                                                                                                                               |   |                                                 | 22,291      |   |                                              |   | 77,046 |   |
| Other                current liabilities                                                                                                                                          |   |                                                 | 811,464     |   |                                              |   | 648,031 |   |
| Total                Liabilities                                                                                                                                                  |   | $                                                    | 5,750,317   |   |                                              |   | 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; 213,605,673                and                198,146,858 shares issued and outstanding, respectively |   |                                                 | 213,605     |   |                                              |   | 198,146 |   |
| Additional                paid-in capital                                                                                                                                         |   |                                                 | 29,040,415  |   |                                              |   | 27,221,863 |   |
| Deferred                compensation                                                                                                                                              |   |                                                 | 0           |   |                                              |   |   |   |
| Accumulated                deficit                                                                                                                                                |   |                                                 | (32,964,181 | )      |                                              |   | (28,206,818 | ) |
| Total                shareholders' deficit                                                                                                                                        |   |                                                 | (3,709,505  | )      |                                              |   | (786,153 | ) |
|                                                                                                                                                                              |   |                                                 |        |   |                                              |   |   |   |
| Total                Liabilities and Shareholders' Deficit                                                                                                                        |   | $                                                    | 2,040,812   |   |                                              | $      | 3,394,291 |   |

----

**US      ENERGY INITIATIVES CORPORATION**

**CONSOLIDATED      STATEMENTS OF OPERATIONS**

|                                                                        |   | **Three                Months****Ended****September                30, 2007** |        |   | **Three****Months****Ended****September                30,****2006** |   |        | **Nine ****Months ****Ended ****September                30, **** ****2007** |   |   | **Nine****Months ****Ended****September                30,****2006** |   |
|-----------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|-------------|--------|----------------------------------------------------------------------|--------|-------------|-------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------|--------|
| Revenue                                                                     |   | $                                                                             | 177,640     |   |                                                                 | $      | 456,126     |                                                                                                  |   | $      | 803,886                                                                   |   |   | $ | 881,849 |   |
| Cost                of sales                                                |   |                                                                          | 168,053     |   |                                                                 |   | 267,484     |                                                                                                  |   |   | 717,410                                                                   |   |   |   | 462,443 |   |
| Gross                Profit                                                 |   |                                                                          | 9,587       |   |                                                                 |   | 188,642     |                                                                                                  |   |   | 86,476                                                                    |   |   |   | 419,406 |   |
|                                                                        |   |                                                                          |        |   |                                                                 |   |        |                                                                                                  |   |   |                                                                      |   |   |   |   |   |
| Operating                Expenses                                           |   |                                                                          |        |   |                                                                 |   |        |                                                                                                  |   |   |                                                                      |   |   |   |   |   |
| Consulting                and professional                                  |   |                                                                          | 138,334     |   |                                                                 |   | 314,757     |                                                                                                  |   |   | 499,133                                                                   |   |   |   | 1,410,463 |   |
| Research                & Development                                   |   |                                                                          | 1,874       |   |                                                                 |   | 26,571      |                                                                                                  |   |   | 38,513                                                                    |   |   |   | 52,682 |   |
| Compensation                                                                |   |                                                                          | 208,021     |   |                                                                 |   | 2,072,555   |                                                                                                  |   |   | 1,274,589                                                                 |   |   |   | 3,203,921 |   |
| Depreciation                and Amortization                                |   |                                                                          | 27,739      |   |                                                                 |   | 44,725      |                                                                                                  |   |   | 81,004                                                                    |   |   |   | 134,650 |   |
| Impairment                Loss                                              |   |                                                                          | -           |   |                                                                 |   | -           |                                                                                                  |   |   | 1,310                                                                     |   |   |   | - |   |
| Rent                                                                        |   |                                                                          | 58,600      |   |                                                                 |   | 58,545      |                                                                                                  |   |   | 171,490                                                                   |   |   |   | 131,534 |   |
