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, 1997 or
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[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission file number 0-6814
U.S. ENERGY CORP.
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(Exact Name of Registrant as Specified in its Charter)
Wyoming 83-0205516
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
877 North 8th West, Riverton, WY 82501
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (307) 856-9271
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Not Applicable
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(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
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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 14, 1997
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Common stock, $.01 par value 6,867,616 Shares
<PAGE>
U.S. ENERGY CORP.
INDEX
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements.
Condensed Consolidated Balance Sheets
November 30, 1997 and May 31, 1997 ......................... 3-4
Condensed Consolidated Statements of
Operations Three and Six Months Ended
November 30, 1997 and 1996 .................................. 5-6
Condensed Consolidated Statements of Cash Flows
Six Months Ended November 30, 1997 and 1996 ................ 7-8
Notes to Condensed Consolidated
Financial Statements ....................................... 9
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ................ 10-13
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings ............................................ 14
ITEM 6. Exhibits and Reports on Form 8-K ............................. 15
Signatures ................................................... 16
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
U.S. ENERGY CORP. AND AFFILIATES
Condensed Consolidated Balance Sheets
ASSETS
November 30, May 31,
1997 1997
------------ ------------
(Unaudited)
CURRENT ASSETS:
Cash $ 3,722,000 $ 1,416,900
Accounts receivable
Trade 332,000 368,200
Related parties 873,600 1,191,000
Current portion of long-term receivable
Related parties 337,200 337,200
Inventory 61,000 96,000
Assets held for resale & other 971,700 991,600
------------ ------------
TOTAL CURRENT ASSETS 6,297,500 4,400,900
LONG-TERM NOTES RECEIVABLE 1,454,900 1,477,900
INVESTMENT IN CONTINGENT
STOCK PURCHASE WARRANT 4,594,000 4,594,000
INVESTMENTS IN AFFILIATES
Affiliates 4,939,000 4,999,600
Restricted investments 8,765,700 8,506,300
------------ ------------
13,704,700 13,505,900
PROPERTIES AND EQUIPMENT 15,725,400 14,843,000
Less accumulated depreciation,
depletion and amortization (9,108,800) (8,802,100)
------------ ------------
6,616,600 6,040,900
OTHER ASSETS 413,900 367,500
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$ 33,081,600 $ 30,387,100
============ ============
3
See notes to Condensed Consolidated Financial Statements.
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U.S. ENERGY CORP. AND AFFILIATES
Condensed Consolidated Balance Sheets
LIABILITIES AND SHAREHOLDERS' EQUITY
November 30, May 31,
1997 1997
------------ ------------
(Unaudited)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 348,600 $ 1,312,600
Deferred income (Note 4) 4,000,000 --
Current portion of long-term debt 204,700 81,300
------------ ------------
TOTAL CURRENT LIABILITIES 4,553,300 1,393,900
LONG-TERM DEBT (Note 5) 9,600 183,100
RECLAMATION LIABILITY (Note 6) 8,751,800 8,751,800
OTHER ACCRUED LIABILITIES 4,793,400 5,259,000
DEFERRED TAX LIABILITY 183,300 183,300
MINORITY INTERESTS 62,600 --
COMMITMENTS AND CONTINGENCIES
FORFEITABLE COMMON STOCK, $.01 par value
issued 229,606 shares and 223,900,
respectively, forfeitable until earned 1,958,000 1,892,400
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value;
authorized, 100,000 shares;
none issued or outstanding -- --
Common stock, $.01 par value;
authorized 20,000,000 shares;
issued, 6,696,475 and 6,646,475 shares 67,000 66,500
Additional paid-in capital 22,762,500 22,543,000
Accumulated deficit (6,950,900) (6,776,900)
Treasury Stock, 690,943 shares, at cost (2,182,000) (2,182,000)
Unallocated ESOP contribution (927,000) (927,000)
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12,769,600 12,723,600
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$ 33,081,600 $ 30,387,100
============ ============
4
See notes to Condensed Consolidated Financial Statements.
