**UNITED
          STATES**
 **SECURITIES
          AND EXCHANGE COMMISSION**
 Washington,
          D.C. 20549
  **FORM
          10-QSB**
 
 [X]
          QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE
          ACT OF
          1934.
 
 For
          the
          quarterly period ended September 30,
          2006
 
 Commission
          File Number: 333-86518
 
 
 **US
          ENERGY HOLDINGS, INC.**
 (Exact
          name of registrant as specified in its charter.)
 
 
 **NEVADA**
                  (State
                    or other jurisdiction of
                  incorporation
                    or organization)
                **75-3025152**
                  (I.R.S.
                    Employer Identification No.)
 
 
 4606
            FM
            1960 West, Suite 443, Houston, Texas 77069
 (Address
          of principal executive offices)
 
 (281)
          315-8895
 (Issuer's
          telephone number)
 Check
            whether the registrant (1) filed all reports required to be filed by
            Section 13
            or 15(d) of the Exchange Act during the past 12 months (or for such shorter
            period that the registrant was required to file such reports), and (2)
            has been
            subject to such filing requirements for the past 90 days. xYes oNo
  Indicate
            by check mark whether the Registrant is a shell company (as defined in
            Rule
            12b-2 of the Securities Exchange Act of 1934) (check one): o Yes xNo
  State
            the
            number of shares outstanding of each of the issuers classes of common
            equity, as
            of the latest practicable date: 5,393,978 shares of Common Stock, as
            of May 18 ,
            2006.
  Transitional
            Small Business Disclosure Format (check one): xYes oNo
 -1-
  **US
        ENERGY HOLDINGS, INC.**
 **(FORMERLY
        PITBOSS ENTERTAINMENT, INC.)**
 **CONDENSED
        FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2006 AND 2005**
 
 **TABLE
        OF CONTENTS**
 
  Page(s)
 
 Condensed
        Balance Sheet as of September 30, 2006 (Unaudited)  3
 
 Condensed
        Statements of Operations for the nine months and
 three
        months ended September 30, 2006 and 2005 (Unaudited)  4
 Condensed
        Statements of Cash Flows for the nine months ended
 September
        30, 2006 and 2005 (Unaudited)        
        5
 
 Notes
        to
        the Condensed Financial Statements      6-18
 -2-




**US
      ENERGY HOLDINGS, INC.**


**(FORMERLY
      PITBOSS ENTERTAINMENT, INC.)**


**CONDENSED
      FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2006 AND 2005**




**US
        ENERGY HOLDINGS, INC.**
 **(FORMERLY
        PITBOSS ENTERTAINMENT, INC.)**
 **BALANCE
        SHEET**
 **SEPTEMBER
        30, 2006 AND 2005**
   **ASSETS****2006**Current
                  Assets:Cash
              
              $
              465Intagible
                  AssetsWell
                  Rights - Oil and Gas
              
              
              50,000**TOTAL
                  ASSETS**
              
              $
              50,465**LIABILITIES
                  AND STOCKHOLDERS' (DEFICIT)****LIABILITIES**Current
                  Liabilities:Accounts
                  payable and accrued expenses
              
              $
              5,150Loan
                  payable - officers
              
              
              235,118Total
                  Current Liabilities
              
              
              240,268**STOCKHOLDERS'
                  (DEFICIT)**Common
                  stock, $.001 Par Value; 75,000,000 shares authorized5,393,978
                  issued and outstanding
              
              
              5,394Warrants
                  outstanding
              
              
              777,357Additional
                  paid-in capital
              
              
              2,530,442Accumulated
                  deficit
              
              
              (3,502,996
              )**Total
                  Stockholders' (Deficit)**
              
              
              (189,803
              )**TOTAL
                  LIABILITIES AND STOCKHOLDERS' (DEFICIT)**
              
              $
              50,465








-3-


**US
                  ENERGY HOLDINGS, INC.****(FORMERLY
                  PITBOSS ENTERTAINMENT, INC.)****CONDENSED
                  STATEMENTS OF OPERATIONS****FOR
                  THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                  (UNAUDITED)**For
                  Nine Months Ended
              
              
              For
                  Three Months EndedSeptember
                  30,
              
              
              September
                  30,**2006**
              
              
              **2005**
              
              
              **2006**
              
              
              **2005****OPERATING
                  EXPENSES**Compensation
              
              $
              100,000
              
              $
              -
              
              $
              -
              
              $
              -Consulting
                  services
              
              
              736,300
              
              
              -
              
              
              -
              
              
              -General
                  and administrative expenses
              
              
              32,873
              
              
              -
              
              
              56
              
              
              -**Total
                  Operating Expenses**
              
              
              869,173
              
              
              -
              
              
              56
              
              
              -**OTHER
                  INCOME**Forgiveness
                  of debt
              
              
              15,597
              
              
              -
              
              
              15,597
              
              
              -**Total
                  Other income**
              
              
              15,597
              
              
              -
              
              
              15,597
              
              
              -**(LOSS)
                  BEFORE PROVISION FOR TAXES**
              
              
              (853,576
              )
              
