As filed with the Securities and Exchange Commission on April 2, 2003.
REGISTRATION NO. 333-88584
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
PRE-EFFECTIVE AMENDMENT NO. 2
Registration Statement
Under the Securities Act of 1933
U.S. ENERGY CORP.
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(Exact name of registrant as specified in its charter)
Wyoming
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(State or other jurisdiction of incorporation or organization)
83-0205516
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(I.R.S. Employer Identification No.)
877 North 8th West, Riverton, Wyoming 82501; Tel. 307.856.9271
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(Address, including zip code, and telephone number, including area code,
of issuer's principal executive offices)
Daniel P. Svilar, 877 North 8th West
Riverton, WY 82501; Tel. 307.856.9271
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(Name, address, including zip code, and telephone number of agent for service)
Copies to: Stephen E. Rounds, Esq.
The Law Office of Stephen E. Rounds
4635 East 18th Ave., Denver, CO 80220
Tel: 303.377.6997; Fax: 303.377.0231
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Approximate date of commencement and end of proposed sale to the public: From
time to time after the registration statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering:[ ] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Proposed
Proposed Maximum
Amount of Maximum Aggregate
Title of Each Class Securities Offering Dollar Price Amount
of Securities to be Registered Price Per of Securities to of
to be Registered in the Offering Security be Registered(1) Fee
---------------- --------------- -------- ---------------- --------
Common Stock 266,541 $3.75 $ 999,528.75 $ 91.96
Shares(2)
Common Stock 56,383 $4.00 $ 225,532.00 $ 20.75
Shares(3)
Common Stock 20,000 $3.75 $ 75,000.00 $ 6.90
Shares(2)
Total No. Securities
to be Registered 342,924 $ 1,300,060.75 $ 119.61
Shares
(1) Under rule 457(c), registration fee calculations are estimated based on the
market value of the registrant's common stock (Nasdaq National Market
System price on May 13, 2002), which is within 5 business days prior to the
initial filing of this statement.
(2) These shares are issued and outstanding, and are being registered for
resale under this registration statement.
(3) These shares being registered for resale under this registration statement
are issuable on exercise of outstanding warrants, at $4.00 per share, which
warrants were purchased by 16 investors in February and March 2002. These
warrants expire two years from the date of investment.
DELAYING AMENDMENT UNDER RULE 473(A): The registrant hereby amends this
registration statement on such date or dates as may be necessary to delay its
effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall become effective in
accordance with section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the Commission
acting pursuant to section 8(a), may determine.
The information in this prospectus is subject to completion or amendment. The
securities covered by this prospectus cannot be sold until the registration
statement filed with the Securities and Exchange Commission becomes effective.
This prospectus shall not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these securities in any state in
which an offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of that state.
1
U.S. ENERGY CORP.
342,924 SHARES OF COMMON STOCK
This prospectus covers the offer and sale of up to 358,309 shares of common
stock ($0.01 par value) by the shareholders and by holders of warrants on
exercise of warrants. The shares are offered for sale by the selling
shareholders:
o 266,541 shares held by 14 investors.
o 56,383 shares on exercise of warrants held by 16 investors, at $4.00
per share. These warrants expire two years from the original dates of
investment which were various dates in February and March 2002.
o 20,000 shares held by Robert H. Taggart Jr.
In this prospectus, "selling shareholder" or "selling shareholders" refer
to the 14 private placement investors holding 266,541 shares, and warrants to
purchase an additional 56,383 shares, and to Robert H. Taggart, Jr., who holds
20,000 shares. The selling shareholders are identified under "Selling
Shareholders." In this prospectus, and the information incorporated by
reference; "we," "company," and "USE" refer to U.S. Energy Corp. (and its
subsidiaries unless otherwise specifically stated).
The selling shareholders may sell the shares from time to time in
negotiated transactions, brokers' transactions or a combination of such methods
of sale at market prices prevailing at the time of sale or at negotiated prices.
Although we will receive proceeds if and to the extent the warrants are
exercised, we will not receive any proceeds from sale of any of the shares
offered by the selling shareholders. None of the warrants have been exercised at
prospectus date.
USE is traded ("USEG") on the Nasdaq National Market System (3.60 on March
28, 2003, ).
AN INVESTMENT IN THE SHARES OFFERED BY THIS PROSPECTUS IS SPECULATIVE AND
SUBJECT TO RISK OF LOSS. SEE "RISK FACTORS" BEGINNING ON PAGE 8 AND THE TABLE OF
CONTENTS ON PAGE 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS _____________________, 2003.
2
TABLE OF CONTENTS
PAGE NO.
Summary Information............................................................5
The Company...........................................................5
The Offering..........................................................6
Risk Factors ..................................................................8
Risk Factors Involving the Company........................................9
Lack of coalbed methane production and established
reserves for most of the coalbed methane properties
may slow down development of these properties.........................9
Continued low gas prices for Powder River Basin
production may hurt our business......................................9
We may have to begin to curtail operations if we don't
raise more capital by July 2003......................................10
We are subject to certain kinds of risks which
are unique to the minerals business..................................10
Delays in obtaining permits for methane
wells could impair our business......................................10
The company's poison pill could discourage
some advantageous transactions.......................................11
Compliance with environmental regulations may be costly..............11
Commodity price fluctuations may be difficult
to manage and could cause losses.....................................11
Future equity transactions, including exercise of
options or warrants, could result in dilution........................11
Terms of subsequent financings may
adversely impact your investment.....................................12
There may be risks related to our prior use
of Arthur Andersen LLP as our independent
certified public accountant..........................................12
Risk Factor Involving This Offering......................................13
3
Representations About This Offering...........................................14
Forward Looking Statements....................................................14
Description of Securities.....................................................15
Use of Proceeds...............................................................18
Selling Shareholders..........................................................19
Plan of Distribution..........................................................22
Disclosure of Commission Position on Indemnification..........................23
Where to Find More Information About Us.......................................24
Incorporation of Certain Information by Reference.............................24
Legal Matters.................................................................25
Experts.......................................................................25
4
SUMMARY INFORMATION
The following summarizes all material information found elsewhere in this
prospectus and the information incorporated into it by reference. This summary
is qualified by the more detailed information in this prospectus and the
information incorporated by reference.
THE COMPANY
U.S. Energy Corp. is a Wyoming corporation, formed in 1966, in the business
of acquiring, exploring, developing and/or selling or leasing mineral
properties, and the mining and marketing of minerals. We now are engaged in the
exploration of coalbed methane gas properties, which is our primary business
focus. The only activities of a significant and recurring nature are in coalbed
methane.
We also hold mining properties, but these properties (uranium and a
property in Sutter Creek, California we bought for gold exploration) are shut
down. The most significant uranium properties are located on Sheep Mountain in
Wyoming and in southeast Utah. We also hold a royalty interest in claims on
Green Mountain, Wyoming, now held by Kennecott Uranium Company (see below).
Interests are held in other mineral properties (principally molybdenum), but are
either non-operating interests or undeveloped claims. We also hold commercial
properties, most of which are located in Utah and leased to third parties. Our
fiscal year ends May 31 but on December 16, 2002, our Board of Directors adopted
a resolution changing the fiscal year end of USE and its affiliates to December
31, effective December 31, 2002.
The exploration of coalbed methane properties is conducted through Rocky
Mountain Gas, Inc. RMG, a Wyoming corporation, is owned 51.1% by USE and 40.4%
by Crested Corp. Crested is a 70.5% majority-owned subsidiary of the company
(see below). Properties of RMG are held in southeastern Montana, and
northeastern and southwestern Wyoming. In April 2002, a lawsuit was filed
challenging the validity of Bureau of Land Management leases in Montana.
Approximately 32% (88,411 acres) of RMG's total acreage is leased from the BLM
in Montana. See Item 3 (Legal Proceedings) in the Form 10-K/A for fiscal 2002.
The status of this litigation will be updated in subsequent SEC filings.
Except for the Bobcat Field (for which we have established gas reserves) we
don't know if anything of value will result from our activities in the coalbed
methane area: Only a limited number of exploratory wells have been drilled, and
there is not yet enough information from these wells to determine if they
contain proved reserves; gas prices are low in the Powder River Basin (our area
of activity); permitting issues may delay further work, and more funding may be
needed but not available.
USE and Crested originally were independent companies, with two common
affiliates (John L. Larsen and Max T. Evans, Mr. Evans is now deceased). In
1980, USE and Crested formed a joint venture, referred to as the USECC Joint
Venture, to do business together (unless one or the other elected not to pursue
an individual project). As a result of USE funding certain of Crested's
obligations from time to time (due to Crested's lack of cash on hand), and later
payment of debts by Crested issuing common stock to USE, Crested became a
majority-owned subsidiary of USE in fiscal 1993. In fiscal 2001, Crested issued
another 6,666,666 shares of common stock to reduce Crested's debt owed to USE by
$3.0 million, which increased USE's ownership of Crested to 70.5%.