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<TABLE>
<CAPTION>
U.S. ENERGY CORP. AND AFFILIATES
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
November 30, November 30,
-------------------------------- -------------------------------
1997 1996 1997 1996
---- ---- ---- ----
REVENUES:
<S> <C> <C> <C> <C>
Mineral sales $ -- $ -- $ 858,700 $ --
Construction contract revenues -- 261,800 -- 777,700
Commercial revenues 850,200 456,300 2,409,500 1,068,800
Oil sales 28,100 23,200 76,600 62,300
Mineral property transactions 52,900 27,500 110,400 48,400
Interest 175,800 159,500 362,800 286,600
Gain (loss) on sale of assets (900) (19,900) (200) (19,900)
Management fees and other 197,100 44,000 346,000 67,600
----------- ----------- ----------- -----------
1,303,200 952,400 4,163,800 2,291,500
COSTS AND EXPENSES:
Mineral operations 348,300 154,100 723,200 316,900
Construction costs 10,400 201,400 22,100 564,600
Commercial Operations 799,700 720,200 1,637,500 1,450,800
Oil Production 29,000 14,600 43,500 38,700
Interest 17,000 26,300 32,900 62,200
General and administrative 798,000 619,200 1,409,700 1,034,500
----------- ----------- ----------- -----------
2,002,400 1,735,800 3,868,900 3,467,700
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE EQUITY
INCOME OF AFFILIATE AND
PROVISION FOR INCOME TAXES (699,200) (783,400) 294,900 (1,176,200)
MINORITY INTEREST IN (GAIN)
LOSS OF CONSOLIDATED
SUBSIDIARIES 83,900 230,100 (62,600) 343,900
(continued)
5
See notes to Condensed Consolidated Financial Statements.
<PAGE>
U.S. ENERGY CORP. AND AFFILIATES
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
November 30, November 30,
-------------------------------- --------------------------------
1997 1996 1997 1996
---- ---- ---- ----
EQUITY IN LOSS OF
AFFILIATES - NET (242,500) (122,900) (406,300) (232,500)
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES (857,800) (676,200) (174,000) (1,064,800)
PROVISION FOR
INCOME TAXES -- -- -- --
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (857,800) $ (676,200) $ (174,000) $(1,064,800)
=========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE $ (.13) $ (.10) $ (.03) $ (.16)
=========== =========== =========== ===========
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 6,850,913 6,654,863 6,821,138 6,630,099
=========== =========== =========== ===========
6
See notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
U.S. ENERGY CORP. AND AFFILIATES
Condensed Consolidated Statements of Cash Flows
Six Months Ended
November 30,
------------------------------------
1997 1996
---- ----
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (174,000) $(1,064,800)
Adjustments to reconcile net loss to net
cash used in operating activities:
Minority interest in gain (loss) 62,600 (343,900)
Depreciation, depletion and amortization 481,800 327,900
Equity in loss from affiliates 406,300 232,500
Loss (gain) on sale of assets 200 19,900
Deferred Income 4,000,000 --
Other accrued liabilities (465,600) (370,800)
Other assets (153,000) (18,300)
Net changes in components
of working capital (555,500) (748,700)
----------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 3,602,800 (1,966,200)
CASH FLOWS FROM INVESTING ACTIVITIES:
Development of mining properties (14,500) (274,900)
Development of gas properties -- (28,600)
Increase in restricted investments (259,400) (172,800)
Changes in notes receivable 23,000 (90,600)
Distributions from affiliates -- 4,207,700
Investments in affiliates (345,700) (386,500)
Purchase of property and equipment (875,000) (55,300)
Proceeds from sale of assets 4,000 192,000
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NET CASH (USED IN)INVESTING ACTIVITIES (1,467,600) 3,391,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of options and warrants for common stock 220,000 1,034,300
Proceeds from sale of subsidiary stock and stock options -- 1,258,300
Proceeds from long-term debt 160,900 400,200
Payment on long-term debt (211,000) (772,000)
----------- -----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 169,900 1,920,800
(continued)
7
See notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
U.S. ENERGY CORP. AND AFFILIATES
Condensed Consolidated Statements of Cash Flows
Six Months Ended
November 30,
---------------------------
1997 1996
---- ----
(Unaudited) (Unaudited)
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 2,305,100 3,345,600
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,416,900 992,600
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CASH AND CASH EQUIVALENTS AT
END OF PERIOD $3,722,000 $4,338,200
========== ==========
SUPPLEMENTAL DISCLOSURES:
Income tax paid $ -- $ --
========== ==========
Interest paid $ 32,900 $ 62,600
========== ==========
8
See notes to Condensed Consolidated Financial Statements.