              -
              
              
              15,541
              
              
              -Provision
                  for income taxes
              
              
              -
              
              
              -
              
              
              -
              
              
              -**Net
                  (loss) from continuing operations**
              
              
              (853,576
              )
              
              -
              
              
              15,541
              
              
              -**DISCONTINUED
                  OPERATIONS:******Loss
                  from Operations of Discontinued Segment
              
              
              -
              
              
              (100,194
              )
              
              -
              
              
              (26,118
              )**Net
                  (loss)**
              
              $
              (853,576
              )
              $
              (100,194
              )
              $
              15,541
              
              $
              (26,118
              )**EARNINGS
                  (LOSS) PER SHARE - BASIC AND DILUTED**
              
              $
              (0.18
              )
              $
              (0.06
              )
              $
              0.00
              
              $
              (0.02
              )**WEIGHTED
                  AVERAGE NUMBER OF COMMON****SHARES
                  OUTSTANDING - BASIC AND DILUTED**
              
              
              4,667,128
              
              
              1,660,000
              
              
              5,393,978
              
              
              1,660,000


-4-




**US
                  ENERGY HOLDINGS, INC.****(FORMERLY
                  PITBOSS ENTERTAINMENT, INC.)****CONDENSED
                  STATEMENTS OF CASH FLOW****FOR
                  THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (UNAUDITED)****2006**
              
              
              **2005****CASH
                  FLOWS FROM OPERATING ACTIVITIES****Continuing
                  Operations:**Net
                  (loss)
              
              $
              (853,576
              )
              $
              -**Adjustments
                  to reconcile net (loss) to net cash****(used
                  in) operating activities:**Common
                  stock issued for services
              
              
              586,300
              
              
              -Common
                  stock issued for compensation
              
              
              100,000
              
              
              -**Changes
                  in assets and liabilities:**(Increase)
                  in Intangable assets - Well Rights Gas and Oil
              
              
              (50,000
              )
              
              -(Decrease)
                  in accounts payable and accrued expenses
              
              
              (2,463
              )
              
              -Total
              
              
              633,837
              
              
              -**Net
                  cash (used in) operating activities**
              
              
              (219,739
              )
              
              -**Discontinued
                  Operations:**(Loss)
                  from discontinued operations
              
              
              -
              
              
              (100,194
              )Change
                  in assets disposed of
              
              
              -
              
              
              75,007Net
                  cash used in operating activities - discontinued division
              
              
              -
              
              
              (25,187
              )**Discontinued
                  Investing Activities:**
              
              
              -
              
              
              (3,086
              )**Discontinued
                  Financing Activities:**
              
              
              -
              
              
              (4,184
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES******Increase
                  in amounts due from related parties
              
              
              219,521
              
              
              -**Net
                  cash provided by financing activities**
              
              
              219,521
              
              
              -**NET
                  (DECREASE) IN CASH**
              
              
              (218
              )
              
              (32,457
              )**CASH
                  AND CASH EQUIVALENTS -****BEGINNING
                  OF PERIOD**
              
              
              683
              
              
              32,457**CASH
                  AND CASH EQUIVALENTS - END OF PERIOD**
              
              $
              465
              
              $
              -**SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW****INFORMATION:**Interest
                  paid
              
              $
              -
              
              $
              -Income
                  taxes paid
              
              $
              -
              
              $
              -


-5-







**NOTE
      1-   BASIS OF PRESENTATION**





The
      interim financial statements included herein, presented in accordance with
      accounting principles generally accepted in the United States have been prepared
      by the Company, without audit, pursuant to the rules and regulations of the
      Securities and Exchange Commission. Certain information and footnote disclosures
      normally included in financial statements prepared in accordance with accounting
      principles generally accepted in the United States of America have been
      condensed or omitted pursuant to such rules and regulations, although the
      Company believes that the disclosures are adequate to make the information
      present and not misleading.





These
      statements reflect all adjustments, consisting of normal recurring adjustments,
      which, in the opinion of management, are necessary for fair presentation of
      the
      information contained therein. It is suggested that these interim financial
      statements be read in conjunction with the audited financial statements of
      the
      Company for the period ended December 31, 2005 and notes thereto included in
      the
      Company’s Form 10-KSB. The Company follows the same accounting policies in the
      preparation of interim reports.





Results
      of operations for the interim periods are not indicative of annual
      results.





**NOTE
      2-   HISTORY AND ORGANIZATION OF COMPANY**





Karma
      Media, Inc. (the “Company”) was organized April 21, 1999 under the laws of the
      State of Nevada, as Le Gourmet Co. Inc.