5
All of USE's (and Crested's) operations are in the United States. Principal
executive offices for USE are located in the Glen L. Larsen building at 877
North 8th Street West, Riverton, Wyoming 82501, telephone 307.856.9271; fax
307.857.3050.
Most of the company's (USE's) operations are conducted through
subsidiaries, the USECC joint venture with Crested, and various jointly-owned
subsidiaries of USE and Crested.
Until September 11, 2000, USE and Kennecott Uranium Company ("Kennecott"),
owned the Green Mountain Mining Venture ("GMMV"), which held a large uranium
deposit and uranium mill in Wyoming. On September 11, 2000, USE and Crested
settled litigation with Kennecott involving the GMMV by selling their interest
in the GMMV and its properties back to Kennecott for $3.25 million and receiving
a royalty interest in the uranium properties. Kennecott also assumed all
reclamation obligations on the GMMV properties. Other principal uranium
properties and an uranium mill in southeast Utah are held by Plateau Resources
Ltd., a wholly-owned subsidiary of USE. The Utah uranium properties are shut
down .
The gold property held by Sutter Gold Mining Company ("SGMC"), a
majority-owned subsidiary of USE, is shut down so far as a prospective mining
operation is concerned, because the current price of gold is too low to raise
the capital necessary to put the properties into production. There are no
current plans to start mining activities at Sutter.
THE OFFERING
Securities Outstanding 12,189,776 shares of common stock, $0.01 par
value.
Securities To Be Outstanding 12,246,159 shares of common
stock, $0.01 par value,
assuming the 56,383
warrants held by the
selling shareholders were
exercised as of the date of
this prospectus.
Securities Offered 342,924 shares of common stock owned or to be
owned by the selling shareholders.
Use of Proceeds We will not receive any proceeds from sale of
shares by the selling shareholders. To the
extent the warrants are exercised, we would
receive up to $225,532, which would be used
for working capital.
Plan of Distribution The offering is made by the selling
shareholders named in this prospectus, to the
extent they sells shares. Sales may be made
in the open market or in private negotiated
transactions, at fixed or negotiated prices.
See "Plan of Distribution."
Risk Factors An investment is subject to risk. See "Risk
Factors."
6
GAS RESERVES FOR BOBCAT FIELD
The following table sets forth estimated proved reserves of gas and the
present value (discounted 10%, referred to as the "PV10") of such reserves as of
December 31, 2002. These reserves are for the Bobcat Field (24 wells, all
producing from the Cook coal, and wells to be drilled to the Cook coal, on
acreage adjacent to the producing wells). The reserve data and the present value
as of that date were prepared by Ryder Scott Company, independent petroleum
engineers. For further information, see Ryder Scott's reserve report included as
an exhibit to registration statement covering this prospectus.
Refer to these definitions when reading the reserve information:
PROVED RESERVES: The estimated quantities of gas that geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions.
PROVED DEVELOPED RESERVES: Proved reserves that can be expected to be
recovered from existing wells with existing equipment and operating methods.
PROVED UNDEVELOPED RESERVES: Proved reserves that are expected to be
recovered from new wells on undrilled acreage.
PRESENT VALUE (also referred to below as the "PV10 VALUE"): The present
value of estimated future revenues to be generated from the production of proved
reserves, net of estimated production and future development costs, using prices
and costs as of the calculation date without future escalation, all without
giving effect to non-property related expenses (such as general and
administrative expenses, debt service, or future income tax expense), or to
depreciation, depletion and amortization, and discounted using an annual
discount rate of 10%.
The PV10 value was prepared using constant prices ($3.00 per Mcf) as of the
calculation date, discounted at 10% per annum on a pre-income tax basis, and is
not intended to represent the current market value of the estimated gas reserves
owned by the company. Note that the PV10 discount factor has been calculated net
of ad valorem and production taxes, but before income taxes. The PV10 discount
factor is not the same as the standardized measure of present value calculations
which are determined on an after-income tax basis.
Proved Reserves Proved Reserves
Developed Undeveloped Total
--------- ----------- -----
Coalbed methane gas (Mmcf) 489.7 95.9 585.6
PV10 Value $ 793,482 $ 94,947 $ 888,429
These estimates of proved reserves have been filed only with the Securities
and Exchange Commission, and have not been included in reports to other federal
agencies.
Note that there are numerous uncertainties inherent in estimating gas
reserves and their estimated values, including many factors beyond the control
of the company. Reservoir engineering is a subjective process of estimating
underground accumulations of gas that cannot be measured exactly. Estimates of
economically recoverable gas, and the future net cash flows which may be
realized from the reserves,
7
necessarily depend on a number of variable factors and assumptions, such as
historical production from the area compared with production from other areas,
the assumed effects of regulations by government agencies, assumptions about
future gas prices and operating costs, severance and excise taxes, development
costs, and workover and remedial costs. The outcomes in fact may vary
considerable from the assumptions.
Estimates of the economically recoverable quantities of gas attributable to
any particular property, the classification of reserves as to proved developed
and proved undeveloped based on risk of recovery, and estimates of the future
net cash flows expected from the properties, as prepared by different engineers
or by the same engineers but at different times, may vary substantially, and the
estimates may be revised up or down as assumptions change.
It is likely that actual production volumes, revenues from production, and
the amount of money spent on a property's reserves, will vary from the
estimates. These variances could be material.
The PV10 discount factor, which is required by Securities and Exchange
Commission for use in calculating discounted future net cash flows for reporting
purposes, is not necessarily the most appropriate discount factor, based on
interest rates in effect in the financial markets, and risks associated with the
gas business.
Generally, the volume of gas production declines as reserves are depleted,
with the rate of decline depending on reservoir characteristics. Except to the
extent we conduct successful exploration and development activities on our other
properties, or acquire properties with proved reserves, or both, our proved
reserves will decline with production. Therefore, our future production depends
on finding or acquiring more reserves.
The business of exploring for, developing, or acquiring reserves is capital
intensive. To the extent operating cash flow is reduced and external capital
becomes unavailable or limited, our ability to make the necessary capital
investment to maintain or expand our gas reserves asset base would be impaired.
There is no assurance future exploration, development, and acquisition
activities will result in additional proved reserves. Even if revenues increase
because of higher gas prices, increased exploration and development costs could
neutralize the increased revenues.
RISK FACTORS
An investment in our common stock is speculative in nature and involves a
high degree of risk. You should carefully consider the following risks and the
other information in this prospectus (including the information incorporated by
reference) before investing.
8
RISK FACTORS INVOLVING THE COMPANY
LACK OF COALBED METHANE PRODUCTION AND ESTABLISHED RESERVES FOR COALBED
METHANE PROPERTIES MAY SLOW DOWN FURTHER EXPLORATION OF THESE PROPERTIES.
Presently we have only one property in production, for which a reserves have
been established (see "Gas Reserves for Bobcat Field" above). We have not
drilled and tested enough wells on the other properties to determine if we have
economic reserves of coalbed methane in place. For some properties, we will have
to establish at least some reserve parameters before gas transmission companies
will build gas lines to our properties, and construction of lines will depend
also on then-current and projected market prices for gas. If we have the
necessary capital, we may elect to build our own lines over to existing
transmission lines near two of our properties in the Powder River Basin in
Wyoming. We can't sell production until the lines and associated gathering lines
and compression stations are constructed.
Due to permitting delays in Montana, we may not realize production from the
Castle Rock and Kirby prospects until late 2003, or later. The Bobcat property
in Wyoming is now in production and other Wyoming properties could be in
production in 2003, but production might be delayed due to low market prices for
gas. Low market prices could delay gas purchasers from building the necessary
lines to move gas from our properties to the major gas transmission lines.
These factors may make it difficult to raise the amount of capital needed
to further explore the coalbed methane production potential in our properties in
a rapid manner. Therefore we may have to seek to raise capital. In the meantime,
we have only limited working capital. See below.
CONTINUED LOW GAS PRICES FOR POWDER RIVER BASIN PRODUCTION MAY HURT OUR
BUSINESS. For September, 2002, RMG received an average price of $0.94 per
Million BTU (MMBtu) of gas produced from the Bobcat field (its only producing
field), with prices ranging from $0.46 to $1.22 per MMBtu. The energy content of
our CBM gas is close to one MMBtu per Mcf (from .96 to .98 MMBtu in 1.00 Mcf)
The Bobcat field is not economic at these low prices. These prices approximate
what other producers in the area were receiving in September 2002, and represent
a negative price differential of approximately 73% compared to the average price
of approximately $3.485 per MMBtu received by producers nationwide. This
negative differential usually narrows to within 60% to 30% of a national average
during the winter months. RMG owns a 27.6% working interest (22% net revenue
interest) in the Bobcat project.
There is no guarantee that increased pipeline capacity planned or under
construction will eliminate the negative price differential or even
significantly reduce it.
Produced and sold gas (net of gas used as fuel for the compressors)
averaged approximately 1,821 MMBtu per day in January 2003(503 MMBtu net rate to
our 27.6% working interest). All gas was sold at market prices (average price
$3.03 per MMBtu), which for January 2003 represented a negative differential of
57% from national average gas prices in that month.