<PAGE>
U.S. ENERGY CORP. AND AFFILIATES
Notes to Condensed Consolidated Financial Statements
1) The Condensed Consolidated Balance Sheet as of November 30, 1997, the
Condensed Consolidated Statements of Operations for the three and six months
ended November 30, 1997 and 1996, and the Condensed Consolidated Statements of
Cash Flows for the six months ended November 30, 1997 and 1996, have been
prepared by the Company without audit. The Condensed Consolidated Balance Sheet
as of May 31, 1997, has been derived from the audited financial statements
included in the Company's Annual Report on Form 10-K for the period then ended.
In the opinion of the Company, the accompanying financial statements contain all
adjustments (consisting of only normal recurring accruals) necessary to present
fairly the financial position of the Company as of November 30, 1997 and May 31,
1997, the results of operations for the three and six months ended November 30,
1997 and 1996, 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 Company's May 31, 1997 Form 10-K. The
results of operations for the periods ended November 30, 1997 and 1996 are not
necessarily indicative of the operating results for the full year.
3) The consolidated financial statements of the Company include 100% of the
accounts of USECB Joint Venture ("USECB" or "USECC") which is owned 50% by the
Company and 50% by the Company's subsidiary, Crested Corp. (Crested). The
consolidated financial statements also reflect 100% of the accounts of its
majority-owned subsidiaries: Energx Ltd. (90%), Crested (51.9%, Plateau
Resources Limited (100%) and Four Nines Gold, Inc. (50.9%) All material
intercompany profits and balances have been eliminated.
4) Deferred income consists of $4,000,000 received when the Company and its
subsidiary, Crested entered into an Acquisition Agreement with Kennecott Uranium
Company to develop properties. The amount remained forfeitable during the second
quarter of fiscal 1998 until certain actions are taken by the Company and
Crested during the third quarter of fiscal 1998. (See GMMV discussion in Item
2).
5) Debt as of November 30, 1997, consists of various equipment and other
loans totaling $214,300, and debt attributable to consolidated affiliates of
$123,000 on Four Nines. Certain inter-affiliate loans were eliminated during
consolidation.
6) Accrued reclamation obligations of $8,751,800 are the Company'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.
7) Net income (loss) per share is computed using the weighted average
number of common shares outstanding during each period. The effect of stock
options is not included in the computation, as it is anti-dilutive.
8) Certain reclassifications have been made in the May 31, 1997 financial
statements to conform to the classifications used in November 30, 1997.
9
<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 Company's liquidity, capital resources and
results of operations during the periods included in the accompanying financial
statements.
Liquidity and Capital Resources
On June 23, 1997, the Company and its subsidiary Crested Corp. ("Crested"),
entered into an Acquisition Agreement with Kennecott Uranium Company
("Kennecott") whereby the Company and Crested received a signing bonus from
Kennecott of $4,000,000 and a loan of $16,000,000 to develop the Green Mountain
Mining Venture (GMMV) properties. The $4,000,000 is shown as deferred income on
the November 30, 1997 balance sheet as it was forfeitable until certain
conditions were met. During the third quarter of fiscal 1998, the forfeitable
terms were satisfied which will allow the signing bonus to be recognized as
income during the quarter ending February 28, 1998.
The Company and Crested also received cash from the sale of uranium under the
SMP contracts of $858,700; advance royalties from CYPRUS/AMAX of $110,400;
$1,380,000 from the rental of equipment to the GMMV and real estate properties
and $478,600 in the form of management fees. The receipt of these funds
increased the Company's liquidity position significantly.
The Company utilized $1,467,600 in its investing activities during the six
months ended November 30, 1997. This was primarily as a result of the Company
and Crested purchasing $875,000 worth of equipment, and funding standby costs of
Sheep Mountain Partners ("SMP") and Plateau Resources Limited ("Plateau"). Due
to disputes existing between the SMP partners, the Company and Crested have not
been reimbursed for care and maintenance costs expended on the SMP mineral
properties in Wyoming since the spring of 1991.
The Company received a net of $169,900 from its financing activities as
options and warrants were exercised for $220,000 for 50,000 shares and long term
debt was increased by $160,900. This increase in cash was off-set by the
payments on long term debt of $211,000 which resulted in an overall reduction of
long term debt of $50,000. Cash provided by operations of $3,602,800 plus the
$169,900 provided by financing activities, less the $1,467,600 used in investing
activities resulted in a net increase in cash and cash equivalents of
$2,305,100. This increase places the Company in a strong cash position of
$3,722,000 at November 30, 1997 as compared to $4,338,200 at the same date of
the prior year and $1,416,900 at May 31, 1997.
