SOURCE: US Energy Initiatives Corporation

August 27, 2007 06:40 ET

US Energy Initiatives Acquires SeaSpray Aerosol Packaging in a Continuing Evolution to a Manufacturing Enterprise

TAMPA, FL--(Marketwire - August 27, 2007) - US Energy Initiatives Corporation (OTCBB: USEI) ("US Energy" or the "Company") today announced a series of transactions to acquire GreenTree Spray Technologies, LLC, d/b/a/ SeaSpray Aerosol, Inc. ("SeaSpray") from Nano Chemical Solutions, Inc. ("NCSH"). Parties to the transaction executed closing documents on Friday, August 24, 2007 and a final closing is scheduled for August 31, 2007 when all deliverables have been received. The Company also provided an operating update for its three business segments: Electronic manufacturing; aerosol production and packaging, and; dual-fuel systems.

In a multi-closing, USEI today announced the Company had:

--  Acquired 32,000,000 shares of NCSH and the rights to a Note in default
    in the amount of $1,333,000 owed by NCSH and secured by the operations of
    SeaSpray, its wholly owned subsidiary in exchange for 10,000,000 restricted
    shares of USEI and a Note of equal amount. The terms of the Note are no
    payments for six months, interest payments only between months 6 and 12 and
    payment of the balance at the end of twelve months;
    
--  Exchanged the Note in default with NCSH for its wholly owned
    subsidiary SeaSpray, and;
    
--  Delivered the 32,000,000 shares of NCSH as settlement in full for
    $791,000 in debt owed to our Chairman. Under the terms of our debt
    arrangement, if the Company had converted this into USEI common stock, it
    would have required in excess of 13,000,000 shares.
    

At the conclusion of the transaction, USEI is now comprised of three business segments:

1.  wholly owned subsidiary Automated Engineering Corporation (AEC),
    electronic manufacturing which, including the acquisition of SeaSpray,
    accounts for approximately 60% of our revenues and 12% of our
    expenses;

2.  wholly owned subsidiary SeaSpray, aerosol production and packaging
    which presently would represent 36% of our revenues and 25% of our
    expenses;

3.  the technology business division, dual-fuel, diesel to natural gas
    conversion system sales which, including the acquisition of SeaSpray,
    accounts for approximately 2% of our revenues and 61% of our expenses.

USEI's operating enhancements made during the past four weeks are designed to expand revenue opportunities through growing in-house capabilities from developing automotive aftermarket components to now also manufacturing electronic components for the marine, recreational vehicle, studio recording, municipal market and boutique aerosol production and packaging for a variety of clients. The Company's strategic evolution from a development to an operating enterprise is designed to achieve near-term advantages including:

--  Preserving our ownership and rights to USEI's dual-fuel system while
    reducing our expenses by approximately $1,300,000;
    
--  Eliminate the need to raise additional financing to support
    development architecture and thus, eliminate the need for further dilution
    to our shareholders relating to technology development. As our operating
    divisions grow, we can support our developmental activities through
    internally generated funds;
    
--  Expanding our operations through the acquisition of a boutique
    production and packaging facility in Seaford, Delaware.
    

Following the acquisition of SeaSpray, the following briefly summarizes our three business segments.

Electronic Manufacturing

The Company's wholly owned subsidiary Automated Engineering Corporation (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.

The Company's business model for electronic manufacturing foresees the design, prototype and development of a family of products based on needs expressed by our existing and prospective clients. As each of our new products is accepted, USEI becomes the sole-source provider for all future purchases. This approach allows us to offer substantial improvements in product design and functionality for our clients, insulate our enterprise on a competitive basis and improve the predictability of raw material needs and financial prospects. To further the Company's electronic manufacturing business model:

--  Finalized and introduced a new marine safety device in the form of a
    distress signal visible over a greater distance than competitive products;
    
--  Finalized and introduced a power conditioning and protective device
    for use in the upper-end recreational vehicle industry. This device allows
    for the safe and efficient delivery of electricity for the intricate
    systems found in recreational vehicles available in today's marketplace;
    