On
      March
      11, 2002, the Company amended its Articles of Incorporation to increase the
      number of authorized shares to 25,000,000 shares and to change the par value
      to
      $0.001.





On
      March
      17, 2003, the Company amended its Articles of Incorporation to change its name
      to Estelle Reyna, Inc.





On
      September 11, 2003, the Company amended its Articles of Incorporation to change
      its name to Karma Media, Inc.





On
      July
      8, 2005, the Company amended its Articles of Incorporation to change its name
      to
      PitBoss Entertainment, Inc.




-6-


**NOTE
      2-** **HISTORY
      AND ORGANIZATION OF COMPANY (CONTINUED)**





On
      February 1, 2006, the Board of Directors Amended the Articles of Incorporation
      to change its name and address from PitBoss Entertainment, Inc., to US Energy
      Holdings, Inc. effective March 3, 2006.





On
      February 3, 2006, Claude Eldridge was named Chairman/CEO and Secretary of US
      Energy Holdings, Inc.





In
      February, 2006, the Company amended its Articles of Incorporation to increase
      the number of authorized shares to 75,000,000 shares at $0.001 par
      value.





In
      March
      2006, US Energy Holdings, Inc. announced it will enter into a joint-venture
      with
      Houston-based Hawk Explorations, Inc. for the development and drilling of four
      oil well sites and four natural gas sites.










**NOTE
      3-   SIGNIFICANT ACCOUNTING POLICIES AND
      PROCEDURES**





**Cash
      and cash equivalents**





The
      Company maintains a cash balance in a non-interest bearing account that
      currently does not exceed federally insured limits. For the purpose of the
      statements of cash flows, all highly liquid investments with an original
      maturity of three months or less are considered to be cash equivalents. Cash
      equivalents include funds held in a Paypal account. There were no such cash
      and
      cash equivalents as of September 30, 2006.




**Fixed
      assets**





Fixed
      assets are recorded at cost. Minor additions and renewals are expensed in the
      period incurred. Major additions and renewals are capitalized and depreciated
      over their estimated useful lives. Depreciation is calculated using half year
      convention over the estimated useful lives as follows:





Computers
      and equipment 3 years








-7-


**NOTE
      3-** **SIGNIFICANT
      ACCOUNTING POLICIES AND PROCEDURES (CONTINUED)**





**Impairment
      of long-lived assets**





Long-lived
      assets held and used by the Company are reviewed for possible impairment
      whenever events or circumstances indicate the carrying amount of an asset may
      not be recoverable or is impaired. Management has not had any impairment
      adjustments for the nine and three months ended September 30, 2006 and 2005,
      respectively.





**Revenue
      recognition**





The
      Company as of October 2005 and January 2006 ceased its former business plans.
      The Company formerly recognized revenue when earned through affiliate programs.
      The affiliate programs are with various companies whereby they will pay a
      referral or commission for sales generated through a link on the Company’s
      website. The affiliates generally took 30 days to process the commission once
      the sale occurs. The Company recognized the commission once it was notified
      of
      the amount. For consulting, on-line marketing and sponsorship and appearance
      income the Company recognizes revenue as services are performed.





**Advertising
      costs**





The
      Company expenses all costs of advertising as incurred. The advertising costs
      are
      included in general and administrative expenses in the condensed statements
      of
      operations for the nine months ended September 30, 2006 and 2005.








**Oil
      and Gas Exploration and Development**





**Property
      Acquisition Costs** - Oil
      and gas leasehold acquisition costs are capitalized and included in the balance
      sheet caption properties, plants and equipment. Leasehold impairment is
      recognized based on exploratory experience and management’s judgment. Upon
      discovery of commercial reserves, leasehold costs are transferred to proved
      properties.





**Exploratory
      Costs** - Geological
      and geophysical costs and the costs of carrying and retaining undeveloped
      properties are expensed as incurred. Exploratory well costs are capitalized,
      or
“suspended,” on the balance








-8-


**NOTE
      3-** **SIGNIFICANT
      ACCOUNTING POLICIES AND PROCEDURES (CONTINUED)**





**Exploratory
      Costs (continued)**





sheet
      pending further evaluation of whether economically recoverable reserves have
      been found. If economically recoverable reserves are not found, exploratory
      well
      costs are expensed as dry holes. If exploratory wells encounter potentially
      economic quantities of oil and gas, the well costs remain capitalized on the
      balance sheet as long as sufficient progress assessing the reserves and the
      economic and operating viability of the project is being made. For complex
      exploratory discoveries, it is not unusual to have exploratory wells remain
      suspended on the balance sheet for several years while we perform additional
      appraisal drilling and seismic work on the potential oil and gas field, or
      we
      seek government or co-venturer approval of development plans or seek
      environmental permitting. Once all required approvals and permits have been
      obtained, the projects are moved into the development phase and the oil and
      gas
      reserves are designated as proved reserves.