The primary requirements for the Company's working capital continue to be
funding of the on-going administrative expenses; mine and mill holding and start
up costs of Plateau; the holding costs of the SMP mines; on going litigation
expenses associates with the SMP dispute, and certain uranium delivery costs
associated with SMP utility contracts. Nukem/CRIC are currently making most of
the SMP deliveries. No assurance can be given that this method of delivery will
continue. The capital requirements to fill the Company's and Crested's portion
of the remaining commitments in fiscal 1998 will depend on the spot market price
of uranium and may also be dependent on the outcome of the Arbitration/
Litigation Award involving Nukem and CRIC, which they have appealed to the 10th
Circuit Court of Appeals.
The primary source of the Company's capital resources for the remainder of
fiscal 1998 will be financing available through the GMMV, see discussion below,
cash on hand, eventual settlement of the Nukem/CRIC Arbitration/Litigation,
uranium deliveries pursuant to the SMP contracts, borrowing from financial
10
<PAGE>
institutions (primarily the line of credit), and the sale of equity or interests
in investment properties. Fees from oil production, rentals of various real
estate holdings and equipment, and the sale of aviation fuel will also provide
cash.
The Company, Crested and Sutter Gold Mining Company ("SGMC") are currently
seeking additional financing for the construction of the gold processing mill
and mine development of SGMC. See discussion under SGMC below. An additional $8
million in financing is being sought, however, there is no assurance that the
funds will be raised.
The expenditures for the SMP care and maintenance costs may require additional
funding, depending on the outcome of the SMP arbitration.
See Part II, Item 1 "Legal Proceedings" below.
GMMV
- ----
On June 23, 1997, the Company and Crested signed an Acquisition Agreement with
Kennecott for the right to acquire Kennecott's interest in the GMMV for
$15,000,000 and other consideration. This information was previously reported in
the Company's Form 10-K for the fiscal year ended May 31, 1997. Kennecott paid
the Company and Crested $4,000,000 on signing, and committed to provide the GMMV
a loan of up to $16,000,000 for payment of costs incurred by USECC in developing
the proposed underground Jackpot uranium mine and permitting the Sweetwater
Mill. As a result of these agreements, it is believed that no internal funding
will be required by the Company and Crested for the GMMV at either the
Sweetwater Mill or the Jackpot mine for the remainder of fiscal year 1998.
Pursuant to the Acquisition Agreement, the Mineral Lease, and the Mill Contract,
USECC is developing the proposed Jackpot Mine and working with Kennecott in
preparing the Sweetwater Mill for renewed operations. Such work is being funded
from the $16,000,000 provided to the GMMV by Kennecott. Under the Fourth
Amendment of the GMMV Agreement, Kennecott will be entitled to a credit against
its original $50,000,000 commitment to fund the GMMV, in the amount of two
dollars of credit for each one dollar of such funds out of the $16,000,000
provided by Kennecott to the GMMV, plus the $4,000,000 paid to the Company and
Crested on signing of the Acquisition Agreement.
Closing of the Acquisition Agreement is subject to the Company and Crested
satisfying several conditions on or before the extended closing date of October
30, 1998. If the Acquisition Agreement were not closed by December 1, 1997, then
the Company and Crested (or an entity formed by them to acquire the GMMV
interest owned by Kennecott) were to provide Kennecott a commitment letter from
a recognized national investment banking firm to complete an underwritten public
offering of the securities of an entity formed or introduced to acquire
Kennecott's GMMV interest (the "Acquiring Entity") in amount sufficient to close
the Acquisition Agreement transactions. Such amount is estimated by the Company
and Crested to be approximately $40,000,000.
The Acquisition Agreement was not closed by December 1, 1997 but the Company and
Crested provided a commitment letter to Kennecott within the time requirements
from a recognized national investment banking firm to meet the requirements of
the Acquisition Agreement. Thus, the $4,000,000 signing bonus paid by Kennecott
became nonrefundable.
If the Acquisition Agreement is never closed, Kennecott, shall own their
respective 50% interest in the GMMV, and the obligation to repay the $16,000,000
loan shall remain Kennecott's obligation, without any adverse effect on the 50%
interest in the GMMV held by the Company and Crested.