| Insurance                                                                   |   |                                                                          | 56,671      |   |                                                                 |   | 48,654      |                                                                                                  |   |   | 182,850                                                                   |   |   |   | 180,076 |   |
| Other                operating expenses                                     |   |                                                                          | 119,303     |   |                                                                 |   | 195,591     |                                                                                                  |   |   | 237,030                                                                   |   |   |   | 371,908 |   |
| Total                Operating Expenses                                     |   |                                                                          | 610,542     |   |                                                                 |   | 2,761,398   |                                                                                                  |   |   | 2,485,919                                                                 |   |   |   | 5,485,234 |   |
|                                                                        |   |                                                                          |        |   |                                                                 |   |        |                                                                                                  |   |   |                                                                      |   |   |   |   |   |
| ***Loss                from operations***                                   |   |                                                                          | (600,955    | )      |                                                                 |   | (2,572,756  | )                                                                                                     |   |   | (2,399,443                                                                | )      |   |   | (5,065,828 | ) |
|                                                                        |   |                                                                          |        |   |                                                                 |   |        |                                                                                                  |   |   |                                                                      |   |   |   |   |   |
| Other                Expense (Income)                                       |   |                                                                          |        |   |                                                                 |   |        |                                                                                                  |   |   |                                                                      |   |   |   |   |   |
| Derivative                loss (gain)                                       |   |                                                                          | (31,900     | )      |                                                                 |   | (1,379,059  | )                                                                                                     |   |   | 274,239                                                                   |   |   |   | (803,129 | ) |
| Interest                expense (Income)                                    |   |                                                                          | 366,355     |   |                                                                 |   | 1,303,962   |                                                                                                  |   |   | 2,083,681                                                                 |   |   |   | 2,724,917 |   |
| Loss                on extinguishment of debt                               |   |                                                                          | -           |   |                                                                 |   | (216,000    | )                                                                                                     |   |   | -                                                                         |   |   |   | (162,557 | ) |
| Other                income                                                 |   |                                                                          | -           |   |                                                                 |   |        | -                                                                                                     |   |   | -                                                                         |   |   |   | (1,164 | ) |
|                                                                        |   |                                                                          |        |   |                                                                 |   |        |                                                                                                  |   |   |                                                                      |   |   |   |   |   |
| (Income)                loss from other expenses                            |   |                                                                          | 334,455     |   |                                                                 |   | (291,097    | )                                                                                                     |   |   | 2,357,920                                                                 |   |   |   | 1,758,067 |   |
|                                                                        |   |                                                                          |        |   |                                                                 |   |        |                                                                                                  |   |   |                                                                      |   |   |   |   |   |
|  Net                Loss                                               |   | $                                                                             | (935,410    | )      |                                                                 | $      | (2,281,659  | )                                                                                                     |   | $      | (4,757,363                                                                | )      |   | $ | (6,823,895 | ) |
|                                                                        |   |                                                                          |        |   |                                                                 |   |        |                                                                                                  |   |   |                                                                      |   |   |   |   |   |
| Basic                and diluted weighted average common shares outstanding |   |                                                                          | 213,364,369 |   |                                                                 |   | 128,096,006 |                                                                                                  |   |   | 210,334,932                                                               |   |   |   | 116,400,574 |   |
|                                                                        |   |                                                                          |        |   |                                                                 |   |        |                                                                                                  |   |   |                                                                      |   |   |   |   |   |
| Basic                and diluted loss per share                             |   | $                                                                             | (0.004      | )      |                                                                 | $      | (0.03       | )                                                                                                     |   | $      | (0.023                                                                    | )      |   | $ | (0.06 | ) |

