FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] Quarterly report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal quarter ended November 30, 1995 or
[ ] Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ____ to ____
Commission file number 0-6814
U.S. ENERGY CORP.
- ------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Wyoming 83-0205516
- --------------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
877 North 8th West, Riverton, WY 82501
- ---------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (307) 856-9271
---------------
Not Applicable
- -------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 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.
YES X NO
State the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at January 16, 1996
- ------------------------------ --------------------------------
Common stock, $.01 par value 6,338,465 Shares
<PAGE>
U.S. ENERGY CORP.
INDEX
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements.
Condensed Consolidated Balance Sheets
November 30, 1995 and May 31, 1995 . . . . . . . . .3-4
Condensed Consolidated Statements of
Operations Three and Six Months
Ended November 30, 1995 and 1994 . . . . . . . . . .5-6
Condensed Consolidated Statements of Cash Flows
Six Months Ended November 30, 1995 and 1994. . . . .7-8
Notes to Condensed Consolidated
Financial Statements . . . . . . . . . . . . . . . 9-10
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . .11-14
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings. . . . . . . . . . . . . . . . .14-15
ITEM 4. Submission of Matters
to a Vote of Security Holders. . . . . . . . . . . . 15
ITEM 5. Other Information. . . . . . . . . . . . . . . . . . 16
ITEM 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 16
Signatures . . . . . . . . . . . . . . . . . . . . . 17
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
U.S. ENERGY CORP. AND AFFILIATES
Condensed Consolidated Balance Sheets
<CAPTION>
ASSETS
November 30, May 31,
1995 1995
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 952,400 $ 551,300
Accounts receivable
Trade 1,627,000 1,484,100
Related parties 231,500 231,600
Inventory 1,502,000 1,567,300
Current portion long-term
notes receivables 38,300 74,400
Other 206,200 149,300
----------- -----------
TOTAL CURRENT ASSETS 4,557,400 4,058,000
----------- -----------
INVESTMENTS AND ADVANCES
Affiliates 3,243,400 3,244,600
Restricted 7,983,000 7,757,400
----------- -----------
11,226,400 11,002,000
PROPERTIES AND EQUIPMENT 27,865,800 27,200,200
Less accumulated depreciation,
depletion and amortization (10,063,800) (9,700,800)
----------- -----------
17,802,800 17,499,400
OTHER ASSETS:
Accounts and notes receivable:
Real estate and other 891,600 945,700
Affiliates and related parties 25,000 25,000
Employees 552,500 505,100
Buildings and improvements
held for sale 7,500 7,500
Deferred compensation, long-term -- 5,100
Deposits and other 117,200 117,200
----------- -----------
1,593,800 1,605,600
----------- -----------
$35,179,600 $34,165,000
----------- -----------
----------- -----------
See notes to condensed consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
U.S. ENERGY CORP. AND AFFILIATES
Condensed Consolidated Balance Sheets
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
November 30, May 31,
1995 1995
---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 1,452,400 $ 2,276,100
Lines of credit 843,000 1,527,000
Current portion of long-term debt 502,000 232,900
----------- -----------
TOTAL CURRENT LIABILITIES 2,797,400 4,036,000
LONG-TERM DEBT (See Note 4) 1,146,100 928,500
RECLAMATION LIABILITY (See Note 5) 3,951,800 3,951,800
OTHER ACCRUED LIABILITIES (See Note 5) 10,605,800 10,818,700
DEFERRED TAX LIABILITY 214,100 183,300
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 479,600 708,200
Common stock, 187,817
shares forfeitable 1,370,100 1,370,100
SHAREHOLDERS' EQUITY (See Note 6):
Preferred stock, $.01 par value;
authorized, 100,000 shares;
none issued or outstanding -- --
Common stock, $.01 par value;
authorized, 20,000,000 shares;
issued, 6,203,562 and 5,262,794 61,900 52,500
Additional paid-in capital 21,438,700 18,629,000
Accumulated deficit (3,629,200) (3,256,400)
Treasury stock, 769,943
shares, at cost (2,242,400) (2,242,400)
Unallocated ESOP contribution (1,014,300) (1,014,300)
----------- -----------
14,614,700 12,168,400
----------- -----------
$35,179,600 $34,165,000
----------- -----------
----------- -----------