During March 2003, RMG will receive a guaranteed price of $3.49 per MMBtu
for its share of the first 500 MMBtu of gas sold each day with the balance at
market prices.
During February 2003, RMG received a guaranteed price of $3.07 per MMBtu
for its share of the first 1,000 MMBtu of gas sold each day, and an average
price of $4.25 per MMBtu for the balance of gas
9
produced. This guaranteed pricing arrangement may be available to RMG monthly,
at prices negotiated with the gas buyer at the end of each preceding month, or,
RMG may elect to sell on daily market prices.
The guaranteed pricing mechanism may, or may not, prove advantageous to RMG
in those months it is utilized, depending on market price performance during
those months, and in any event, would not insulate RMG from the negative price
differential to the extent it is a significant influence on prices.
The return of sustained low gas prices would impair our ability to raise
capital for RMG and reduce revenues from production coming on line. See the
discussion under the caption "Gathering and Transmission of CBM Gas" in the Form
10-K/A for fiscal 2002.
WE MAY HAVE TO BEGIN TO CURTAIL OPERATIONS IF WE DON'T RAISE MORE CAPITAL
BY JULY 2003. At November 30, 2002, U.S. Energy Corp. had working capital of
$2,166,600, and an accumulated deficit of $36,954,100. Our current level of
operations, including general and administrative overhead, mineral operations
(primarily holding costs for the uranium and gold properties), and costs to
comply with other property lease and permitting obligations for the coalbed
properties, are estimated to cost $2,900,000 for the six months ending June 30,
2003. However, if we can't realize cash from liquidating assets, or other
sources, or if RMG spends more money on exploration than will be covered by
current arrangements, then under these circumstances additional equity financing
may be necessary to sustain operations starting in July 2003. There are no
current commitments for such future financing as may be necessary.
Our strategy for RMG contemplates a total capital budget of up to
$50,000,000 through calendar 2003 to continue exploring our coalbed methane
properties, put them into production, and to acquire more properties. The cash
requirements for our coalbed methane business are in addition to working capital
requirements. However, lack of production and established reserves may make it
difficult to raise this amount of money in the near future. Therefore, we may
have to seek to raise capital in smaller amounts over time, which efforts
probably will extend well into calendar 2004. See the preceding risk factor.
WE ARE SUBJECT TO CERTAIN KINDS OF RISK WHICH ARE UNIQUE TO THE
MINERALS BUSINESS. The exploration for and production of minerals is highly
speculative and involves risks different from and in some instances greater than
risks encountered by companies in other industries. Many exploration programs do
not result in the discovery of mineralization and any mineralization discovered
may not be of sufficient quantity or quality. Also, the mere discovery of
promising mineralization may not warrant production, because the minerals
(including methane gas) may be difficult or impossible to extract (produce) on a
profitable basis.
Profitability of any mining and production we may conduct will involve a
number of factors, including, but not limited to: the ability to obtain all
required permits; costs of bringing the property into production; the
construction of adequate production facilities; the availability and costs of
financing; keeping ongoing costs of production at economic levels; and market
prices for the metals or hydrocarbons to be produced staying above production
costs. Our properties, or properties we might acquire in the future, may not
contain deposits of minerals or coalbed methane gas that will be profitable to
produce.
In addition, all forms of mineral (and oil and gas and coalbed methane)
exploration and production require permits to have been issued by various
federal and state agencies. See below.
DELAYS IN OBTAINING PERMITS FOR METHANE WELLS COULD IMPAIR OUR BUSINESS.
Drilling and producing coalbed methane wells requires obtaining permits from
various governmental agencies. The
10
ease of obtaining the necessary permits depends on the type of mineral ownership
and the state in which the property is located. Intermittent delays in the
permitting process can reasonably be expected throughout the development of any
play. For example, there is currently a temporary moratorium for drilling
coalbed methane wells on fee and state lands in Montana. We may shift our
exploration and development strategy as needed to accommodate the permitting
process. As with all governmental permit processes, permits may not be issued in
a timely fashion or in a form consistent with our plan of operations.
THE COMPANY'S POISON PILL COULD DISCOURAGE SOME ADVANTAGEOUS TRANSACTIONS.
We have adopted a shareholder rights plan, also known as a poison pill (see
"Description of Securities"). The plan is designed to discourage a takeover of
the company at an unfair low price. However, it is possible that the board of
directors and the takeover acquiror would not agree on a higher price, in which
case the takeover might be abandoned, even though the takeover price was at a
significant premium to market prices. Therefore, as a result of the mere
existence of the plan, shareholders would not receive the premium price.
COMPLIANCE WITH ENVIRONMENTAL REGULATIONS MAY BE COSTLY. Our business
(mostly coalbed methane) is intensely regulated by government agencies. Permits
are required to drill and pump methane wells, explore for minerals, operate
mines, build and operate processing plants, and handle and store waste. The
regulations under which permits are issued change from time to time to reflect
changes in public policy or scientific understanding of issues. If the economics
of a project would not justify the changes, we might have to abandon the
project.
The company must comply with numerous environmental regulations on a
continuous basis, to comply with the United States Clean Air Act, the Clean
Water Act, the Resource Conservation and Recovery Act ("RCRA"), and the
Comprehensive Environmental Response Compensation Liability Act ("CERCLA"). For
example, water and dust discharged from mines and tailings from prior mining or
milling operations must be monitored and contained and reports filed with
federal, state and county regulatory authorities. Additional monitoring and
reporting is required by the United States Nuclear Regulatory Commission for
uranium mills even if not currently operating (like the company's uranium mill
at Ticaboo, Utah). The Abandoned Mine Reclamation Act in Wyoming and similar
laws in other states where we have properties impose reclamation obligations on
abandoned mining properties, in addition to or in conjunction with federal
statutes.
Failure to comply with these regulations could result in substantial fines
and environmental remediation orders. For information on the company's bonding
requirements to date, see note K to the audited financial statements in the 2002
Form 10-K/A.
COMMODITY PRICE FLUCTUATIONS MAY BE DIFFICULT TO MANAGE AND COULD CAUSE
LOSSES. Gold, uranium and gas prices can be volatile. Sharp swings in market
prices make budgeting and operations more difficult. Sustained lower prices can
result in impairment of the financial value of the mineral property purchased as
well as the facilities built to process the material (such as mills or gas
compression stations). Hedging activities, if available for the commodity, can
protect against price swings but may result in locking a company into a lower
than market price over time.
FUTURE EQUITY TRANSACTIONS, INCLUDING EXERCISE OF OPTIONS OR WARRANTS,
COULD RESULT IN DILUTION. From time to time the company sells restricted stock
and warrants, and convertible debt, to investors in private placements conducted
by broker-dealers, or in negotiated transactions. Because the
11
stock is restricted, the stock is sold at a greater discount to market prices
compared to a public stock offering, and the exercise price of the warrants
sometimes is at or even lower than market prices. These transactions cause
dilution to existing shareholders. Also, from time to time, options are issued
to employees and third parties, with exercise prices equal to market. Exercise
of in-the-money options and warrants will result in dilution to existing
shareholders; the amount of dilution will depend on the spread between market
and exercise price, and the number of shares involved. The company will continue
to grant options to employees with exercise prices equal to market price at
grant date, and in the future may sell restricted stock and warrants, all of
which may result in dilution to existing shareholders. See also "Registration
for Resale of Additional Shares May Depress Market Prices."
TERMS OF SUBSEQUENT FINANCINGS MAY ADVERSELY IMPACT YOUR INVESTMENT. We may
have to raise equity, debt or preferred stock financing in the future. Your
rights and the value of your investment in the common stock could be reduced.
For example, if we have to issue secured debt securities, the holders of the
debt would have a claim to our assets that would be prior to the rights of
stockholders until the debt is paid. Interest on these debt securities would
increase costs and negatively impact operating results. Preferred stock could be
issued in series from time to time with such designations, rights, preferences,
and limitations as needed to raise capital. The terms of preferred stock could
be more advantageous to those investors than to the holders of common stock. In
addition, if we need to raise more equity capital from sale of common stock,
institutional or other investors may negotiate terms at least and possibly more
favorable than the terms of this offering. Shares of common stock which we sell
could be sold into the market, which could adversely affect market price. See
"Risk Factor Involving This Offering" below.
THERE MAY BE RISKS RELATED TO OUR PRIOR USE OF ARTHUR ANDERSEN LLP AS OUR
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT. The consolidated balance sheet of U.S.
Energy Corp. for the year ended May 31, 2000 and the related consolidated
statements of operations, shareholders equity and cash flows for each of the two
years in the period ended May 31, 2000 included in the Annual Report on Form
10-K/A for the year ended May 31, 2002, as amended, and incorporated by
reference into this prospectus, to the extent and for the periods indicated in
their report, have been audited by Arthur Andersen LLP, independent certified
public accountants.