----

**US      ENERGY INITIATIVES CORPORATION**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                                                                  |   | **Nine****Months****Ended****September                30, 2007** |       |   |   | **Nine****Months****Ended****September                30, 2006** |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------|------------|--------|--------|------------------------------------------------------------------|--------|
| Cash                flows from operating activities                                                                   |   |                                                             |       |   |   |                                                             |   |
| Net                Loss                                                                                               |   | $                                                                | (4,757,363 | )      |   |                                                             | $      | (6,823,895 | ) |
| Adjustments                to reconcile net income to net cash provided (used) by operating                activities |   |                                                             |       |   |   |                                                             |   |   |   |
| Common                stock issued for services                                                                       |   |                                                             | 391,004    |   |   |                                                             |   | 2,328,313 |   |
| Depreciation                                                                                                          |   |                                                             | 81,004     |   |   |                                                             |   | 65,702 |   |
| Amortization                of deferred compensation                                                                  |   |                                                             | -          |   |   |                                                             |   | 200,000 |   |
| Amortization                of deferred debt cost  and debt discount                                        |   |                                                             | 398,488    |   |   |                                                             |   | 1,668,873 |   |
| Amortization                of  deferred interest costs                                                     |   |                                                             | 799,450    |   |   |                                                             |   |   |   |
| Amortization                of deferred consulting                                                                    |   |                                                             | 182,000    |   |   |                                                             |   | 504,007 |   |
| Amortization                of intangibles                                                                            |   |                                                             | -          |   |   |                                                             |   | 68,948 |   |
| Impairment                of asset                                                                                    |   |                                                             | 1,310      |   |   |                                                             |   |   |   |
| Conversion                benefit on related party advance                                                            |   |                                                             | 708,955    |   |   |                                                             |   | 558,000 |   |
| Gain                on extinguishment of debt                                                                         |   |                                                             | -          |   |   |                                                             |   | (162,557 | ) |
| Derivative                (income) expense                                                                            |   |                                                             | 274,239    |   |   |                                                             |   | (803,129 | ) |
| Advance                Deposits                                                                                       |   |                                                             | -          |   |   |                                                             |   | (3,422 | ) |
|                                                                                                                  |   |                                                             |       |   |   |                                                             |   |   |   |
| Change                in operating assets and liabilities                                                             |   |                                                             |       |   |   |                                                             |   |   |   |
| Accounts                Receivable                                                                                    |   |                                                             | 213,271    |   |   |                                                             |   | 178,107 |   |
| Inventory                                                                                                             |   |                                                             | (4,679)    |   |   |                                                             |   | (246,934 | ) |
| Prepaid                & deposits                                                                                 |   |                                                             | 32,846     |   |   |                                                             |   | (13,555 | ) |
| Other                assets                                                                                      |   |                                                             | 200        |   |   |                                                             |   | (800 | ) |
| Accounts                payable                                                                                       |   |                                                             | 129,150    |   |   |                                                             |   | 67,488 |   |
| Related                Party payable                                                                                  |   |                                                             | 12,003     |   |   |                                                             |   |   |   |
| Accrued                liabilities                                                                                    |   |                                                             | 143,832    |   |   |                                                             |   | 27,231 |   |
| Other                current liabilities                                                                              |   |                                                             | 176,954    |   |   |                                                             |   |   |   |
|                                                                                                                  |   |                                                             |       |   |   |                                                             |   |   |   |
| Net                Cash Provided (used) by operating activities                                                       |   |                                                             | (1,217,336 | )      |   |                                                             |   | (2,387,623) |   |
|                                                                                                                  |   |                                                             |       |   |   |                                                             |   |   |   |
| Cash                flows from Investing Activities                                                         |   |                                                             |       |   |   |                                                             |   |   |   |
| Purchase                of property and equipment                                                                     |   |                                                             | (26,907    | )      |   |                                                             |   | (4,323 | ) |
| 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                                                       |   |                                                             | (25,907    | )      |   |                                                             |   | (233,909) |   |
|                                                                                                                  |   |                                                             |       |   |   |                                                             |   |   |   |
| Cash                flows from Financing Activities                                                                   |   |                                                             |       |   |   |                                                             |   |   |   |
| Loans                from related parties                                                                             |   |                                                             | 945,190    |   |   |                                                             |   | 558,000 |   |
| Payment                to related parties                                                                             |   |                                                             |       |   |   |                                                             |   | (161,540 | ) |
| Payment                on notes payable                                                                               |   |                                                             |       |   |   |                                                             |   | (976,602 | ) |
| Proceeds                from notes payable                                                                            |   |                                                             | 150,000    |   |   |                                                             |   |   |   |
| Proceeds                from convertible debt – Dutchess                                                        |   |                                                             | 145,000    |   |   |                                                             |   | 2,414,025 |   |
|                                                                                                                  |   | ________                                                         |       |   |   |                                                             |   |   |
| Net                cash provided (used) by financing activities                                             |   |                                                             | 1,240,190  |   |   |                                                             |   | 1,833,883 |   |
|                                                                                                                  |   |                                                             |       |   |   |                                                             |   |   |   |
| Net                increase (decrease) in cash and cash equivalents                                                   |   |                                                             | (3,053     | )      |   |                                                             |   | (787,649 | ) |
| Beginning                cash and cash equivalents                                                                    |   |                                                             | 3,937      |   |   |                                                             |   | 818,557 |   |
|                                                                                                                  |   |                                                             |       |   |   |                                                             |   |   |   |
| Ending                cash and cash equivalents                                                                       |   | $                                                                | 884        |   |   |                                                             | $      | 30,908 |   |
|                                                                                                                  |   |                                                             |       |   |   |                                                             |   |   |   |
| Supplement                disclosure of cash flow information                                                         |   |                                                             |       |   |   |                                                             |   |   |   |
| Cash                paid during the year for interest                                                                 |   | $                                                                | 5,000      |   |   |                                                             | $      | 41,477 |   |
| Common                stock issued for services                                                                       |   | $                                                                | 402,468    |   |   |                                                             | $      | 2,328,313 |   |
| Common                stock issued for conversion of convertible note                                                 |   | $                                                                | 566,087    |   |   |                                                             | $      | 1,801,695 |   |
| Amortization                of common stock issued for deferred compensation                                          |   |                                                             |       |   |   |                                                             | $      | 200,000 |   |
| Common                stock issued for discount on debt                                                               |   | $                                                                | 86,500     |   |   |                                                             | $      | 366,000 |   |
| Common                stock issued as debt cost                                                                       |   |                                                             |       |   |   |                                                             | $      | 1,500,000 |   |
| Common                stock issued to raise convertible debt                                                          |   |                                                             |       |   |   |                                                             | $      | 558,000 |   |
| Common                stock issued for incentive on debt                                                              |   | $                                                                | 22,500     |   |   |                                                             |   |   |   |