See notes to condensed consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
U.S. ENERGY CORP. AND AFFILIATES
Condensed Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
------------------------ --------------------------
1995 1994 1995 1994
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
REVENUES:
Mineral sales
and option $ -- $ -- $ 2,174,300 $ --
Construction contract
revenues 1,190,000 294,000 2,817,100 890,500
Oil sales 40,400 44,300 82,000 85,500
Recreational
product sales 1,318,000 1,157,300 2,575,000 2,169,200
Commercial revenues 257,600 188,000 560,900 733,100
Gain (loss) on sale
of assets 27,600 (77,100) 44,200 313,900
Interest 246,100 150,400 270,000 173,100
Management and
other fees 149,800 47,200 371,300 90,800
---------- ---------- ----------- -----------
3,229,500 1,804,100 8,894,800 4,456,100
---------- ---------- ----------- -----------
COSTS AND EXPENSES:
Costs of mineral sales -- -- 1,824,300 --
Cost of recreational
products 718,900 645,500 1,381,700 1,181,300
Mineral operations 349,900 295,700 411,500 706,200
Construction costs 888,900 155,500 2,095,300 754,000
Abandoned gas leases -- -- 328,700 --
General and
administrative 1,034,200 770,300 1,882,100 1,684,500
Commercial operations 530,100 462,000 1,068,300 1,090,400
Oil production 13,900 -- 31,400 --
Loss on sale
of investments -- 76,400 -- 89,900
Interest 55,900 55,500 145,000 102,600
---------- ---------- ----------- -----------
3,591,800 2,460,900 9,168,300 5,608,900
---------- ---------- ----------- -----------
(Continued)
See notes to condensed consolidated financial statements.
</TABLE>
5
<PAGE>
<TABLE>
U.S. ENERGY CORP. AND AFFILIATES
Condensed Consolidated Statements of Operations
(Unaudited)
(Continued)
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
------------------------ --------------------------
1995 1994 1995 1994
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Loss Before Equity
Loss of Affiliates,
Provision for
Income Taxes (362,300) (656,800) (273,500) (1,152,800)
Minority Interest in
Loss of Consolidated
Subsidiaries 102,100 203,000 66,500 342,200
Equity in Loss of
Affiliates-net (90,300) (80,400) (165,900) (176,800)
---------- ---------- ----------- -----------
Loss Before Provision
for Income Taxes (350,500) (534,200) (372,900) (987,400)
Provision for
Income Taxes -- -- -- --
---------- ---------- ----------- -----------
NET LOSS $ (350,500) $ (534,200) $ (372,900) $ (987,400)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
NET LOSS PER SHARE $ (.06) $ (.11) $ (.06) $ (.21)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 6,343,465 4,693,090 6,034,445 4,693,090
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
*Less than $.01 per share.
See notes to condensed consolidated financial statements.
</TABLE>
6
<PAGE>
<TABLE>
U.S. ENERGY CORP. AND AFFILIATES
Condensed Consolidated Statement of Cash Flows
(Unaudited)
<CAPTION>
Six Months Ended
November 30,
--------------------------
1995 1994
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ (372,900) $ (987,400)
Adjustments to reconcile
net income to net cash used
in operating activities:
Minority interest in (gain) loss
of consolidated subsidiaries (66,500) (342,200)
Depreciation, depletion
and amortization 428,700 386,500
Abandoned mineral leases 328,700 --
Equity in (gain) loss of affiliates 165,900 176,800
(Gain) Loss on sale assets (28,600) (313,900)
Loss on sale of investments -- 76,400
Change in deferred income taxes 30,800 (119,800)
Net changes in components
of working capital (1,183,100) (236,100)
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (697,000) (1,359,700)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in affiliates (326,800) (301,800)
Investments in other (225,600) (9,600)
Purchase of property and equipment (809,600) (115,100)
Proceeds from sale of assets 38,500 582,600
Development of mining properties (219,600) 205,900)
Development of gas properties (23,400) (92,000)
Change in notes receivable 42,800 124,900
Proceeds from sale of investments -- 166,500
Deposits and other -- (3,300)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (1,523,700) (103,500)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Private placement of common stock 2,842,200 --
Cancellation of stock for services (23,100) --
Additions to long-term debt 1,648,000 1,316,200
Payment on long-term debt (1,845,300) (350,100)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,621,800 966,100
----------- -----------
(Continued)
See notes to condensed consolidated financial statements.