Unlike
      leasehold acquisition costs, there is no periodic impairment assessment of
      suspended exploratory well costs. In addition to reviewing suspended well
      balances quarterly, management continuously monitors the results of the
      additional appraisal drilling and seismic work and expenses the suspended well
      costs as a dry hole when it judges that the potential field does not warrant
      further investment in the near term.





**Earnings
      (Loss) Per Share of Common Stock**





Historical
      net (loss) per common share is computed using the weighted average number of
      common shares outstanding. Diluted earnings per share (EPS) includes additional
      dilution from common stock equivalents, such as stock issuable pursuant to
      the
      exercise of stock options and warrants. Common stock equivalents were not
      included in the computation of diluted earnings per share when the Company
      reported a loss because to do so would be anti-dilutive for periods presented.
      As of September 31, 2005, the Company had 3,000,000 warrants
      available.





-9-





**NOTE
      3-   SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES
      (CONTINUED)**








**Earnings
      (Loss) Per Share of Common Stock (Continued)**




2006
              
              2005Net
                  (Loss)
              
              $
              (853,576
              )
              $
              (100,194
              )Weighed-average
                  common sharesoutstanding
                  (Basic)
              
              
              4,667,128
              
              
              1,660,000Weighed-average
                  common sharesequivalents:Stock
                  options
              
              
              -
              
              
              -Warrants
              
              
              -
              
              
              -Weighed-average
                  common sharesoutstanding
                  (Diluted)
              
              
              4,667,128
              
              
              1,660,000





The
      following is a reconciliation of the computation for basic and diluted EPS:





**Start-up
      costs**





Reporting
      on the costs of start-up activities Statement of Position 98-5 (SOP 98-5),
      “Reporting on the Costs of Start-Up Activities,” which provides guidance on the
      financial reporting of start- up costs and organizational costs, requires most
      costs of start-up activities and organizational costs to be expensed as
      incurred. SOP 98-5 is effective for fiscal years beginning after December 15,
      1998. With the adoption of SOP 98-5, there has been little or no effect on
      the
      Company’s financial statements.





**Estimates**





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenue and expenses during
      the reporting period. Actual results could differ from those
      estimates.










-10-





**NOTE
      3-   SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES
      (CONTINUED)**





**Fair
      value of financial instruments**





Fair
      value of financial instruments discussed herein are based upon certain market
      assumptions and pertinent information available to management as of September
      30, 2006 and 2005. The respective carrying value of certain balance sheet
      financial instruments approximated their fair values. These financial
      instruments include cash and equivalents, accounts receivable, prepaid expenses
      and accounts payable and accrued expenses. Fair values were assumed to
      approximate carrying values because they are short term in nature and their
      carrying amounts approximate fair values or they are payable on
      demand.





**Reclassification**





Certain
      amounts for the period ended September 30, 2005 have been reclassified to
      conform to the presentation of the September 30, 2006 amounts. The
      reclassifications have no effect on the net loss for the period ended September
      30, 2006.





**Income
      taxes**





Deferred
      income tax assets and liabilities are computed annually for differences between
      the financial statement and tax basis of assets and liabilities that will result
      in taxable or deductible amounts in the future based on enacted tax laws and
      rates applicable on the periods in which the differences are expected to affect
      taxable income. Valuation allowances are established when necessary to reduce
      deferred tax assets to the amount expected to be realized. Income tax expense
      is
      the tax payable or refundable for the period plus or minus the change during
      the
      period in deferred tax assets and liabilities.





**Discontinued
      Operations**





In
      accordance with SFAS No. 144, “Accounting for the Impairment or disposal of
      Long-Lived Assets,” discontinued operations include components of entities or
      entire entities that, through disposal transactions, will be eliminated from
      the
      on-going operations of the Company.








-11-





**NOTE
      3-** **SIGNIFICANT
      ACCOUNTING POLICIES AND PROCEDURES** **** **(CONTINUED)**





**Recent
      pronouncements**





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 151, “Inventory
      Costs.” SFAS No. 151 requires abnormal amounts of inventory costs related
      to idle facility, freight handling and wasted material expenses to be recognized
      as current period charges. Additionally, SFAS No. 151 requires that
      allocation of fixed production overheads to the costs of conversion be based
      on
      the normal capacity of the production facilities. The standard is effective
      for
      fiscal years beginning after June 15, 2005. The adoption of SFAS
      No. 151 did not have a material impact on the Company’s financial position
      or results of operations.