The recent obstruction of justice conviction of Arthur Andersen LLP may
adversely affect Arthur Andersen LLP's ability to satisfy any claims arising
from the provision of auditing services to us, including claims that may arise
out of Arthur Andersen LLP's audit of our financial statements incorporated by
reference in this prospectus for the years ended May 31, 2000. Arthur Andersen
LLP has been convicted of federal obstruction of justice arising from the
government's investigation of Enron Corp. Should we seek to access the public
capital markets to raise money for the Company before October 1, 2003, SEC rules
will require us to include or incorporate by reference in any prospectus audited
financial statements for the fiscal year ended May 31, 2000, which has been
audited by Arthur Andersen LLP. If the SEC ceases accepting financial statements
audited by Arthur Andersen LLP, we could be unable to access the public capital
markets until after October 1, 2003, unless Grant Thornton LLP, our current
independent accounting firm, or another independent accounting firm, is able to
re-audit the financial statements originally audited by Arthur Andersen LLP. Any
delay or inability to access the public capital markets caused by these
circumstances could have a material adverse effect on our business,
profitability, and growth prospectus.
The SEC's rules would not require the use of the financial statements for
the fiscal year ended May 31, 2002, in any prospectus we file after October 1,
2003.
12
RISK FACTOR INVOLVING THIS OFFERING
REGISTRATION FOR RESALE OF ADDITIONAL SHARES MAY DEPRESS market prices.
From time to time we have funded operations by selling restricted securities of
subsidiary companies for their operations, then later reacquired those
securities by exchange for shares and warrants of USE. For example, in January
2002, we issued 1,423,460 restricted shares of common stock in exchange for
restricted shares of Rocky Mountain Gas, Inc. and in conversion of preferred
stock of USE, for which the exchanging shareholders, and the holder of the USE
preferred stock, originally had invested $5,309,000. The shares of common stock
of USE were issued based on the market price of $3.92 on December 5, 2001, and
the original investment amount for RMG and preferred stock, plus $270,959 of
interest owed three of the investors. It is anticipated that resale of these
1,423,460 shares of USE common stock will be registered on a Form S-3
registration statement . An initial registration statement for resale of these
shares was filed with the Securities and Exchange Commission in May 2002.
A third Form S-3 registration statement will be filed with the Securities
and Exchange Commission also in March 2003 for the shares covered by the
transactions described below.
On May 30, 2002, we borrowed $1,000,000 from Caydal, LLC, a private lender
and shareholder of U.S. Energy Corp. The two year secured loan is convertible
into restricted shares of U.S. Energy Corp. common stock at the rate of 1 share
for $3.00 of principal (a maximum of 333,333 shares), or into restricted shares
of common stock of our subsidiary Rocky Mountain Gas, Inc. at the rate of 1
share for $1.50 of principal. In addition, USE issued to the lender a warrant to
purchase until May 30, 2005, 120,000 shares of USE restricted common stock, at
$3.00 per share, and RMG issued to the lender a warrant to purchase until May
30, 2005, 120,000 shares of RMG restricted common stock, at $1.50 per share.
VentureRound Group ("VRG"), a licensed broker-dealer, acted as the lender's
agent in the transaction, for which services USE paid VRG $25,000 cash and
issued to 31 persons who own equity interests in VRG warrants to purchase until
May 30, 2005, 30,000 restricted shares of common stock of U.S. Energy Corp., at
$3.00 per share.
VRG also served as financial advisor to the company in connection with a
private financing by the company in February and March 2002. In connection with
that transaction, warrants to purchase 28,192 shares at $4.00 are held by 36
persons who own equity interests in VRG, issued as of March 25, 2002, expiring
on March 25, 2004. In connection with an earlier financing by the company, the
company issued warrants to purchase 3,000 shares at $3.75 to one person who owns
an equity interest in and is associated (licensed) with VRG; these warrants were
issued as of October 18, 2001 and expire on October 18, 2006.
In each of the financing or advisory transactions in which VRG was
involved, the services provided by VRG were provided by persons associated with
(licensed with) a broker-dealer registered with the Securities and Exchange
Commission. The warrants to purchase stock in USE were issued in partial
consideration for these services provided by licensed persons, but distributed
to the owners of VRG, including the persons licensed as brokers (who also own
equity interests in VRG). Those persons who received warrants as owners of VRG,
but who are not licensed as brokers, did not provide securities- transaction
services and did not otherwise pay for the warrants.
Effective September 19, 2002, we entered into amendments to warrants that
were to expire on that date. The original warrants were issued for the exercise
of up to 67,025 shares of the company's common stock to persons who had been
associated (licensed) with a broker-dealer which raised funds in 1997 for
13
Yellowstone Fuels Corp., a subsidiary of the company. As consideration for an
extension of time for exercising the warrants, the holders agreed to waive
certain rights relating to anti-dilutive and cashless exercise provisions of the
original warrants. The warrants, which now cover 74,564 shares, are exercisable
at $3.64 per share, and now expire on July 19, 2003.
On November 19, 2002, we borrowed $500,000 from Tsunami Partners, L.P., a
private lender. The two year secured loan is convertible into restricted shares
of U.S. Energy Corp. common stock at the rate of 1 share for $3.00 of principal
(a maximum of 166,666 shares), or into restricted shares of common stock of our
subsidiary Rocky Mountain Gas, Inc. at the rate of 1 share for $2.00 of
principal. In addition, U.S. Energy Corp. issued to the lender a warrant to
purchase until November 19, 2005, 60,000 shares of U.S. Energy Corp. restricted
common stock, at $3.00 per share, and RMG issued to the lender a warrant to
purchase until November 19, 2005, 60,000 shares of RMG restricted common stock,
at $2.00 per share. VRG acted as the agent in the transaction, for which
services USE paid VRG $20,000 cash and issued a warrant to purchase until
November 19, 2005, 15,000 restricted shares of common stock of U.S. Energy
Corp., at $3.00 per share. These warrants were issued to the equity owners of
VRG (see above), including Robert H. Taggart, a licensed broker who provided
securities-transaction services.
On December 9, 2002, the company and its subsidiary Sutter Gold Mining
Company entered into a settlement agreement relating to certain litigation
involving SGMC. As a result of the settlement the company issued 20,000 shares
of U.S. Energy Corp. common stock to trusts.
On February 3, 2003, the company issued 8,231 shares to Philip A. Nicholas
as partial payment for legal services; and 5,474 shares and an option to
purchase 18,000 shares of the company's common stock at $3.00 per share as
partial payment for legal services to Robert A. Nicholas.
It is anticipated that resale of the foregoing 33,705 shares of USE common
stock, and resale of the 330,756 shares on exercise of the warrants, 18,000
shares on exercise of options and 499,999 shares which may be issued by
conversion of debt, into the public market (a total of 882,460 shares) will be
registered on the third Form S-3 registration statement to be filed with the
Securities and Exchange Commission in March 2003.
Such resales could adversely affect market prices for the investors who buy
shares in this offering.
From time to time, we may sell restricted shares to raise capital.
Registration for resale of such additional shares could adversely affect market
prices for investors who buy shares in this offering.
REPRESENTATIONS ABOUT THIS OFFERING
We have not authorized anyone to provide you with information different
from that contained in this prospectus. This prospectus is not an offer to sell
nor does it seek an offer to buy the shares in any jurisdiction where this offer
or sale is not permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus (or any supplement), regardless
of when it is delivered or when any shares are sold.
FORWARD LOOKING STATEMENTS
We make statements in this prospectus which are considered to be "forward
looking" statements. All statements (other than statements of historical fact)
about financial and business strategy and the performance objectives of
management are forward-looking statements. These forward-looking
14
statements are based on the beliefs of management, as well as assumptions made
by and information currently available to them. These statements involve risks
that are both known and unknown, including unexpected economic and market
factors, failure to accurately forecast operating and capital expenditures and
capital needs (due to rising costs and/or different drilling and production
conditions in the field), changes in timing or conditions for getting regulatory
approvals to drill coalbed methane wells where needed, and other business
factors. The use of the words "anticipate," "believe," "estimate," "expect,"
"may," "will," "should," "continue," "intend" and similar words or phrases, are
intended by us to identify forward-looking statements (also known as "cautionary
statements" because you should be cautious in evaluating such statements in the
context of all the information in this prospectus and the information
incorporated by reference into this prospectus). These statements reflect our
current views with respect to future events. They are subject to the realization
in fact of assumptions, but what we now think will happen may be turn out much
different, and our assumptions may prove to have been inaccurate or incomplete.
The investment risks discussed under "Risk Factors" specifically address
all of the material risk factors that may influence future operating results and
financial performance. Those investment risks are not "boiler plate" but are
intended to tell you about the uncertainties and risks inherent in our business
at the present time which you need to evaluate before making your investment
decision.
DESCRIPTION OF SECURITIES
COMMON STOCK. We are authorized by our articles of incorporation to issue
an unlimited number of shares of common stock, $0.01 par value, and 100,000
shares of preferred stock, $0.01 par value.