</TABLE>
7
<PAGE>
<TABLE>
U.S. ENERGY CORP. AND AFFILIATES
Condensed Consolidated Statement of Cash Flows
(Unaudited)
<CAPTION>
Six Months Ended
November 30,
---------------------------
1995 1994
----------- ------------
<S> <C> <C>
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 401,100 (497,100)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 551,300 1,181,700
----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 952,400 $ 684,600
----------- -----------
----------- -----------
SUPPLEMENTAL DISCLOSURES:
Income tax paid $ -- $ 105,000
----------- -----------
----------- -----------
Interest paid $ 145,000 $ 102,600
----------- -----------
----------- -----------
See notes to condensed consolidated financial statements.
</TABLE>
8
<PAGE>
U.S. ENERGY CORP. AND AFFILIATES
Notes to Condensed Consolidated Financial Statements
1) The Condensed Consolidated Balance Sheet as of November
30, 1995, the Condensed Consolidated Statements of Operations for
the three and six months ended November 30, 1995 and 1994, and the
Condensed Consolidated Statements of Cash Flows for the six months
ended November 30, 1995 and 1994, have been prepared by the
Registrant without audit. The Condensed Consolidated Balance Sheet
as of May 31, 1995, has been taken from the audited financial
statements included in the Registrant's Annual Report on Form 10-K
for the period then ended. In the opinion of the Registrant, the
accompanying financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present
fairly the financial position of Registrant as of November 30, 1995
and May 31, 1995, the results of operations for the three and six
months ended November 30, 1995 and 1994, and the cash flows for the
six months then ended.
2) Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. It is suggested that these financial statements be read
in conjunction with the Registrant's May 31, 1995 Form 10-K. The
results of operations for the periods ended November 30, 1995 and
1994 are not necessarily indicative of the operating results for
the full year.
3) The consolidated financial statements of the Registrant
include 100% of the accounts of USECB Joint Venture (USECB) which
is owned 50% by the Registrant and 50% by the Registrant's
subsidiary, Crested Corp. (Crested). The consolidated financial
statements also reflect 100% of the accounts of its majority-owned
subsidiaries: The Brunton Company (100%), Energx Ltd. (90%),
Crested (51.9%), USECC Gold Limited Liability Company (100%),
Plateau Resources Limited (100%) and Four Nines Gold, Inc. (50.9%)
All material intercompany profits and balances have been
eliminated.
4) Debt as of November 30, 1995 consists of the line of
credit of $650,000, various equipment and other property loans
totaling $216,700 and debt attributable to consolidated affiliates
of $806,400 on Brunton and $818,000 on Four Nines Gold. Certain
inter-affiliate loans were eliminated during consolidation.
9
<PAGE>
U.S. ENERGY CORP. AND AFFILIATES
Notes to Condensed Consolidated Financial Statements
(Continued)
5) Accrued reclamation obligations of $3,951,800 are the
Registrant's share of a reclamation liability at the Crooks Gap
Mining District and the full obligation at the Shootaring Uranium
Mill. The reclamation work may be performed over several years.
In addition, Plateau has recorded additional obligations of
$10,605,800 for the estimated holding and maintenance costs needed
until the mill is placed in service or decommissioning begins.
6) During the six months ended November 30, 1995, the
Registrant completed a private placement of 812,432 of restricted
common shares which resulted in net proceeds to the Company of
$3.50 per share or $2,842,200. The Registrant also cancelled 5,000
shares of its common stock which had previously been issued for
professional services.
7) Net income (loss) per share is computed using the
weighted average number of common shares outstanding during each
period. The dilutive effect of stock options is not included in
the computation, as it is not material.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
-------------------------------------------------------
The following is management's discussion and analysis of
significant factors which have affected the Registrant's liquidity,
capital resources and results of operations during the period
included in the accompanying financial statements.
Liquidity and Capital Resources
Working capital increased during the six months ended November
30, 1995 by $1,738,000 to working capital of $1,760,000. Cash and
cash equivalents increased by $401,100 to $952,400 during the
period ended November 30, 1995. This increase was as a result of
financing activities.