11
<PAGE>
Sutter Gold Mining Company
- --------------------------
During the first and second quarters of fiscal 1997, SGMC sold 424,000 shares of
its common stock in a private placement. These shares were sold for $3.00 per
share. SGMC received $1,106,600 in net proceeds after deducting commissions and
offering costs.
In addition a preliminary prospectus to qualify a previous special warrant
offering prospectus of Sutter Gold Mining common stock has been filed with the
Ontario Securities Commission with a copy to the Toronto Stock Exchange. An
additional $8 million must be raised to fund the development costs to place the
SGMC properties in production. SGMC's ability to raise the additional funds is
dependent, in part upon the changing spot market price for gold. It is not
anticipated that any of the Company's funds will be required to fund these
operations.
Sheep Mountain Partners
- -----------------------
Nukem and CRIC filed their opening brief in their appeal before the 10th Circuit
Court of Appeals on December 12, 1997. The Company and Crested filed their
answer brief on January 12, 1998. Nukem and CRIC now have fourteen days to file
a reply brief after which time the 10th Circuit Court may set oral arguments and
then decide the case. No assurance can be given as to the ultimate outcome,
however management of the Company and Crested are optimistic the ruling will be
in their favor.
Until such time as these issues are resolved, the Company and Crested may be
required to fund the standby costs of the Sheep Mountain mines. The Company and
Crested have filed a lien on the SMP properties as a protection for the payment
of past and future standby costs for which they have not been reimbursed by
Nukem/CRIC and filed suit in Wyoming to foreclose the lien. The case is in the
discovery stage.
Results of Operations
Three and Six months ended November 30, 1997 Compared to Three and Six Months
Ended November 30, 1996
Revenues for the six months ended November 30, 1997 increased by $1,872,300 over
the same period of the prior year. The increase in revenues primarily are as a
result of a delivery pursuant to one of the SMP delivery contracts wherein a net
profit of $858,700 was recognized by the Company and an increase of $1,340,700
in commercial revenues which consist primarily of the rental of equipment and
certain real estate. There were no uranium sales during the six months ended
November 30 1996. The increase of equipment rentals is as a result of increased
equipment rentals to the GMMV under the June 23, 1997 Agreement discussed above.
Construction revenues decreased $777,700 during the six months ended November
30, 1997 as a result of the Company's subsidiary Four Nines Gold concentrating
all of its efforts and equipment on the mine development at the Jackpot uranium
mine and having no third party contracts. Commercial revenues increased by
$112,700 due increased activity at the real estate properties owned in southern
Utah. Other Revenues increased by $278,400 during the six month period ended
November 30, 1997, over the same period ended November 30, 1996, because of
increased activities provided to the various subsidiary companies by the
Company.
12
<PAGE>
Other than a reduction of construction costs in the amount of $542,500 and
increases in Commercial Operations of $186,700, Mineral Operations of $406,300
and General and Administrative expenses of $375,200 costs and expenses remained
constant with those experienced during the same period of the prior year.
Mineral Operations and General and Administrative expenses increased due
primarily to additional staff to administer the development of the GMMV and
Plateau mining properties. Commercial expenses increased due to increased
activity at the commercial real estate operations in Southern Utah. Construction
expenses decreased due to limited activity in Four Nines Gold outside the
Company owned activities.
Equity losses in affiliates increased by $173,800 over the prior year during the
six months ended November 30, 1997 to a total of $406,300. This increase
consisted of losses of $182,800 and $223,500 respectively from SMP and Yellow
Stone Fuels Corp.