On
      December 16, 2004, the Financial Accounting Standards Board (“FASB”) published
      Statement of Financial Accounting Standards No. 123 (Revised 2004), “
Share-Based Payment ” (“SFAS 123R”). SFAS 123R requires that compensation cost
      related to share-based payment transactions be recognized in the financial
      statements. Share-based payment transactions within the scope of SFAS 123R
      include stock options, restricted stock plans, performance-based awards, stock
      appreciation rights, and employee share purchase plans. The provisions of FAS
      123R, as amended, are effective for small business issuers beginning as of
      the
      next fiscal year after December 15, 2005. Accordingly, the Company will
      implement the revised standard in the first quarter of fiscal year 2006.
      Previously, the Company accounted for its share-based payment transactions
      under
      the provisions of APB 25, which does not necessarily require the recognition
      of
      compensation cost in the financial statements (note 3(e)). The adoption of
      SFAS
      No. 123R did not have a material impact on the Company’s financial
      position, results of operations, or cash flows.





In
      May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error
      Corrections.” SFAS No. 154 replaces Accounting Principles Board (“APB”)
      Opinion No. 20, “Accounting Changes” and SFAS No. 3, “Reporting
      Accounting Changes in Interim Financial Statements.” SFAS No. 154 requires
      retrospective application to prior periods’ financial statements of a voluntary
      change in accounting principle unless it is impracticable. APB No. 20
      previously required that most voluntary changes in accounting principle be
      recognized by including the cumulative





-12-


**NOTE
      3-** **SIGNIFICANT
      ACCOUNTING POLICIES AND PROCEDURES** **** **(CONTINUED)**





**Recent
      pronouncements (continued)**





effect
      of
      changing to the new accounting principle in net income in the period of the
      change. SFAS No. 154 is effective for accounting changes


and
      corrections of errors made in fiscal years beginning after December 15,
      2005. The adoption of SFAS No. 154 did not have a material impact on the
      Company’s financial position, results of operations, or cash flows.





In
      February 2006, the FASB issued SFAS No. 155, “Accounting for Certain
      Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and
      140.” SFAS No. 155 resolves issues addressed in SFAS No. 133
      Implementation Issue No. D1, “Application of Statement 133 to Beneficial
      Interests in Securitized Financial Assets,” and permits fair value remeasurement
      for any hybrid financial instrument that contains an embedded derivative that
      otherwise would require bifurcation, clarifies which interest-only strips and
      principal-only strips are not subject to the requirements of SFAS No. 133,
      establishes a requirement to


evaluate
      interests in securitized financial assets to identify interests that are
      freestanding derivatives or that are hybrid financial instruments that contain
      an embedded derivative requiring bifurcation, clarifies that concentrations
      of
      credit risk in the form of subordination are not embedded derivatives and amends
      SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose
      entity from holding a derivative financial instrument that pertains to a
      beneficial interest other than another derivative financial instrument. SFAS
      No. 155 is effective for all financial instruments acquired or issued after
      the beginning of the first fiscal year that begins after September 15,
      2006. The adoption of FAS 155 is not anticipated to have a material impact
      on
      the Company’s financial position, results of operations, or cash
      flows.





In
      March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of
      Financial Assets, an amendment of FASB Statement No. 140.” SFAS
      No. 156 requires an entity to recognize a servicing asset or liability each
      time it undertakes an obligation to service a financial asset by entering into
      a
      servicing contract under a transfer of the servicer’s financial assets that
      meets the requirements for sale accounting, a transfer of the servicer’s
      financial assets to a qualified special-purpose entity in a guaranteed mortgage
      securitization in which the transferor retains all of the resulting securities
      and classifies them as either available-for-sale or trading securities in
      accordance with SFAS No. 115, “Accounting for Certain Investments in Debt
      and Equity Securities” and an acquisition or





-13-





**NOTE
      3-** **SIGNIFICANT
      ACCOUNTING POLICIES AND PROCEDURES** **** **(CONTINUED)**





**Recent
      pronouncements (continued)**





assumption
      of an obligation to service a financial asset that does not relate to financial
      assets of the servicer or its consolidated affiliates. Additionally, SFAS
      No. 156 requires all separately recognized servicing assets and servicing
      liabilities to be initially measured at fair value, permits an entity to choose
      either the use of an amortization or fair value method for subsequent
      measurements, permits at initial adoption a one-time reclassification of
      available-for-sale securities to trading securities by entities with recognized
      servicing rights and requires separate presentation of servicing assets and
      liabilities subsequently measured at fair value and additional disclosures
      for
      all separately recognized servicing assets and liabilities. SFAS No. 156 is
      effective for transactions entered into after the beginning of the first fiscal
      year that begins after September 15, 2006. The adoption of FAS 156 is not
      anticipated to have a material impact on the Company’s financial position or
      results of operations.





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No. 157, *Fair
      Value Measurements* ,(“FAS
      157”). This Standard defines fair value, establishes a framework for measuring
      fair value in generally accepted accounting principles and expands disclosures
      about fair value measurements. FAS 157 is effective for financial statements
      issued for fiscal years beginning after November 15, 2007 and interim
      periods within those fiscal years. The adoption of FAS 157 is not expected
      to
      have a material impact on the Company’s financial position, results of
      operations or cash flows.





