Newsletter

May 25, 2006

Volume VII, Issue 44

Home Page : www.otcjournal.com
Email Questions or Comments To: editor@otcjournal.com

To OTC Journal Members:

US Energy (OTC BB: HYFS): Double Header News

I had planned on wrapping it up for the impending holiday weekend, but the two news releases out of US Energy post close on Tuesday are just too important to not bring to your attention.

I am totally convinced this is the most exciting microcap situation we are covering at this time. Of course, if the price of oil is comes down drastically in the near future it might affect this idea adversely- what do you think?

Diesel fuel is running upwards of $7 per gallon in the Far East if you can find it, and the cost and scarcity is really hurting a lot of the building efforts in China, Singapore, Korea, and the like.

HYFS has one potential answer to the problem- a conversion system that converts diesel engines to a diesel/natural gas hybrid that saves fuel without sacrificing power. They are making substantial inroads everyday to major sales- just watch these guys deliver something big in the not too distant future.

After the market closed on Tuesday, HYFS put out not one, but two reasonably substantive press releases. For starters, HYFS announced that in conjunction with the NGVI (Natural Gas Vehicle Institute), the company has completed field installations of new systems in Korea. Korea has 5 million diesel engines. They have modified both Daewoo and Hyundai engines, and field trials are starting up.

Daewoo and Hyundai are huge names in the Far East. Trials have started. Larger orders could follow.

The second news release is also quite interesting, and bodes well for the future. HYFS announced it has agreed to acquire Atlanta Based Encore Energy Solutions, an alternative fuels management company in the business of advising Fortune 500 companies. The annual revenue run rate of Encore was not disclosed in the press release, but HYFS states Encore is "profitable".

Technically, the stock is a picture of consolidation after making a nice surge from the OTC Journal intro'd level of $.27. $.45 has been the subsequent high, and the stock has succumbed like every other stock in the past 10 trading days.

You can see the up and down grinding pattern as the stock surges and falls back. The market is eating through overhead supply with each subsequent surge, and cleaning the market up for a breakout. Persistence breaks down resistance. One of these days this one is going to break out, and then you will have to remember what I have been suggesting you do every time a stock makes a big, spiky run to the upside- if you own it cheaper.

I opted for the press release on the Daewoo system because it could lead to some large orders for systems, and that would clearly be a bigger impetus for the stock to trade higher. It is worth noting the HYFS already numbers GM,UPS, and the UP Postal Service amongst its clients. Governments and municipalities are ordering retrofit systems. This technology works, and it's just a question of time before adoption is more widespread.

Here is the complete text of the news release for your review:

Press Release Source: US Energy Initiatives Corporation

US Energy Completes Daewoo Dual-Fuel System

Wednesday May 24, 4:05 pm ET

Joint Program with US Based Natural Gas Vehicle Institute

TAMPA, Fla.--(BUSINESS WIRE)--May 24, 2006--US Energy Initiatives Corporation (OTCBB:HYFS - News; "US Energy" or the "Company"), manufacturer of a patent dual-fuel diesel to natural gas conversion technology, today announced on-site activation of the Daewoo WD6L engine at the Natural Gas Vehicle Institute (NGVI) facility.

"The Daewoo system was put on a developmental fast-track at the request of our client, US-based NGVI," said US Energy CEO Mark Clancy. "We completed our field installations with our chief programmer in Korea ensuring the system was running smoothly. NGVI has notified us that they intend to follow-up the successful Daewoo conversion with a Hyndai 13 liter and a Daewoo 15 liter. We are very excited about our relationship with an international presence such as NGVI. Both Daewoo and Hyndai are engaging our Company as the direct result of the efforts made by the NGVI to further the use of natural gas worldwide," concluded Mr. Clancy.

Among the markets where NGVI has existing client relationships is Korea. Korea has 5 million diesel vehicles out of 15 million total vehicle population. The size of South Korean land is smaller than the State of Kentucky and is surrounded by oceans and by North Korea. There are 3 million diesel cargo vehicles out of 5 million diesels which are a portion of the target market of NGVI to be converted to natural gas vehicles by the year of 2020. Korea is the second largest importer of LNG in the world after Japan. The Korean fuel price of diesel is U$ 1.20/liter while that of CNG is only U$ 0.54/liter. Korea has five billion US dollars of government budget allocated to be spent during the next 10 years through Seoul Metro Clean Air Project for after-market conversions and after-treatment of the diesel vehicles.

About US Energy Initiatives Corporation (OTCBB:HYFS - News): US Energy was formed in 1996 to deliver its patent dual-fuel diesel to natural gas conversion technology. The Company's primary facility is a 12,000 square foot state-of-the-art systems development and emission testing lab in Atlanta, Georgia. The Company's current clients include Natural Gas Vehicle Institute, http://www.ngvi.com; General Motors (NYSE:GM - News), http://www.gm.com; United Parcel Service (NYSE:UPS - News), http://www.ups.com; US Postal Service; Dallas County School System, Portland, Oregon School System; Oklahoma Natural Gas and a host of private purchasers.

About the Natural Gas Vehicle Institute - The Natural Gas Vehicle Institute is North America's leading provider of training and consulting services on subjects related to natural gas as an alternative vehicle fuel. NGVI's services and programs address the full range of alternative vehicle fuel issues -- from building and maintaining a fueling station to adding NGVs to your fleet to mapping a Clean Cities Program. The Natural Gas Vehicle Institute provides natural gas vehicle education, training, consulting and technical assistance to vehicle manufacturers, fuel retailers, utilities, NGV users, consultants, equipment manufacturers and suppliers, government and other industry stakeholders. NGVI's training is officially endorsed by the Natural Gas Vehicle Coalition.

Investors are cautioned that certain statements contained in this document are "Forward-Looking Statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, which include words such as "believes," "anticipates," "intends," "plans," "expects" and similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future US Energy Initiatives actions, which may be provided by management, are also forward-looking statements as defined by the act. These statements are not guarantees of future performance.

Contact:

US Energy Initiatives Corporation, Tampa
Mark Clancy, 813-287-5787 ext. 222
http://www.usenergyic.com

Source: US Energy Initiatives Corporation

Comments in the BLOG

There is a new BLOG posting with thoughts on Bad Toys (OTC BB: BYTH). If you have an interest, please review. I'm going to make time for postings on HDY, ACTC, NWKI, NWWV, and NIHK sometime before next week. This will bring everyone up to date on my feelings about nearly every company we cover regularly. Nothing to say about HESG- it is dead until something happens to revive it, if it happens. You are going to get the unvarnished truth- like it or not.

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The OTCjournal.com Newsletter is an independent electronic publication committed to providing our readers with factual information on selected publicly traded companies. All companies are chosen on the basis of certain financial analysis and other pertinent criteria with a view toward maximizing the upside potential for investors while minimizing the downside risk, whenever possible. Moreover, as detailed below, this publication accepts compensation from certain of the companies which it features. Likewise, this newsletter is owned by MarketByte, LLC. To the degrees enumerated herein, this newsletter should not be regarded as an independent publication.

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