Newsletter

May 31, 2006

Volume VII, Issue 45

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

To OTC Journal Members:

US Energy (OTC BB: HYFS): Here We Go

Two out of the last four editions have been focused on US Energy (OTC BB: HYFS)- Make that three out of five including today. Why do you suppose that might be? I'll tell you why. This company has more potential big events in the immediate future's pipeline than any I currently cover, and in this energy and commodity driven environment, it is the right idea at right time.

HYFS is going to make me look like I know what I'm doing today. Why- because they have landed the first major contract in company history, and believe me, this is just the beginning.

I have covered the potential demand for the retrofit version of their system in the Far East in great detail. Their system converts a diesel engine into a hybrid diesel/natural gas engine. The system provides tremendous fuel savings with no loss of power. Diesel engines are fueling the Far East construction explosion, and fuel is running upwards of $7 per gallon when you can find it.

HYFS ran up to $.43 two weeks ago when the company announced it had received an order for 11 systems from the State of NY. That was before the recent market swoon.

Today's news might just be powerful enough for this stock to make a new all time high despite the current market environment. 11 systems got us to $.43. What do you think today's news of an order out of the Far East for 1500 systems will do to the stock?

Since the new multi month high on the stock in May at the $.43 level, the stock has been grinding in a range. This chart is what technicians call an "ascending wedge". There is a pattern of higher lows, and lower highs coming to a point. At some point the wedge will be broken, either to the downside or the upside, and the consolidation trend will end. If the stock eclipses the $.41 level on this news, it will signal the possibility a new high is about to be made.

Thailand based Autogas Ltd. has placed an order for 1500 systems. The systems will retrofit the Isuzu 2.5L and 3.0L diesel engines Autogas represents. They are also working on three other versions that will work for 3,000 other diesel engines Autogas manages for their customers.

My estimate- this contract is probably worth in the range of $3 million to HYFS. This is just the tip of the iceberg. There are millions of diesel engines in the Far East, all of whom would benefit in the fuel savings arena with HYFS retrofits.

Also- don't forget the OEM (original equipment manufacturer) market. Several major manufacturers are studying the conversion technology with an eye towards including same in new diesel engines. HYFS lists GM as a customer.

By the time you read this edition, I wonder if the stock will be making a new high. I hope so. This is just the beginning. Look for more of the same in the future. Right idea at the right time. Let's enjoy the ride and see what happens.

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

US ENERGY INITIATIVES CONTRACTS FOR THE SALE OF 1,500 DUAL FUEL SYSTEMS

Previously developed Isuzu 2.5 and 3.0L common-rail systems ready for deployment

Tampa, FL - May 30, 2006: US Energy Initiatives Corporation ("US Energy" or the "Company") (OTCBB:HYFS - News), a manufacturer of a patent dual-fuel diesel to natural gas conversion technology referred to as Hybrid Fuel Systems, today announced it has executed an agreement with Autogas (Thailand) Ltd. registered in Thailand as (Greengas NGV).

"Autogas is a six-year old Thailand-based company" said US Energy CEO Mark Clancy, "and we're excited to have such a strong partner in this critical market. We are also pleased to deliver this first significant order for our technology to our shareholders. As we gear up our enterprise to react to the OEM universe, this major aftermarket project will allow us to build-out our Thailand-based service and support capability. We anticipate we will begin deliverables against this agreement during the late third quarter, early fourth quarter and look to make a meaningful impact to our revenues in the fourth quarter of this year" concluded Mr. Clancy.

"In addition to our anticipated work with the Isuzu engines, on our behalf, US Energy is also developing a dual fuel system for Nissan 454 series, the Hino H07 series and the Mitsubishi FD series" said Autogas CEO Robin Hughes. "The potential for these three engines for our existing portfolio of clients runs to over 3,000 vehicles. Autogas is delighted to have acquired the rights to market and distribute the US Energy proven dual-fuel diesel to natural gas systems in Thailand. EPA approval on engine platforms in the USA provides us with the comfort that we will adhere to the highest levels of engineering integrity and emissions reductions on all types of engine applications" concluded Mr. Hughes.

About US Energy Initiatives Corporation. (OTCBB: HYFS), formed in 1996, delivers its patent dual-fuel diesel to natural gas conversion technology and resells a portfolio of gasoline to natural gas and propane conversion systems through both Company-owned and franchised service centers in twelve states and directly to domestic and international original equipment manufacturers. 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 General Motors (NYSE:GM), http://www.gm.com; United Parcel Service (NYSE:UPS), http://www.ups.com; US Postal Service; Dallas County School System, Portland, Oregon School System; Oklahoma Natural Gas and a host of private purchasers. For more information contact CEO Mark Clancy at the Company's corporate headquarters @ 813-287-5787 or visit the Company's web site at http://www.usenergyic.com.

About Autogas (Thailand) Ltd. (ETS) Autogas-Thailand is recognized as an innovative project solutions company in all areas of alternative fuels including vehicle conversions, fuel dispensation, warranty and after market service. US Energy completes our matrix of opportunity.

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.

Comments in the BLOG

I didn't get to all the BLOG postings I wanted to do over the weekend. I still want to publish pre summer doldrums updates on Golden Peaks (TSX: GL) and Network Installation (OTC BB: NWKI).

However, since last publishing a full edition, I have posted current BLOG entries on HyperDynamics (AMEX: HDY), Nighthawk (OTC BB: NIHK), Bad Toys (OTC BB: BYTH), Newave (OTC BB: NWWV), and Advanced Cellular (OTC BB: ACTC).

I use the BLOG for specific trading strategies in very volatile markets, and to update everyone with ongoing commentary. You can use the BLOG to communicate directly with me and indirectly with the management of the companies. If you have a question, I will get you an answer. Please use the BLOG to ask questions or share your pay of view on any situation. I welcome negative commentary as it gives us a chance to hear both sides of the story. Once reviewed, every legitimate comment or question will find its way to the web page for all to review. It's your opportunity to participate directly.

To use the BLOG, simply go to the home page at www.otcjournal.com - the BLOG will scroll down automatically on the right side of your screen. The most current journal entries appear in the middle of your screen. Check back frequently for updates particularly when stocks are moving to overbought or oversold levels in volatile markets.

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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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