In June and July 1995, the Registrant sold 812,432 restricted
common shares in a private placement for net proceeds of $2,842,200
($3.50 per share). The Registrant committed to register these
shares with the SEC in the second quarter of fiscal 1996 under the
Securities Act of 1933. Registration of these shares is currently
before the SEC. In connection with this private placement,
warrants to purchase 81,243 common shares at $4.80 per share were
issued to the selling agent. These warrants are exercisable
through July 28, 2000.
The Registrant utilized $1,523,700 in its investing activities
during the six months ended November 30, 1995. This was primarily
as a result of the Registrant and its subsidiary Crested funding
Sheep Mountain Partners ("SMP"), Plateau Resources Limited
("Plateau"), Energx, Ltd. ("Energx") and the Sutter Gold Mining
Company ("SGMC"). As the Registrant and Crested provide various
services for GMMV and SMP, the non-affiliated participants are
invoiced for their proportionate share of the approved operating
costs. GMMV is current on its reimbursements to the Registrant and
Crested for all the operating costs. Due to disputes existing
between the SMP partners, the Registrant and Crested have not been
reimbursed for care and maintenance costs expended on the SMP
mineral properties since the spring of 1991. Additionally, the
Registrant and is affiliates purchased $809,600 of additional
equipment during the six months ended November 30, 1995.
11
<PAGE>
Other changes in working capital were decreases in accounts
payable and accrued expenses of $823,700. The Registrant and
Crested have a line of credit for $1,000,000, with $650,000
outstanding as of November 30, 1995. Brunton and Four Nines,
consolidated affiliates, have $122,000 and $71,000 outstanding,
respectively, on their lines of credit.
The primary requirements for the Registrant's working capital
continue to be the funding of on-going administrative expenses, the
mine and mill development and holding costs of SGMC; holding costs
of Plateau; uranium (U3O8) delivery costs, and property holding
costs of SMP. As a result of the disputes between the SMP
partners, the Registrant and Crested have been delivering certain
of their respective portions of the U3O8 concentrates required to
fill various delivery requirements on long-term U3O8 contracts with
domestic utilities. Currently, Nukem/CRIC have made most of the
SMP deliveries of U3O8. It is not known how long this arrangement
will continue. The capital requirements to fill the Registrant's
and Crested's portion of the remaining commitments in fiscal 1996
will depend on the spot market price of uranium and is also
dependent on the outcome of the arbitration proceedings involving
Nukem/CRIC.
The primary source of the Registrant's capital resources for
the remainder of fiscal 1996, will be (i) cash on hand; (ii) sale
of equity or interests in investment properties or affiliated
companies; (iii) sale of equipment; (iv) resolution of pending
litigation/arbitration; (v) sale of royalties or interests in
mineral properties; (vi) proceeds from the sale of uranium under
the SMP contracts, (vii) and borrowings from financial
institutions. The sale of recreational and professional products
by Brunton, construction revenues from Four Nines Gold ("FNG"),
fees from oil production, rentals of various real estate holdings
and equipment, aircraft chartering and the sale of aviation fuel
will also provide cash.
Additional working capital to that on hand at November
30, 1995, will be required to hold and maintain existing mineral
properties, permitting, the construction of a gold processing mill,
and mine development of SGMC and the development of Plateau and its
associated properties and administration costs. The Registrant and
Crested are currently seeking a joint venture partner and/or other
means of financing the construction of the SGMC gold processing
mill and mine development. The funding of SMP care and maintenance
costs may require additional funding, depending on the outcome of
the SMP arbitration. The Registrant and Crested sought rescission
of the SMP Partnership Agreement as well as damages from Nukem/CRIC
in U.S. District Court. In February 1994, the parties to the
litigation agreed to a consensual binding arbitration on claims
accruing after the formation of the SMP partnership. The
arbitration hearings have concluded, and it is anticipated that the
Arbitration Panel will enter its award some time during fourth
quarter of fiscal 1996.
12
<PAGE>
Results of Operations
Three and Six Months Ended November 30, 1995 Compared to Three and
Six Months Ended November 30, 1994
Revenues for the six month period ended November 30, 1995
increased by $4,438,700 primarily due to increases in mineral sales
and a mineral option, construction contract revenues and the sale
of recreational and professional products.