Shares of common stock may be issued for such consideration and on such
terms as determined by the board of directors, without shareholder approval.
Holders are entitled to receive dividends when and as declared by the board of
directors out of funds legally available therefor. There are no restrictions on
payment of cash dividends. Cash dividends have not been declared on the common
stock, although a 1 for 10 stock dividend was declared in November 1990. It is
anticipated that future earnings would be reinvested into operations and not
declared as dividends on the common stock. All holders of shares of common stock
have equal voting rights, and the shares of common stock sold in this offering
will have the same rights. Holders of shares of common stock are entitled to one
vote per share on all matters upon which such holders are entitled to vote, and
further have the right to cumulate their votes in elections of directors.
Cumulation means multiplying the number of shares held, by the number of
nominees to the board of directors, then voting the product among the nominees
as desired. Directors are elected by a plurality of the votes cast.
Shares of common stock sold in this offering are fully-paid and
nonassessable shares of U.S. Energy Corp.
Pursuant to our articles of incorporation and as permitted by Wyoming law,
shares of common stock held by our subsidiaries may be voted by such
subsidiaries as determined by the board of directors of each, in elections of
directors and other matters brought before shareholders.
In September 2001, the company adopted a shareholder rights plan ("poison
pill") and filed the plan with the Securities and Exchange Commission as an
exhibit to Form 8-A. The following three paragraphs briefly state principal
features of the plan, which are qualified by reference to the complete plan,
which is incorporated by reference into this prospectus.
15
Under the plan, the holder of each share of common stock has the right to
purchase (when the rights become exercisable) from the company one-one
thousandth (1/1,000th) of one (1) share of Series P preferred stock at price of
$200.00 for each one-one thousandth (1/1,000th) share of such preferred stock.
The purpose of the plan is to deter an unfairly low priced hostile takeover of
the company, by encouraging a hostile party to negotiate a fair offer with the
board of directors and thus eliminate the poison pill.
The rights trade with the common stock and aren't separable therefrom; no
separate certificate for the rights is issued unless and until there is a
hostile takeover attempted, after which time separate and tradable rights
certificates would be issued.
The rights are not exercisable and never can be unless and until a hostile
(not negotiated with the board) takeover of the company is initiated with the
objective of acquiring 15% of the company's voting stock. If before the takeover
is launched the hostile party comes to agreement with the board of directors
about price and terms and makes a "qualified offer" to buy the stock of the
company, then the board of directors may redeem (buy back) the rights for $0.01
each. But, if such a "qualified offer" isn't agreed upon, then the rights are
exercisable for preferred stock, which in turn would enable the holder to
convert the preferred stock into voting common stock of the company at a price
equal to one-half the market price.
PREFERRED STOCK. Shares of preferred stock may be issued by the board of
directors with such dividend, liquidation, voting and conversion features as may
be determined by the board of directors without shareholder approval. In June
2000, we established a Series A Convertible Preferred Stock, for which 1,000
shares of preferred stock are reserved for sale at $10,000 per share; 200 shares
were issued and outstanding at November 30, 2001. In January 2002, we converted
the 200 outstanding shares of Series A stock by issuing 513,140 shares of
restricted common stock to the holder, based on $2,000,000 invested plus $11,507
of interest (annual rate of 7.5%) which accrued in December 2001 (previous
interest had been paid in cash), divided by $3.92 (market price for USE stock on
December 5, 2001).
WARRANTS. As of the date of this prospectus, warrants and options (to
persons or entities other than employees, officers or directors of the company)
are issued and outstanding to purchase a total of 743,870 shares of common
stock:
o Options to purchase 18,000 shares at $3.00 held by Robert A. Nicholas,
issued February 3, 2003 and expiring February 2, 2004, issued as partial payment
for legal services. Resale of shares acquired on exercise of these options is
not yet covered by a resale prospectus.
o Warrants to purchase 60,000 shares at $3.00 held by Tsunami Partners,
L.P., issued on November 19, 2002 and expiring November 19, 2005, issued in
connection with a $500,000 convertible loan to the company from Tsunami, L.P.
Resale of shares acquired on exercise of these warrants is not yet covered by a
resale prospectus.
o Warrants to purchase 15,000 shares at $3.00 held by 34 persons who own
equity interests in VentureRound Group ("VRG"), a licensed broker-dealer, which
served as financial advisor in connection with the Tsunami loan transaction. The
warrants were issued as of November 19, 2002, expiring on November 19, 2005.
Resale of shares acquired on exercise of these warrants is not yet covered by a
resale prospectus.
16
o Warrants to purchase 120,000 shares at $3.00 held by Caydal, LLC, issued
on May 30, 2002 and expiring May 30, 2005, issued in connection with a
convertible loan to the company from Caydal. Resale of shares acquired on
exercise of these warrants is not yet covered by a resale prospectus.
o Warrants to purchase 30,000 shares at $3.00 held by 31 persons who own
equity interests in VRG, which served as financial advisor in connection with
the Caydal loan transaction. The warrants were issued as of May 30, 2002,
expiring on May 30, 2005. Resale of shares acquired on exercise of these
warrants is not yet covered by a resale prospectus.
o Warrants to purchase 3,000 shares at $3.75 per share held by one person
who owns an equity interest in VRG, which served as the financial advisor to the
company in connection with the private transactions from June to October 2001
(see above). These warrants were issued as partial compensation for services
provided to the company by the individual who owns an equity interest in VRG and
who is associated (licensed) with VRG. These warrants were issued as of October
18, 2001 and expire October 18, 2006. Resale of shares acquired on exercise of
these warrants is not yet covered by a resale prospectus.
o Warrants to purchase 28,192 shares at $4.00 held by 36 persons who own
equity interests in VRG, issued as of March 25, 2002, expiring on March 25,
2004, which served as the financial advisor to the company in connection with
the private transactions in February and March 2002. Resale of shares acquired
on exercise of these warrants is not yet covered by a resale prospectus.
o Options to purchase 20,000 shares at $3.90 held by James E. Seale issued
as of January 10, 2002, expiring on January 9, 2005 for consulting services.
Resale of shares acquired on exercise of these options is not yet covered by a
resale prospectus.
o Warrants to purchase 10,000 shares at $3.75 held by Kevin P. Daly, issued
as of October 18, 2001 and expiring October 18, 2003. Resale of shares acquired
on exercise of these warrants is covered by a prospectus filed pursuant to Rule
424(b)(2).
o Warrants to purchase 50,000 shares at $3.00 held by Caydal, LLC, issued
on October 24, 2001 and expiring October 24, 2003. Resale of shares acquired on
exercise of these warrants is covered by a prospectus filed pursuant to Rule
424(b)(2).
o Warrants to purchase 67,936 shares at $3.75 held by 18 investors who
purchased shares and warrants in private transactions with the company from June
29, 2001 to October 18, 2001. These warrants were issued as of October 18, 2001
and expire October 18, 2003. Resale of shares acquired on exercise of these
warrants is covered by a prospectus filed pursuant to Rule 424(b)(2).
o Warrants to purchase 34,761 shares at $3.75 held by persons who equity
interests in VRG, which served as the financial advisor to the company in
connection with the private transactions from June to October 2001 (see above).
These warrants were issued as partial compensation for services provided to the
company by persons who own equity interests in VRG, which services were provided
by licensed brokers. These warrants were issued as of October 18, 2001 and
expire October 18, 2006. Resale of shares acquired on exercise of these warrants
is covered by a prospectus filed pursuant to Rule 424(b)(2).
o Warrants to purchase 11,034 shares at $3.75 held by persons who own
equity interests in VRG. These warrants were issued for financial consulting
services provided by persons who own equity interests
17
in VRG. The services were provided by licensed brokers. These warrants were
issued as of November 2, 2001 and expire November 2, 2006. Resale of shares
acquired on exercise of these warrants is covered by a prospectus filed pursuant
to Rule 424(b)(2).
o Warrants to purchase 74,564 shares at $3.64, issued in exchange for
Yellow Stone Fuels Corporation (a subsidiary of USE) warrants under a share and
warrant exchange agreement between YSFC and USE. The warrants expire July 19,
2003, and were issued to persons who had been associated (licensed) with a
broker-dealer (American Fronteer f/k/a RAF Financial) which raised funds for
YSFC in 1997. Resale of shares acquired on exercise of these warrants is not yet
covered by a resale prospectus.
o Options issued February 8, 1999 to purchase 75,000 shares at $2.25 per
share (expiring February 8, 2004), to consultant Michael Baybak. Resale of the
shares acquired on exercise of these options is not covered by a resale
prospectus.
o Options issued February 8, 1999 to purchase 20,000 shares at $2.62 per
share (expiring March 15, 2003), to (former) consultant R. J. Falkner. Resale of
the shares acquired on exercise of these options is covered by a prospectus
filed pursuant to Rule 424(b)(2).
o Warrants issued May 14, 2001 to purchase 10,000 shares at $4.70 per share
(expiring May 14, 2003), to consultant Riches in Resources, Inc. The warrants
are not exercisable unless the company's stock price closes at or above $6.50
per share for 90 consecutive days before expiration of the options. Resale of
the shares acquired on exercise of these options is covered by a prospectus
filed pursuant to Rule 424(b)(2).
o Warrants issued May 14, 2001 to purchase 20,000 shares at $4.70 per share
(expiring May 14, 2003), to consultant Riches in Resources, Inc. The warrants
are not exercisable until the company's stock price closes at or above $10.00
per share for 90 consecutive days. Resale of the shares acquired on exercise of
these options is covered by a prospectus filed pursuant to Rule 424(b)(2).
o Options issued April 11, 2001 to purchase 20,000 shares at $3.98 per
share, expiring April 10, 2006, to consultant (former) R. J. Falkner and
Company. Resale of the shares acquired on exercise of these options is covered
by a prospectus filed pursuant to Rule 424(b)(2).
o Warrants to purchase 56,383 shares at $4.00 per share, held by 16
investors who purchased shares and warrants in private transactions with the
company in February and March, 2002. These warrants were issued in February and
March 2002, and will expire two years after issuance. Resale of the shares
acquired on exercise of these warrants is covered by this prospectus.