----

**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 nine months ended September 30, 2006 to conform to the presentation for      the three and nine months ended September 30, 2007*

*q.      Going concern:*

----

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

*License      Agreement*

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

*Preferred      Stock*

----

***Note      5 – Goodwill***

|                                               |   | September                30, 2007 |    |
|----------------------------------------------------|--------|-----------------------------------|---------|
|  Goodwill                                     |   | $                                 | 683,877 |   |
|  Less                accumulated amortization |   |                              |    |   |
|  Less                Impairment          |   | $                                 |    |   |
|  Total                         |   | $                                 | 683,877 |   |

----

***Note      6 – Intangible Assets***

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

|                                                      |   | September                30, 2007 |    |
|-----------------------------------------------------------|--------|-----------------------------------|---------|
|  Payroll                and sales taxes         |   | $                                 | 371,453 |   |
|  Accrued                penalties and interest  |   |                              | 32,753  |   |
|                                                      |   | $                                 | 404,206 |   |

***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 9/30/07** |   |
|------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|----------------------------------------------------------------------|--------|---------------------------------------------|--------|--------|----------------------------------------|--------|---------|-------------------------------------|--------|
| 3/05/05                                                                                                                            | 3/05/10                            | 1,600,000                warrants issued to  Alpha Capital |   | $                                           | 0.19   |   |                                   | $      | 928,000 |                                |   | $ | 17,920 |   |
| 11/4/05                                                                                                                            | 11/4/10                            | 314,815                warrants issued to Dutchess Private Equity    |   | $                                           | 0.27   |   |                                   | $      | 85,000  |                                |   | $ | 3,683 |   |
| Fair                value of freestanding derivative instrument liabilities for options                and                warrants |                               |                                                                 | $      | 21,603                                      |   |