Revenues from mineral sales and option were $2,174,300. There
were no similar U3O8 deliveries or option activities for the same
period in the prior year.
Construction contract revenues for the three and six months
ended November 30, 1995 increased by $896,000 and $1,926,600,
respectively from profitable contracts awarded late in fiscal 1995
to the Registrant's subsidiary FNG.
Recreational product sales for the same periods increased by
$160,700 and $405,800, primarily as a result of continued expansion
into the recreational market and development of new products.
Commercial revenues increased by $69,600 for the three month period
ended November 30, 1995 compared to the same period in 1994 but
decreased $172,200 for the six month period compared to the six
months ended November 30, 1994, as a result of reduced fuel sales
and equipment rentals during the six months ended November 30,
1995. Revenues from these areas increased during the three months
ended November 30, 1995. These fluctuations are due to seasonal
fuel sales and a major construction project for GMMV during the
quarter ended November 30, 1995.
Management fees and other revenues increased by $280,500 and
$102,600 for the six and three months ended November 30, 1995.
This increase is primarily as a result of increased revenues
generated by operations of a motel, convenience store and
restaurant at the Registrant's town of Ticaboo in southern Utah.
The costs of mineral sales increased by $1,824,300 for the six
months ended November 30, 1995 for which there were no
corresponding costs during the same period in 1994. Cost and
expenses associated with mineral operations decreased by $294,700
for the six months ended November 30, 1995 compared to the six
months ended November 30, 1994 primarily as a result of a decrease
in legal costs in connection with the SMP arbitration, but
increased by $54,200 for the three months ended November 30, 1995
compared to the same period in 1994 due to arbitrator fees paid
during the quarter. The cost of construction activities increased
by $733,400 and $1,341,300, respectively for the three month and
six month periods ended November 30, 1995 compared to the same
periods in 1994 as a result of increased contract work.
13
<PAGE>
General and administrative expenses increased by $197,600 and
$263,900, respectively for the six and three months ended November
30, 1995. This increase is due to additional expenses associated
with the expansion of Brunton's products as well as FNG's
contracts. Additionally, interest expense which is included in
general and administrative expense increased by $43,000 during the
six months ended November 20, 1995 as compared to the same period
in 1994. Commercial operations expenses remained relatively
constant.
Operations for the six months ended November 30, 1995 resulted
in a pre-tax loss of $273,500 before equity in loss of affiliates
and minority interest in gain of consolidated subsidiaries of
$165,900 and $66,500, respectively, as compared to a loss of
$1,152,800 before equity in loss of affiliates and minority
interest in loss of consolidated subsidiaries of $176,800 and
$342,200, respectively, during the same period of the previous
year. After recognizing equity losses, the Registrant recognized
a net loss of $372,900 compared to a loss of $987,400 for the
comparative period of the previous year.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
-------------------
(a) In the pending arbitration proceedings involving Sheep
Mountain Partners, Registrant, Crested Corp. and Nukem Inc./CRIC,
reported in Registrant's Form 10-K (Item 3) for the fiscal year
ended May 31, 1995, the three member Arbitration Panel entered an
order on October 23, 1995 advising that an Order and Award, which
was scheduled to be issued in December 1995, would not be possible.
The Panel concluded that it will need a period of time up to and
including March 1, 1996 before the Panel's Award will be issued.
The Panel also reserved the right to extend that period of time
should it unanimously decide it is necessary.
(b) In the Bond Gold Bullfrog, Inc. ("BGBI") litigation
reported in the Registrant's 1995 Form 10-K (Item 3) a partial or
bifurcated trial to the judge of the extralateral rights issues was
held on December 11 and 12, 1995, as scheduled. The purpose of the
hearing was to determine whether the Bullfrog orebody in question
is a "vein, lode or ledge" as described in the 1872 Mining Law and
if so, whether the facts of the case warrant the application of the
doctrine of extralateral rights as set forth in such statute.
Although the Court sat as both the finder of fact and law with
respect to such issues, the Court concluded that the questions are
ultimately one of law which must be reached based on the testimony
and exhibits introduced at the trial concerning the description of
the orebody. Registrant and defendants Crested Corp. and Parador
Mining Co., Inc. ("Parador") presented five experts in the field of
14
<PAGE>
geology, including the person who was responsible for the discovery
of the gold deposit at the mine. All five experts opined that the
deposit was a lode and it apexed on a portion of Parador's two
mining claims. The defendant H. B. Layne Contractor, Inc.