OPTIONS. USE has granted options to employees, officers and directors to
purchase shares at exercise prices from $2.00 to $3.90 per share. At March 6,
2003, a total of 3,690,945 shares may be issued upon exercise of these options.
These options expire at various times from 2008 to 2012.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares by the
selling shareholders pursuant to this prospectus. We will receive proceeds from
exercise of the warrants held by 16 investors, if they so exercise, which
proceeds will be used by the company for working capital.
18
SELLING SHAREHOLDERS
This prospectus covers the offer and sale by the selling shareholders of up
to 358,309 shares of common stock ($0.01 par value) owned or to be owned on
exercise of warrants by the selling shareholders. All shares issued are
restricted securities as that term is defined in rule 144 of the Securities and
Exchange Commission under the Securities Act of 1933, and will remain restricted
unless and until such shares are sold pursuant to this prospectus, or otherwise
are sold in compliance with rule 144 or the restriction removed in accordance
with rule 144(k).
None of the selling shareholders are affiliates of the company or any
subsidiary of the company.
Of the shares covered by this prospectus:
o 266,541 shares are held by 14 accredited investors who purchased
shares at $3.25 per share (and warrants, see below) from the company
during the period February 20, 2002 to March 26, 2002, in a private
placement conducted by the company (see below). A total of 281,926
shares were sold in this private placement (for total proceeds of
$916,254). 15,385 of the shares were sold by two of the original
investors under rule 144. Resale of the remaining 266,541 is covered
by this prospectus.
o 56,383 shares are issuable on exercise of warrants held by the 16
investors, at an exercise price of $4.00 per share (expire two years
from date of original investment in February and March 2002).
o 20,000 shares are held by Robert H. Taggart, Jr. which were issued to
him in May 2002, in part for the exchange of warrants to purchase
6,703 shares of common stock of USE (at $3.64 per share) which he
acquired in a share exchange agreement with Yellowstone Fuels
Corporation, and for other services. Mr. Taggart, a securities broker
presently associated with VentureRound Group, L.L.C., previously was
associated with another broker-dealer which raised equity financing
for Yellowstone; the former firm compensated Mr. Taggart by
transferring to him warrants to purchase 6,703 shares of Yellowstone,
subsequently exchanged (along with all other Yellowstone warrants held
by the former firm) for warrants to purchase shares of USE. The
Yellowstone and USE warrants (acquired by exchange of his Yellowstone
warrants) held by Mr. Taggart have been canceled. Additional
consideration for the issuance of the 20,000 shares to Mr. Taggart are
his service to USE for financial public relations and the introduction
of the company to other stock brokerage firms. These services have not
involved capital formation activities by USE.
The selling shareholders may offer their shares for sale on a continuous
basis pursuant to rule 415 under the 1933 Act.
The following information has been provided to us by the selling
shareholders. All numbers of shares, and percentage ownership, are stated on a
pro forma basis as of prospectus date assuming issuance of 56,383 shares upon
exercise of all warrants listed above. There are 12,189,776 shares issued and
outstanding on the initial date of this prospectus; on a pro forma basis,
12,246,159 shares are outstanding, which number assumes exercise only of the
warrants held by the selling shareholders which are covered by this prospectus.
Additional shares issuable on possible exercise of additional options and
warrants presently outstanding, but not held by the selling shareholders, are
not included in the pro forma calculation.
19
Number of Number of Shares
Shares of of Common Stock Percent Owned
Name and Address Common Stock Registered Prior to After
of Beneficial Owner Owned (1) For Sale Offering Offering(2)
---------------------------------------------------------------------------------------------------
Jeffrey J. Schmitz 4,266 3,692 (2) * *
10356 E. Weaver Circle
Englewood, CO 80111
Vincent N. Schmitz 22,629 18,462 (2) * *
4207 Montview Blvd.
Denver, CO 80207
James V. Rauh 19,036 18,462 (2) * *
7234 South Uravan Ct.
Aurora, CO 80016
Dr. Michael M. Vuocolo DDS 19,036 18,462 (2) * *
407 Arrowhead BL 123
Jonesboro, GA 30236
Peyton Jackson 12,290 9,230 (2) * *
8794 Standish Road
Alexandria, VA 22308
P-Con Consulting 9,230 9,230 (2) * *
5432 Broadmoor Street
Alexandria, VA 22315
Donald F. Kern 27,692 27,692 (2) * *
2737 Nestlebrook Trail
Virginia Beach, VA
Fiserv Securities Inc. C/FBO 1,731 1,538(2) * *
Richard T. Huebner IRA
16318 E. Berry Avenue
Aurora, CO 80015
Fiserv Securities Inc. C/FBO 1,835 1,539(2) * *
Steven M. Bathgate IRA
6376 E. Tufts Avenue
Englewood, CO 80111
Generation Capital Association 36,924 36,924 (2) * *
1085 Riverside Trace
Atlanta, GA 30328
Dr. Ross Krueger 28,462 18,462 (2) * *
1801 Barrs Suite #605
Jacksonville, FL 32204
20
Number of Number of Shares
Shares of of Common Stock Percent Owned
Name and Address Common Stock Registered Prior to After
of Beneficial Owner Owned (1) For Sale Offering Offering(2)
---------------------------------------------------------------------------------------------------
John J. Lais III 30,574 30,000 (2) * *
2602 Woodland Court
McKinney, TX 75070
James A. McCaughey 83,268 46,154 (2) * *
First Bank
73-000 Hwy. 111
Palm Desert, CA 92260
Eggleston's, LLC 9,230 9,230 (2) * *
8109 Wellington Road
Alexandria, VA 22308
Jason Wayne Assad 18,462 18,462 (2) * *
6585 Sterling Drive
Suwanee, GA 30024
William N. Anderson 55,385 55,385 (2) * *
6650 Oakhills Drive
Bloomfield, MI 48301
Robert H. Taggart, Jr. 45,148 20,000 * *
7163 South Chapparal Circle East
Auroro, CO 80016
* Less than 1%.
(1) Includes shares underlying warrants which may not have yet been exercised
and are not covered by this resale prospectus.
(2) Includes shares issuable on exercise of warrants, at $4.00 per share, and
assumes exercise of such warrants by the selling shareholder.
(3) Assumes all shares are sold by the selling shareholder.
The shares owned or to be owned by the selling shareholders are registered
under rule 415 of the general rules and regulations of the Securities and
Exchange Commission, concerning delayed and continuous offers and sales of
securities. In regard to the offer and sale of such shares, we have made certain
undertakings in Part II of the registration statement of which this prospectus
is part, by which, in general, we have committed to keep this prospectus current
during any period in which the selling shareholders make offers to sell the
covered securities pursuant to rule 415.
21
PLAN OF DISTRIBUTION
The selling shareholders and any of their pledgees, donees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded. These sales may be at fixed or negotiated prices. The selling
shareholders may use any one or more of the following methods when selling
shares:
O ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
O block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
O purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
O an exchange distribution in accordance with the rules of the
applicable exchange;
O privately negotiated transactions;
O short sales (sales of shares not owned in hopes of a decline in market
price so the seller can purchase in the market at a lower price to be
able to deliver the shares sold);
O broker-dealers may agree with the selling shareholder to sell a
specified number of such shares at a stipulated price per share;
O a combination of any such methods of sale; and
O any other method permitted pursuant to applicable law.
The selling shareholders also may resell all or a portion of the shares in
open market transactions in reliance upon rule 144 under the 1933 Act, provided
they meet the criteria and conform to the requirements of the rule.