The
      FASB
      also issued in September 2006 Statement of Financial Accounting Standards
      No. 158, *Employers’
      Accounting for Defined Benefit Pension and Other Postretirement Plans — an
      amendment of FASB Statement No. 87, 88, 106 and 132(R),* (“FAS
      158”) *.* This
      Standard requires recognition of the funded status of a benefit plan in the
      statement of financial position. The Standard also requires recognition in
      other
      comprehensive income certain gains and losses that arise during the period
      but
      are deferred under pension accounting rules, as well as modifies the timing
      of
      reporting and adds certain disclosures. FAS 158 provides recognition and
      disclosure elements to be effective as of the end of the fiscal year after
      December 15, 2006 and measurement elements to be effective for fiscal years
      ending after December 15, 2008. The Company has not yet analyzed the impact
      FAS 158 will have on its financial condition, results of operations, cash flows
      or disclosures.








-14-





**NOTE
      3-** **SIGNIFICANT
      ACCOUNTING POLICIES AND PROCEDURES** **** **(CONTINUED)**





**NOTE
      4-** **INCOME
      TAXES**





The
      Company accounts for income taxes under Statement of Financial Accounting
      Standards No. 109, “Accounting for Income Taxes” (SFAS No. 109), which requires
      use of the liability method. SFAS No. 109 provides that deferred tax assets
      and
      liabilities are recorded based on the differences between the tax bases of
      assets and liabilities and their carrying amounts for financial reporting
      purposes, referred to as temporary differences. Deferred tax assets and
      liabilities at the end of each period are determined using the currently enacted
      tax rates applied to taxable income in the periods in which the deferred tax
      assets and liabilities are expected to be settled or realized.





At
      September 30, 2006, deferred tax assets consisted of the following:







At
      September 30, 2006, the Company had accumulated deficits in the amount of
      $3,502,996 available to offset future taxable income through 2026. The Company
      established valuation allowances equal to the full amount of the deferred tax
      assets due to the uncertainty of the utilization of the operating losses in
      future periods.





**NOTE
      5-** **STOCKHOLDERS’
      (DEFICIT)**





As
      of
      June 30, 2006 the Company had 5,393,978 shares of common stock
      outstanding.





On
      January 10, 2006, the Company issued 500,000 shares of its $0.001 par value
      common stock to an officer of the Company as compensation. The fair value was
      $100,000.





Deferred
                  tax assets
              
              $
              1,050,900Less:
                  valuation allowance
              
              
              (1,050,900
              )Net
                  deferred tax assets
              
              $
              -
 -15-





**NOTE
      5-** **STOCKHOLDERS’
      (DEFICIT) (Continued)**








On
      March
      28, 2006, the Company issued 2,255,000 shares of its $0.001 par value common
      stock to individuals in a termination agreement. The fair value was
      $586,300.





The
      Company is authorized to issue 75,000,000 shares of its $0.001 par value common
      stock.





On
      July 8
      2005, the Company reported and approved a 10 to 1 reverse split of its $0.001
      par value common stock.





During
      2005, the Company issued 97,898 shares of its $0.001 par value common stock
      to
      individuals in a termination agreement. The fair value was $
      802,036.





All
      share
      and per share amounts have been retroactively restated to reflect the splits
      discussed above.





**NOTE
      6-** **WARRANTS
      AND OPTIONS** ****





On
      December 4, 2003, the Company issued one warrant to a consultant to purchase
      3,000,000 shares of the Company’s $0.001 par value common stock. The warrant
      exercise price is $0.50 per share of common stock and substantially all warrants
      will expire on or before October 31, 2013. The warrant has been determined
      to
      have a market value of $777,357 using the Black- Scholes option pricing model
      with a market value per common share of $0.50, a risk free rate of return of
      4.41%, an exercise period of ten years and a volatility of 80% and was
      discounted for the lack of marketability.





During
      the nine months ended September 30, 2006, no warrants have been
      exercised.





**NOTE
      7-** **LOAN
      PAYABLE - OFFICERS** ****





These
      amounts represent loans payable to various current and former officers of the
      Company for working capital needs, due on demand and without any repayment
      terms.








-16-





**NOTE
      8-** **RELATED
      PARTY TRANSACTIONS**





During
      the nine months ended September 30, 2006 and 2005, the Company paid the
      president of the Company $0 and $6,500, respectively for his
      services.





During
      the nine months ended September 30, 2006 and 2005, the Company paid the
      secretary of the Company $0 and $12,900, respectively for her
      services.





During
      the nine months ended September 30, 2006, the Company issued 500,000 shares
      of
      its $0.001 par value common stock to an officer of the Company as compensation
      valued at $100,000.