| **Issue                Date**                                                                             | **Expiration                Date** | **Instrument**                               |   | **Exercise                Price Per Share** |   |   | **Value                at Issue Date** |   |    | **Value                at 9/30/07** |   |
|-----------------------------------------------------------------------------------------------------------|------------------------------------|----------------------------------------------|--------|---------------------------------------------|--------|--------|----------------------------------------|--------|---------|-------------------------------------|--------|
| 12/20/05                                                                                                  | 12/21/06                           | Dutchess                $1,362,500 term note |   | $                                           | 0.27   |   |                                   | $      | 302,778 |                                |   | $ | 294 |   |
| 3/23/06                                                                                                   | 3/23/07                            | Dutchess                $1,412,500 term note |   | $                                           | 0.27   |   |                                   | $      | 470,833 |                                |   | $ | 394 |   |
| 7/13/06                                                                                                   | 10/13/07                           | Dutchess                $845,000 term note   |   | $                                           | 0.27   |   |                                   | $      | 338,169 |                                |   | $ | 0.00 |   |
| Fair                value of freestanding derivative instrument liabilities for term                notes |                               |                                         | $      | 688                                         |   |
| Total                fair value of freestanding derivative instrument                liabilities          |                               |                                         |   | 22,291                                      |   |

| Expected                term ranging from             |   | .25                to 3.25 years |   |
|-------------------------------------------------------|--------|----------------------------------|--------|
| Stock                Price at September 30, 2007 |   | $                                | 0.04   |   |
| Expected                dividend yield                |   | $                                | 0.00   |   |
| Expected                stock price volatility        |   |                             | 103    | % |
| Risk-free                interest rate ranging from   |   | 3.82%                to 4.09     | %      |

 The      Company has two notes that have matured prior to September      30, 2007, with unpaid balances.  The company has decided to assume a      December 31, 2007 maturity date for the computation of the      derivative.

----

***Note      11- Debt Financing***

***Note      12 – Acquisitions***

----

***Note      13 - Segment Information***

|                                                                   |   |                        |       |      |          |   |      |   |   |
|------------------------------------------------------------------------|--------|-----------------------------|------------|-----------|---------------|--------|-----------|--------|--------|
|                                                                   |   | Hybrid                Fuels |       |      | Manufacturing |   |      | Total  |   |
| Revenue                                                                |   |                        | 23,018     |      |          |   | 780,868   |   |   |   | 803,886 |   |
| Cost                of sales                                           |   |                        | 30,404     |      |          |   | 687,006   |   |   |   | 717,410 |   |
| Gross                Profit                                            |   |                        | (7,386     | )         |          |   | 93,862    |   |   |   | 86,476 |   |
|                                                                   |   |                        |       |      |          |   |      |   |   |   |   |   |
| Operating                Expenses                                      |   |                        |       |      |          |   |      |   |   |   |   |   |
| Consulting                and professional                             |   |                        | 483,196    |      |          |   | 15,937    |   |   |   | 499,133 |   |
| Research                & development                              |   |                        | 22,750     |      |          |   | 15,763    |   |   |   | 38,513 |   |
| Compensation                                                           |   |                        | 1,047,633  |      |          |   | 226,956   |   |   |   | 1,274,589 |   |
| Depreciation                and amotization                            |   |                        | 62,576     |      |          |   | 18,428    |   |   |   | 81,004 |   |
| Impairment                loss                                         |   |                        |       |      |          |   | 1,310     |   |   |   | 1,310 |   |
| Rent                                                                   |   |                        | 87,956     |      |          |   | 83,534    |   |   |   | 171,490 |   |
| Insurance                                                              |   |                        | 137,536    |      |          |   | 45,314    |   |   |   | 182,850 |   |
| Moving                expense                                          |   |                        | 2,900      |      |          |   | 7,200     |   |   |   | 10,100 |   |
| Other                operating expenses                                |   |                        | 180,997    |      |          |   | 45,933    |   |   |   | 226,930 |   |
|                                                                   |   |                        | 2,025,544  |      |          |   | 460,375   |   |   |   | 2,485,919 |   |
| Loss                from operations                                    |   |                        | (2,032,930 | )         |          |   | (366,513  | )      |   |   | (2,399,443 | ) |
|                                                                   |   |                        |       |      |          |   |      |   |   |   |   |   |
| Other                income (expense)                                  |   |                        |       |      |          |   |      |   |   |   |   |   |
|                  Derivative (loss)                                |   |                        | 274,239    |      |          |   |      |   |   |   | 274,239 |   |
|                  Interest expense                                 |   |                        | 2,069,140  |      |          |   | 14,544    |   |   |   | 2,083,684 |   |
|                  Miscellaneous                                    |   |                        | (3         | )         |          |   |      |   |   |   | (3 | ) |
|                                                                   |   |                        | 2,343,376  |      |          |   | 14,544    |   |   |   | 2,357,920 |   |
| Loss                from continuing operations                         |   |                        |       | )         |          |   |      | )      |   |   |   | ) |
| Net                loss for reportable segments                        |   |                        | (4,376,306 | )         |          |   | (381,057  | )      |   |   | (4,757,363 | ) |
| Total                Assets                                            |   |                        | 1,029,844  |      |          |   | 1,010,968 |   |   |   | 2,040,812 |   |
|                                                                   |   |                        |       |      |          |   |      |   |   |   |   |   |
| Reconciliation                of Segment Amounts Reported to Condensed |   |                        |       |      |          |   |      |   |   |
| Consolidated                Amounts                                    |   |                        |       |      |          |   |      |   |   |   |   |   |
| Revenue                                                                |   |                        |       |      |          |   |      |   |   |   |   |   |
| Total                revenues for reportable segments                  |   |                        |       | 803,886   |          |   |      |   |   |
|                  Total consolidated revenue                       |   |                        |       |      |          |   | 803,886   |   |   |   |   |   |
|                                                                   |   |                        |       |      |          |   |      |   |   |   |   |   |
| Net                loss                                                |   |                        |       |      |          |   |      |   |   |   |   |   |
| Net                loss for reportable segments                        |   |                        |       | 4,757,363 |          |   |      |   |   |
|                  Net loss consolidated                            |   |                        |       |      |          |   | 4,757,363 |   |   |   |   |   |
|                                                                   |   |                        |       |      |          |   |      |   |   |   |