The selling shareholders may also engage in short sales against the box (a
short sale where the seller borrows the stock from a third party, hoping the
market price will decline), puts and calls and other transactions in securities
of the company or derivatives of company securities and may sell or deliver
shares in connection with these trades. The selling shareholders may pledge
shares to brokers under the margin provisions of customer agreements. If a
selling shareholder defaults on a margin loan, the broker may, from time to
time, offer and sell the pledged shares. The selling shareholders have advised
the company that they have not entered into any agreements, understandings or
arrangements with any underwriters or broker-dealers regarding the sale of their
shares other than ordinary course brokerage arrangements, nor is there an
underwriter or coordinating broker acting in connection with the proposed sale
of shares by the selling shareholders.
Broker-dealers engaged by the selling shareholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling shareholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
22
negotiated. The selling shareholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
We are required to pay all fees and expenses incident to the registration
of resale of the shares covered by this prospectus. However, all discounts,
commissions or fees incurred in connection with the sale of the shares offered
hereby will be paid by the selling shareholders. The company has agreed to
indemnify the selling shareholders against certain losses, claims, damages and
liabilities, including liabilities under the 1933 Act. We have been advised that
in the opinion of the Securities and Exchange Commission, indemnification for
liabilities under the 1933 Act is against public policy, and therefore is
unenforceable. See below.
In order to comply with the securities laws of certain states, if
applicable, the shares will be sold in such jurisdictions, if required, only
through registered or licensed brokers or dealers. In addition, in certain
states the shares may not be sold unless the shares have been registered or
qualified for sale in such state or an exemption from registration or
qualification is available.
DISCLOSURE OF COMMISSION POSITION
ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our articles of incorporation and bylaws provide that we shall indemnify
directors provided that the indemnification shall not eliminate or limit the
liability of a director for breach of the director's duty or loyalty to the
corporation or its stockholders, or for acts of omission not in good faith or
which involve intentional misconduct or a knowing violation of law.
Wyoming law permits a corporation, under specified circumstances, to
indemnify its directors, officers, employees or agents against expenses
(including attorney's fees), judgments, fines and amounts paid in settlements
actually and reasonably incurred by them in connection with any action, suit or
proceeding brought by third parties by reason of the fact that they were or are
directors, officers, employees or agents of the corporation, if these directors,
officers, employees or agents acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceedings, had no
reason to believe their conduct was unlawful. In a derivative action, i.e., one
by or in the right of the corporation, indemnification may be made only for
expenses actually and reasonably incurred by directors, officers, employees or
agent in connection with the defense or settlement of an action or suit, and
only with respect to a matter as to which they shall have acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and only
to the extent that the court in which the action or suit was brought shall
determine upon application that the defendant directors, officers, employees or
agents are fairly and reasonably entitled to indemnify for such expenses despite
such adjudication of liability.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
company pursuant to the foregoing provisions, or otherwise (for example, in
connection with the sale of securities), we have been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the 1933 Act, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the company of expenses incurred or paid by a director, officer or controlling
person in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the company will, unless in the opinion of its
23
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Securities Act, and will be
governed by the final adjudication of such issue.
WHERE TO FIND MORE INFORMATION ABOUT US
We have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 under the 1933 Act with
respect to the shares offered by this prospectus. This prospectus, filed as a
part of the registration statement, does not contain certain information
contained in part II of the registration statement or filed as exhibits to the
registration statement. We refer you to the registration statement and exhibits
which may be inspected and copied at the Public Reference Section of the
Commission, 450 5th Street, NW, Washington, D.C. 20549, at prescribed rates; the
telephone number for the Public Reference Section is 1.800.SEC.0330. The
registration statement and exhibits also are available for viewing at and
downloading from the EDGAR location within the Commission's internet website
(http://www.sec.gov).
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
Our common stock is registered with the Commission under section 12(g) of
the Securities Exchange Act of 1934 (the "1934 Act"). Under the 1934 Act, we
file with the Commission periodic reports on Forms 10-K, 10-Q and 8-K, and proxy
statements, and our officers and directors file reports of stock ownership on
Forms 3, 4 and 5. These filings may be viewed and downloaded from the
Commission's internet website (http://www.sec.gov) at the EDGAR location, and
also may be inspected and copied at the Public Reference Section of the
Commission, 450 5th Street, NW, Washington, D.C. 20549, at prescribed rates; the
telephone number for the Public Reference Section is 1.800.SEC.0330. Information
on the operation of the Public Reference Room can be obtained by calling the
Commission at 1.800.SEC.0330.
All of the information contained in the following documents filed with the
Commission is incorporated by reference into this prospectus: Amended Annual
Report on Form 10-K/A for fiscal year ended May 31, 2002 filed March 3, 2003;
Quarterly Report on Form 10-Q for the three and six months ended November 30,
2002 filed January 14, 2003; Quarterly Report on Form 10-Q for the three months
ended August 31, 2002 filed October 15, 2002; Proxy Statement for Annual Meeting
of Shareholders in December 2002; Report on Form 8-K on September 20, 2001
reporting adoption in calendar 2001 of a "shareholder rights plan" also commonly
known as a "poison pill;" Report on Form 8-K on December 20, 2001 regarding
status of coalbed methane operations; Report on Form 8-K on April 23, 2002,
reporting that Suncor did not exercise an option to acquire interest in coalbed
methane properties and reporting a contract to purchase the Bobcat coalbed
methane property in Wyoming; Form 8-K on June 6, 2002, reporting closing of the
contract to purchase the Bobcat property; Form 8-K on June 10, 2002 providing
further information on the closing of the contract to purchase the Bobcat
property, and borrowing $1,000,000 in a secured convertible loan transaction;
Form 8-K on July 23, 2002, reporting the Phelps Dodge legal proceedings; Form
8-K on August 20, 2002, reporting the entry of an order by the Special Master
(appointed by the Court in the Nukem litigation) to provide monthly reports on
uranium transactions; Form 8-K on September 5, 2002 concerning a research
report; Form 8-K/A on September 24, 2002 amending the Form 8-K on the research
report; Form 8-K on December 9, 2002 reporting an extension of time granted the
Special Master in the Nukem litigation to file his final accounting report and
borrowing $500,000 in a secured convertible debt transaction; Form 8-K on
December 18, 2002 reporting results of the company's annual meeting of
shareholders and change in fiscal year end; Form 8-K on January 8, 2003
reporting RMG option to purchase coalbed methane properties; Form 8-K on
February 7,
24
2003 reporting an Option Agreement to acquire additional coalbed methane
properties, exploration results on Montana properties now held, and improved gas
prices for Bobcat production; Form 8-K on March 3, 2003 reporting an additional
extension of time granted the Special Master in the Nukem litigation to file his
final accounting report; and Form 8-A, on September 20, 2001, registering the
preferred stock purchase rights (in connection with the shareholder rights
plan). The SEC file number for all of these filings is 000-06814.
All of the information which will be contained in our future Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q, Proxy Statements, and Reports on
Form 8-K, and any other filings we make pursuant to sections 13(a), 13(c), 14 or
15(d) of the 1934 Act, all after the date of this prospectus, also are
incorporated by reference into this prospectus as of the dates when such
documents are filed with the Commission.
We will provide to you copies of any or all of the information in these
documents, and any exhibits to them, without charge, upon request addressed to
U.S. Energy Corp., 877 North 8th West, Riverton, Wyoming 82501, attention Daniel
P. Svilar, Secretary. You also may request these documents by telephone:
1.307.856.9271. Our internet address is www.useg.com. Our 1934 Act filings are
not directly available through our internet address (website), but you can
access those filings through the link to Nasdaq at our internet address
(website).
LEGAL MATTERS
The validity of the issuance of the shares offered has been passed upon by
The Law Office of Stephen E. Rounds, Denver, Colorado.
EXPERTS
Our consolidated balance sheet as of May 31, 2002 and 2001 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the year ended May 31, 2002 and 2001, have been audited by Grant Thornton LLP,
and are included, with the audit report from Grant Thornton LLP, in the Annual
Report on Form 10-K/A for the fiscal year ended May 31, 2002 in reliance upon
the authority of such firm as experts in accounting and auditing. Our
consolidated balance sheet as of May 31, 2000 and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
two years ended May 31, 2000, have been audited by Arthur Andersen LLP, and are
included along with the audit report of Arthur Andersen LLP, in the Annual
Report on Form 10-K/A for the fiscal year ended May 31, 2001, as amended, in
reliance upon the authority of such firm as experts in giving said report.
Arthur Andersen LLP has not consented to the incorporation by reference of their
report in this prospectus, and we have dispensed with the requirement to file
their consent in reliance upon rule 437a of the Securities Act of 1933. Because
Arthur Andersen LLP has not consented to the incorporation by reference of their
report in this prospectus, you will not be able to recover against Arthur
Andersen LLP under Section 11 of the Securities Act of 1933 for any untrue
statements of a material fact contained in the financial statements audited by
Arthur Andersen LLP or any omissions to state a material fact required to be
stated therein.
The letter report of Ryder Scott Company, which contains certain
information with respect to the company's gas reserves, has been filed as an
exhibit to the registration statement of which this prospectus forms a part. The
information contained in the Ryder Scott Company report is included in this
prospectus in reliance on such firm as experts in such matters.