During
      the nine months ended September 30, 2006, one of the officers loans payable
      to a
      former officer of the Company was forgiven totaling $15,587 and is included
      in
      other income.





Office
      space and services were provided without charge by an officer, director and
      shareholder through December 2005. Such costs are immaterial to the financial
      statements and, accordingly, have not been reflected therein. The officers
      and
      directors of the Company are involved in other business activities and may,
      in
      the future, become involved in other business opportunities. If a specific
      business opportunity becomes available, such persons may face a conflict in
      selecting between the Company and their other business interests. The Company
      has not formulated a policy for the resolution of such conflicts.





**NOTE
      9-** **COMMITMENT**





On
      December 4, 2003, the Company executed a consulting agreement with Christopher
      Pair to assist the Company with strategic planning and introducing potential
      business partners and customers. The agreement provides for (a) consulting
      fees
      paid quarterly based on 20% of net revenues less certain revenues attributable
      to revenues not associated with the contract and other expenses; and (b)
      issuance of one warrant to purchase up to 3,000,000 shares of the Company’s
      $0.001 par value common stock. Consulting fees associated with the warrant
      were
      based on a value of $0.50 per share. The value of the warrant was based on
      the
      then- market closing price of the Company’s common stock. The Company then
      discounted both the then- market closing price because the shares issued and
      options to purchase shares were restricted and the volume of trading of the
      Company’s common stock that was not restricted








-17-





**NOTE
      9-** **COMMITMENT
      (Conitnued)**





was
      relatively low. The resulting consulting expense recognized for the warrant
      issuance was $777,356 for the year ended December 31, 2003. During the nine
      months ended September 30, 2006, the Company has not paid or accrued any
      consulting fees.





**NOTE
      10-** **GOING
      CONCERN**





As
      shown
      in the accompanying financial statements, the Company has sustained net
      operating losses for the nine months ended September 30, 2006 and 2005, and
      has
      sustained large accumulated deficits.





The
      Company’s future success is dependent upon its ability to achieve profitable
      operations and generate cash from operating activities. At September 30, 2006
      there is substantial doubt whether this can happen. There is no guarantee that
      the Company will be able to generate revenues in the near future.





The
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.








**NOTE
      11-** **********DISCONTINUED
      OPERATIONS**





The
      Company formerly known as Karma Media, Inc. had operations in the first quarter
      of 2005. The Company has ceased those operations and expects to initiate a
      new
      revenue recognition stream. The statement of operations for the third quarter
      of
      2005 shows all operating activities as discontinued operations.




-18-


**Management’s
      Discussion and Plan of Operation**




***Forward-Looking
      Statements*** ****




This
      Quarterly Report contains forward-looking statements about US Energy Holdings,
      Inc.’s business, financial condition and prospects that reflect management’s
      assumptions and beliefs based on information currently available. We can give
      no
      assurance that the expectations indicated by such forward-looking statements
      will be realized. If any of our management’s assumptions should prove incorrect,
      or if any of the risks and uncertainties underlying such expectations should
      materialize, US Energy Holdings actual results may differ materially from those
      indicated by the forward-looking statements.




The
      key
      factors that are not within our control and that may have a direct bearing
      on
      operating results include, but are not limited to, acceptance of our services,
      our ability to expand our customer base, managements’ ability to raise capital
      in the future, the retention of key employees and changes in the regulation
      of
      our industry.




There
      may
      be other risks and circumstances that management may be unable to predict.
      When
      used in this Quarterly Report, words such as, *”believes,”*  *”expects,”
      “intends,”*  *”plans,”*  *”anticipates,”*  *”estimates”* and
      similar expressions are intended to identify forward-looking statements,
      although there may be certain forward-looking statements not accompanied by
      such
      expressions.




***Management’s
      Discussion and Plan of Operation***




We
      were
      incorporated on January 01, 2006, and have begun our planned principal
      operations. Our efforts to date have focused primarily on formation and
      organization of our company and the development and implementation of our
      business Natural Gas plan. During the three and nine months ended September
      30,
      2006 and 2005, we did not generate any revenues. We have generated a total
      of $0
      in revenues from our Natural Gas services. We do not have any long-term
      agreements to provide our services to any customer. As a result, we are unable
      to predict the stability of, and ability to continue to generate, ongoing
      revenues.




For
      the
      nine and three months ended September 30, 2006, we incurred operating expenses
      in our continued pursuit of our stated business objective of $869,173 and $56,
      respectively. For the nine months ended September 30, 2006, these operating
      expenses included $100,000 of compensation expense, $736,300 of consulting
      services and $32,873 of general and administrative expenses. During the three
      months ended September 30, 2006, a loan payable of $15,597 was forgiven and
      included as other income.





The
      net
      result for the nine months ended September 30, 2006 was a loss of $853,576
      or
      ($0.18) per share, and for the three months ended September 30, 2006 was income
      of $15,541 or $0.00 per share.