Operations for the six month period ended November 30, 1997, resulted in a loss
of $174,000 or $0.03 per share as compared to a loss of $1,064,800 or $0.16 per
share. The decrease in the loss is primarily as a result of increased revenues
for the sale of Uranium and the rental of equipment.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
------------------
(a) Sheep Mountain Partners Arbitration/Litigation. The information called
for in this Item 1 has been previously reported in the Company's Form 10-K (Item
3) for the fiscal year ended May 31, 1997 and Item 1, Part II of the Company's
Form 10-Q for the quarter ended August 31, 1997. This report discloses the
status of the consensual arbitration/litigation in the U.S. District Court of
Colorado and 10th Circuit Court of Appeals involving the Company and Crested
Corp. d/b/a USECC and Nukem, Inc. and its wholly-owned subsidiary Cycle Resource
Investment Corp. (CRIC) over disputes involving the Sheep Mountain Partners
(SMP) partnership concerning the marketing and sale of uranium and mining
operations in Wyoming. As was reported earlier, a Second Amended Judgment was
entered on June 30, 1997, by Judge Lewis T. Babcock of the U.S. District Court
of Colorado wherein the Court again confirmed the Arbitration Award ordering
Nukem to pay USECC a net of approximately $8,600,000 as monetary damages and
imposing a constructive trust in favor of SMP on Nukem's rights to purchase CIS
uranium, the uranium acquired pursuant to those rights and the profits therefrom
(the "CIS contracts"). Nukem/CRIC filed a motion for clarification and/or
limited remand of the Second Amended Judgment. On August 13, 1997, the U.S.
District Court denied the motion. Nukem and CRIC then filed an amended notice of
appeal of the District Court's Judgment, Amended Judgment and Second Amended
Judgment with the 10th Circuit Court of Appeals. USECC filed a motion to
increase the supersedeas bond Nukem posted for $8,613,600 to cover the value of
the CIS contracts, but the 10th Circuit Court denied the motion. Nukem/CRIC
filed their Appellants' opening brief with the 10th Circuit Court of Appeals on
December 12, 1997. USECC filed its Appellees' brief on January 12, 1998.
Nukem/CRIC may file a reply brief on or before January 26, 1998. The Court may
hear oral arguments on the appeal and a decision from the Court is expected in
late spring or early summer 1998.
(b). BGBI Litigation. The information called for in this Item 1 has been
previously reported in the Company's Form 10-K (Item 3) for the fiscal year
ended May 31, 1997. This report discloses the status of the lawsuit filed by
Bond Gold Bullfrog Inc. in Nye County, NV against the Company, Crested and
Parador Mining Company, Inc. regarding Parador's lease to Bond Gold of two
patented mining claims. The District Court bifurcated the trial of the issues
hearing the matter of extralateral rights in December 1995. On December 18,
1997, at a hearing before the District Court on motions for summary judgment by
all parties, the Court granted various motions of the parties but denied
plaintiff's motions for summary judgment on the breach of Parador's lease and
the issue of specific performance by plaintiff. The Court denied defendants'
motion for summary judgment on plaintiff's claim for breach of contract. Thus,
the issues of breach of contract by both BGBI and the defendants the Company,
Crested and Parador and these defendants' claim against BGBI for specific
performance, will be tried before the Court commencing on January 26, 1998.
14
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ITEM 5. Other Information
-----------------
On November 25, 1997, the Company's Board of Directors appointed Keith G.
Larsen to fill the one vacancy created on the Board of Directors when former
Senator Alan K. Simpson resigned to assume a position as Chairman of the
Company's Advisory Board. John L. Larsen, Chairman, President and Chief
Executive Officer of the Company, resigned his position as President and his son
Keith G. Larsen was then appointed as President and Chief Operating Officer of
the Company. John L. Larsen continues to serve as the Company's Chairman of the
Board and Chief Executive Officer.
ITEM 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits. None.
(b) Reports on Form 8-K. The Company filed no Reports on Form 8-K during
the quarter ended November 30, 1997.
15
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
U.S. ENERGY CORP.
(The Company)
Date: January 14, 1997 By: /S/ John L. Larsen
-----------------------------
JOHN L. LARSEN
Chief Executive Officer
and Chairman
Date: January 14, 1997 By: /S/ Robert Scott Lorimer
------------------------------
ROBERT SCOTT LORIMER,
Principal Financial Officer
and Chief Accounting Officer
16
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-END> NOV-30-1997
<CASH> 3,722,000
<SECURITIES> 0
<RECEIVABLES> 1,542,800
<ALLOWANCES> 0
<INVENTORY> 61,000
<CURRENT-ASSETS> 6,297,500
<PP&E> 15,725,400
<DEPRECIATION> (9,108,800)
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<CURRENT-LIABILITIES> 4,553,300
<BONDS> 0
0
0
<COMMON> 67,000
<OTHER-SE> 12,702,600
<TOTAL-LIABILITY-AND-EQUITY> 33,081,600
<SALES> 3,455,200
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<CGS> 2,382,800
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<INCOME-PRETAX> (174,000)
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<NET-INCOME> (174,000)
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