("Layne") presented a single witness who testified that there was
no apex within the Parador claims. The Court nevertheless found
that Parador had failed to meet its burden of proof and therefore
Parador, Registrant and Crested Corp have no right, title and
interest in the minerals lying beneath the claims of Layne pursuant
to extralateral rights. The Court entered a partial judgment in
favor of Layne and ordered that Parador pay Court costs to Layne.
Defendants intend to appeal the Court's ruling as erroneous as a
matter of law.
The partial trial did not address any of the other issues
pending in the litigation other than those required to decide the
question of whether the doctrine of extralateral rights is
applicable to this case. All other claims and counterclaims remain
pending before the Court and no hearing date has been set for those
issues.
Item 4. Submission of Matters to a Vote of Security Holders
-------------------------------------------------------
On November 29, 1995, an annual meeting of shareholders was
held and two directors, Harold F. Herron and David W. Brenman were
reelected for a term expiring on the third succeeding annual
meeting and until their successors are duly elected or appointed
and qualified. With respect to the election of the two directors,
the votes cast were as follows.
Votes For Votes Withheld
---------- --------------
Harold F. Herron 4,909,106 19,507
David W. Brenman 4,910,096 18,517
The Registrant's Board of Directors consists of six members
and Messrs. Herron and Brenman will continue to serve with John L.
Larsen, Max T. Evans, Don C. Anderson and Nick Bebout whose terms
of office as directors continued after the annual meeting of
shareholders held on November 29, 1995.
15
<PAGE>
Item 5. Other Information
-------------------
On January 15, 1996, the Registrant entered into an agreement
in principle to sell all of the shares of its wholly owned
subsidiary, The Brunton Company ("Brunton"), to an nonaffiliated
purchaser for cash. The purchase price will be determined in part
on the basis of the Registrant's adjusted Stockholder's Equity in
Brunton on January 31, 1996. The transaction is expected to result
in a gain to the Registrant. Closing of the transaction, which is
subject to approval of the Boards of Directors of the Registrant
and the purchaser, is scheduled for February 15, 1996. The sale
was prompted in part by Registrant's desire to focus on its core
business of mining. Registrant announced plans to consolidate all
of its uranium assets into a single subsidiary and finance the
startup of its mines and mill operations with debt or equity
funding. There can be no assurance that uranium prices will
continue to increase to a level required to allow Registrant to
operate its uranium properties profitably or that the required
financing will be available to put such properties into operation.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits. None.
(b) Reports on Form 8-K. There were no Reports filed on Form
8-K during the quarter ended November 30, 1995.
16
<PAGE>
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.
U.S. ENERGY CORP.
(Registrant)
Date: January 17, 1996 By: s/ John L. Larsen
------------------------------
JOHN L. LARSEN,
Chief Executive Officer
Date: January 17, 1996 By: s/ Robert Scott Lorimer
------------------------------
ROBERT SCOTT LORIMER,
Principal Financial Officer
and Chief Accounting Officer
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FORM 10-Q FOR THE QUARTER ENDED NOVEMBER 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000101594
<NAME> U.S. ENERGY CORP.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> NOV-30-1995
<CASH> 952,400
<SECURITIES> 0
<RECEIVABLES> 1,896,800
<ALLOWANCES> 0
<INVENTORY> 1,708,200
<CURRENT-ASSETS> 4,557,400
<PP&E> 27,865,800
<DEPRECIATION> 10,063,800
<TOTAL-ASSETS> 17,802,800
<CURRENT-LIABILITIES> 2,797,400
<BONDS> 0
<COMMON> 61,900
0
0
<OTHER-SE> 14,552,800
<TOTAL-LIABILITY-AND-EQUITY> 35,179,600
<SALES> 8,209,300
<TOTAL-REVENUES> 8,894,800
<CGS> 6,401,000
<TOTAL-COSTS> 6,401,000
<OTHER-EXPENSES> 2,622,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 145,000
<INCOME-PRETAX> (372,900)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (372,900)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