----

***Note 14 –Recent Accounting Pronouncements***

**Note      15 – Subsequent Events**

----

**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, 2006 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.In                June of this year General Motors announced that our dual fuel kit                had                successfully completed the 100,000 km and that further development                was not                needed.  The next step is to commence kit sales and conversion                of GM vehicles in Thailand.  Having the GM certification in                hand, it was decided to cancel all further R&D expenses and to shut                down the Atlanta Facility and sell all R&D equipment and excess                Inventory.  The Atlanta facility did not support the manufacture                of kits and AEC was already producing all of the electrical components                and                has successfully outsourced all of the mechanical                components.  This decision dramatically reduced the expenses of                USEI. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | 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.                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| · | The                specialty aerosol filling segment, through the operations of our                recently                acquired subsidiary, Advanced Aerosol Technologies,                Inc.  (AATI).  AATI is a ten year old company                currently undergoing ISO 9001 certification, that formulates and                sells its                own proprietary products as well as providing private labeling services                to                a variety of companies. We                offer our Aerosol filling capabilities primarily to clients requiring                smaller production quantities that would not be economicable feasable                for                large aerosol concerns.  The company is fully staffed with                management, sales, and quality personnel.  The USEI CEO overseas                this company and assists in contract acquisition.  |

----

| · | 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 September 30, 2007 Compared to the Three Months Ended September      30,      2006**

----

**Nine      Months Ended September 30, 2007 Compared to the Nine Months Ended September      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** |                                                                                     |
|------------------------------------|------------------------------------------------------|------------------------------------------------------------------------------------------|
|                               |                                                 |                                                                                     |   |
| November                  19, 2007 | By:                                                  | /s/ PHILIP              RAPPA                                                       |   |
|                               |                                                 | Philip              Rappa                                                                |   |
|                               |                                                 | Chief                Executive Officer (Principal                Executive Officer) |   |
|                               |                                                 |                                                                                     |   |

|                               |   |                                                                   |
|------------------------------------|--------|------------------------------------------------------------------------|
|                               |   |                                                                   |   |
| November                  19, 2007 | By:    | /s/ Michelle              Hamilton                                |   |
|                               |   | Chief                Financial Officer                                 |   |
|                               |   | (Principal              Financial and              Accounting Officer) |   |
|                               |   |                                                                   |   |