We
      expect
      to incur ongoing losses for the next 12 months of operations unless we are
      able
      to increase our revenue generating ability significantly. Our independent
      registered public accountant has expressed substantial doubt about our ability
      to continue as a going concern as footnoted in the financial statements. If
      our
      business fails, our investors may face a complete loss of their
      investment.





We
      believe our cash on hand as of September 30, 2006 of $465 is not sufficient
      to
      continue operations for the next 12 months without generating revenues or
      additional capital infusions. We cannot assume that any financing can be
      obtained or, if obtained, that it will be on reasonable terms. Without
      realization of additional capital, it would be unlikely for us to continue
      as a
      going concern.





US
      Energy
      Holdings, Inc. is an aspiring South Texas energy resource company with an
      emphasis on oil and gas development drilling and production. Claude Eldridge,
      US
      Energy Holdings, Inc.'s new Chairman / CEO stated "I am dedicated to the
      revitalization of jobs in the energy sector, as one of the world's most
      important subjects it has become increasingly important for our company to
      invest in our world's resources, technology, and economic future".





Mr.
      Eldridge concluded, "US Energy Holdings, Inc. will also begin production in
      virgin oil and gas rich resources that have become viable development plays
      due
      to technological advances, drilling innovation and rising market prices. US
      Energy Holdings, Inc. will focus on the acquisition of long-life proven
      resources that offer the opportunity to increase current production on producing
      wells as well as begin new production on acquired properties for sites located
      through new technology. The production costs are predictable and the proven
      reserves minimize risk and ensure the protection of sustainable cash flow
      earnings".





In
      the
      reporting quarter there was an outstanding issue of $15,597 owed to Mr. John
      D.
      Jarvis, these monies were loaned to the Company for legal and accounting fees.
      Mr. Jarvis forgave the loan owed to him by the Company for consideration in
      a
      private business opportunity between Mr. Jarvis and Mr.
      Eldridge.




We
      do not
      believe that our business is subject to seasonal factors. Our management does
      not expect to incur costs related to research and development. We currently
      do
      not own any significant plant or equipment that we would seek to sell in the
      near future.






The
      company has not yet drilled the well sites described in Ozona Texas and that
      factor has limited our ability to maintain our operating objectives. Our
      management believes it is imperative to hire additional employees and/or
      officers and directors within the next three to six months. If we are unable
      to
      hire additional personnel, either as employees, directors, officers or outside
      consultants, we may be unable to continue operating as a going
      concern.






US
      Energy
      Holdings does not have any off-balance sheet arrangements.






We
      have
      not paid for expenses on behalf of any of our directors. Additionally, we
      believe that this fact shall not materially change.




-19-




***Controls
      and Procedures***






We
      maintain a set of disclosure controls and procedures designed to ensure that
      information required to be disclosed in our reports filed under the Securities
      Exchange Act, is recorded, processed, summarized and reported within the time
      periods specified by the SEC’s rules and forms. Disclosure controls are also
      designed with the objective of ensuring that this information is accumulated
      and
      communicated to our management, including our chief executive officer and chief
      financial officer, as appropriate, to allow timely decisions regarding required
      disclosure.






Based
      upon their evaluation as of the end of the period covered by this report, our
      chief executive officer and chief financial officer concluded that our
      disclosure controls and procedures are not effective to ensure that information
      required to be included in our periodic SEC filings is recorded, processed,
      summarized, and reported within the time periods specified in the SEC rules
      and
      forms.






Our
      board
      of directors was advised by Bagell, Josephs, Levine & Company, L.L.C., our
      independent registered public accounting firm, that during their performance
      of
      audit procedures for 2005 Bagell, Josephs, Levine & Company, L.L.C.
      identified a material weakness as defined in Public Company Accounting Oversight
      Board Standard No. 2 in our internal control over financial
      reporting.






This
      deficiency consisted primarily of inadequate staffing and supervision that
      could
      lead to the untimely identification and resolution of accounting and disclosure
      matters and failure to perform timely and effective reviews. However, our size
      prevents us from being able to employ sufficient resources to enable us to
      have
      adequate segregation of duties within our internal control system. Management
      is
      required to apply its judgment in evaluating the cost-benefit relationship
      of
      possible controls and procedures.




***Item
      1 Exhibits***





**Exhibit
      31.1**-- CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO
      SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 PURSUANT TO REGULATION
      SS.240.15D-14 AS PROMULAGATED BY THE SECURITIES AND EXCHANGE COMMISSION





**Exhibit
      32**--
      CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION
      906 OF THE SARBANES-OXLEY ACT OF 2002




-20-





**SIGNATURES**








Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





**US
                ENERGY HOLDINGS, INC.**Date: November
                20, 2006
            By:
            /s/Claude
                EldridgeClaude
                EldridgeTitle:Chairman,
                Chief Executive Officer and Director