--  Began design efforts on a specialized sensor that fits within infant
    automotive car seats. Should the infant be left in the car, an alarm will
    sound. Since the mid-1990s, the number of children who died of heat
    exhaustion while trapped inside vehicles has risen dramatically, totaling
    around 340 in the past 10 years. One reason was a change parent-drivers
    made to protect their kids after juvenile air-bag deaths peaked in 1995 --
    they put them in the back seat, where they are more easily forgotten. USEI
    believes this sensor should become a requirement for all infant car seats;
    
--  AEC is currently working against a backlog in excess of $500,000.
    

Aerosol Production and Packaging

SeaSpray currently manufactures and sells aerosol-delivered janitorial and industrial products, waxes, lubricants, and polishes to other companies, which those companies then sell under their own brand-names. The Company also has its own line of branded products. The Company operates at its plant located at 105 Park Avenue, Seaford, Delaware. The plant consists of approximately 36,000 square feet of office space, laboratories, warehouse space, mixing rooms, and manufacturing space. At this location, the Company purchases raw materials, mixes them according to its formulary, and places them into aerosol cans. Most of the raw materials used in the Company's products are commercially available. The Company's current product line consists of:

--  Hunting scents provided to a National chain by Buck Bomb;
    
--  Manufacturing lubricants and cleaners to the Federal government;
    
--  Colors and tints to the NFL for field coloration;
    
--  Subject to final verification, SeaSpray has a current backlog in
    excess of $500,000.
    

Dual-Fuel System

As the Company previously disclosed in its quarterly report on Form 10QSB and our press announcements, prior to the acquisition of SeaSpray, USEI's dual-fuel system division accounted for approximately 93% of expenses and approximately 4% of our revenues. Following the acquisition, the dual-fuel system would account for approximately 60% of our expenses and less than 3% of our revenues. In addition, in a joint announcement with General Motors Thailand, the Company announced that the GMTh system designed for all Isuzu 2.5 and 3.0 liter engines was fully developed and no longer required any further development. The Company's dual-fuel system is comprised of two parts:

--  The software which is the key to the system and drives all component
    parts. The software developed for the GMTh, PSGas and Weichai systems are
    the property of the Company and are not the subject of our license
    agreement;
    
--  The mechanical portion which is partly based on one of the five
    patents embodied in our license agreement. The patents primarily relate to
    an earlier generation of the dual-fuel system and are not utilized in the
    GMTh, PSGas or Weichai systems.
    

In furthering our shift to a manufacturing enterprise while preserving our investment and prospects relating to our dual-fuel system, the Company has taken the following actions:

--  Curtailed the development activities at our Atlanta, Georgia facility;
    
--  Entered discussions to renegotiate our license agreement in light of
    the limited role of the patents which we believe will lower future royalty
    obligations;
    
--  Suspended the consulting agreement with the technology Licensor.
    

"Eliminating expenses and acquiring a revenue-generating business segment places the Company in a strong position to achieve near-term revenues and profitability," said USEI CEO Phil Rapp. "With the acquisition of SeaSpray and eliminating substantial expenses, we have now completed the first major component of our corporate reorganization. While we remain committed to realize a return on our capital and time invested with the dual-fuel technology, achieving financial and operating stability requires that we complement our development efforts with time-tested revenue opportunities. Boutique electronic manufacturing and specialized aerosol packaging coupled with a family of sole-source products strengthens our ability to achieve profitable operations. Using a platform of stability, we can pursue technology development as opportunities become available," concluded Mr. Rappa.

About US Energy Initiatives Corporation (OTCBB: USEI)

Through its subsidiaries, US Energy is an ISO-9001 certified electronics manufacturer specializing in the design and deployment of technologies and products for which the Company acts as a sole-source provider and as a specialized aerosol production and packaging enterprise. The Company's family of proprietary technologies are made available to the automotive, marine, recreational vehicle, studio recording, municipal market segments and boutique aerosol production and packaging.

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.

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