25
342,924 SHARES COMMON STOCK
U.S. ENERGY CORP.
-------------------
PROSPECTUS
--------------------
____________________, 2003
No dealer, salesman or other person is authorized to give any information
or make any information or make any representations not contained in the
prospectus with respect to the offering made hereby. This prospectus does not
constitute an offer to sell any of the securities offered hereby in any
jurisdiction where, or to any person to whom it is unlawful to make such an
offer. Neither the delivery of this prospectus nor any sale made hereunder
shall, under any circumstances, create an implication that there has been no
change in the information set forth herein or in the business of our company
since the date hereof.
26
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Estimated expenses in connection with the issuance and distribution of
the securities being registered:
Securities and Exchange Commission registration fee...................$ 119.61
National Association of Securities Dealers, Inc. examination fee...... n/a
Accounting ........................................................... 2,000.00
Legal fees and expenses............................................... 2,000.00
Printing ............................................................. n/a
Blue Sky fees and expenses (excluding legal fees)..................... 250.00
Transfer agent ....................................................... n/a
Escrow agent.......................................................... n/a
Miscellaneous......................................................... n/a
Total.................................................................$ 4,369.61
The Registrant will pay all of these expenses.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our articles of incorporation and bylaws provide that we shall indemnify
directors provided that the indemnification shall not eliminate or limit the
liability of a director for breach of the director's duty or loyalty to the
corporation or its stockholders, or for acts of omission not in good faith or
which involve intentional misconduct or a knowing violation of law.
Wyoming law permits a corporation, under specified circumstances, to
indemnify its directors, officers, employees or agents against expenses
(including attorney's fees), judgments, fines and amounts paid in settlements
actually and reasonably incurred by them in connection with any action, suit or
proceeding brought by third parties by reason of the fact that they were or are
directors, officers, employees or agents of the corporation, if these directors,
officers, employees or agents acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceedings, had no
reason to believe their conduct was unlawful. In a derivative action, i.e., one
by or in the right of the corporation, indemnification may be made only for
expenses actually and reasonably incurred by directors, officers, employees or
agent in connection with the defense or settlement of an action or suit, and
only with respect to a matter as to which they shall have acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and only
to the extent that the court in which the action or suit was brought shall
determine upon application that the defendant directors, officers, employees or
agents are fairly and reasonably entitled to indemnify for such expenses despite
such adjudication of liability.
27
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE.
SEQUENTIAL
EXHIBIT NO. TITLE OF EXHIBIT PAGE NO.
----------- ---------------- ----------
3.1 USE Restated Articles of Incorporation.........................[2]
3.1(a) USE Articles of Amendment to
Restated Articles of Incorporation.............................[4]
3.1(b) USE Articles of Amendment (Second) to
Restated Articles of Incorporation
(Establishing Series A Convertible Preferred Stock.............[9]
3.1(c) Articles of Amendment (Third) to
Restated Articles of Incorporation
(Increasing number of authorized shares)......................[14]
3.2 USE Bylaws, as amended through April 22, 1992..................[4]
4.1 Amendment to USE 1998 Incentive
Stock Option Plan (To include Family
Transferability of Options Under SEC Rule 16b)................[11]
4.2 USE 1998 Incentive Stock Option Plan
and Form of Stock Option Agreement 1/99........................[8]
4.3 USE Restricted Stock Bonus Plan,
as amended through 2/94........................................[5]
4.4 Form of Stock Option Agreement, and Schedule
Options Granted January 1, 1996................................[6]
4.5 Form of Stock Option Agreement and Schedule,
Options Granted January 10, 2001..............................[11]
4.6 Form of Investors' Warrant issued in
February and March 2002, and
List of Holders...............................................[21]
4.7 USE 1996 Officers' Stock Award Program (Plan)..................[7]
4.8 USE Restated 1996 Officers' Stock Award Plan and
Amendment to USE 1990 Restricted Stock Bonus Plan..............[7]
28
4.9 Warrant held by Caydal LLC....................................[13]
4.10 Warrant held by Kevin P. Daly................................[13]
4.11 Rights Agreement, dated as of September 19, 2001
between U.S. Energy Corp. and Computershare
Trust Company, Inc. as Rights Agent. The Articles of
Amendment to Articles of Incorporation creating the
Series P Preferred Stock is included herewith as an
exhibit to the Rights Agreement.
Form of Right Certificate (as an exhibit to the
Rights Agreement).
Summary of Rights, which will be sent to all holders
of record of the outstanding shares of Common Stock
of the registrant, also included as an exhibit to the
Rights Agreement..............................................[12]
4.12 Form of Advisor Warrant dated October 18, 2001
and List of Holders ..........................................[14]
4.13 Form of Advisor Warrant dated November 2, 2001
and List of Holders...........................................[14]
4.14 Form of Investor Warrant dated October 18, 2001
and List of Holders...........................................[14]
4.15 Stock Option held by R. Jerry Falkner
dated April 11, 2001..........................................[14]
4.16 Warrant held by Riches In Resources
dated May 14, 2001............................................[14]
4.17 Stock Option held by R. Jerry Falkner dated
October 11, 1999 and First Amendment thereto..................[15]
4.18 Amendment dated April 25, 2002 to
October 11, 1999 Stock Option
Agreement held by R. Jerry Falkner...........................[16]
4.19 USE 2001 Incentive Stock Option Plan
with Form of Option Agreement.................................[18]
4.20 USE Schedule of Options
Issued - 12/7/01 and 5/20/02..................................[18]
4.21 USE 2001 Officers' Stock Compensation Plan....................[18]
4.22 [intentionally left blank]
29
4.23 Amendment dated December 10, 2002 to
October 11, 1999 Stock Option
Agreement held by R. Jerry Falkner............................[20]
5.1 Opinion re legality and consent of counsel.......................*
10.1 USECC Joint Venture Agreement - Amended as of 1/20/89..........[1]
10.2 Management Agreement with USECC................................[3]
10.3 Contract - R. J. Falkner & Company
dated April 11, 2001..........................................[11]
10.4 Consulting Agreement - Riches In Resources
dated May 14, 2001............................................[11]
10.5 Agreement for Strategic Services
VentureRound Group LLC........................................[14]
10.6-10.60 [intentionally left blank]
10.61 Closing Agreement - Addendum to Agreement
for Purchase and Sale of Assets (see Exhibit 10.62)...........[11]
10.62 Agreement for Purchase and Sale of Assets
(Rocky Mountain Gas, Inc. and Quantum Energy LLC)..............[9]
10.63 Purchase and Sale Agreement
CCBM, Inc. (subsidiary of Carrizo Oil & Gas, Inc.)
and Rocky Mountain Gas, Inc...................................[16]
10.64 Purchase and Sale Agreement
Bobcat Property...............................................[16]
10.65 Convertible Promissory Note and
Security Agreement (Caydal, LLC)
dated May 30, 2002............................................[17]
10.66 Convertible Promissory Note and
Security Agreement (Tsunami Partners, L.P.)
dated November 19, 2002.......................................[19]
16. Concurrence Letter from Arthur Andersen LLP
on Change of Accounting Firms.................................[10]
21.1 Subsidiaries of Registrant....................................[11]
23.1 Included in Exhibit 5.1
30
23.2 Consent of Independent Auditors (Grant Thornton LLP).............*
23.3 Consent of [former] audit firm Arthur Andersen LLP...............*
99.1 Summary of reserve report of Ryder Scott Company,
as of December 31, 2002, with consent............................*
*
Previously filed.
_____________
Unless otherwise indicated, the SEC File Number for each of the following
documents incorporated by reference is 000-6814.
[1] Incorporated by reference from the like-numbered exhibit to the
Registrant's Annual Report on Form 10-K for the year ended May 31,
1989, filed August 29, 1989.
[2] Incorporated by reference from the like-numbered exhibit to the
Registrant's Annual Report on Form 10-K for the year ended May 31,
1990, filed September 14, 1990.
[3] Incorporated by reference from the like-numbered exhibit to the
Registrant's Annual Report on Form 10-K for the year ended May 31,
1991, filed September 13, 1991.
[4] Incorporated by reference from the like-numbered exhibit to the
Registrant's Annual Report on Form 10-K for the year ended May 31,
1992, filed September 14, 1991.
[5] Incorporated by reference from the like-numbered exhibit to the
Registrant's Form S-1 registration statement, initial filing (SEC File
No. 333-1689) filed June 18, 1996).
[6] Incorporated by reference from the like-numbered exhibit to the
Registrant's Annual Report on Form 10-K for the year ended May 31,
1996, filed September 13, 1996.
[7] Incorporated by reference from the like-numbered exhibit to the
Registrant's Annual Report on Form 10-K for the year ended May 31,
1997, filed September 15, 1997.
[8] Incorporated by reference from the like-numbered exhibit to the
Registrant's Annual Report on Form 10-K for the year ended May 31,
1998, filed September 14, 1998.
[9] Incorporated by reference from the like-numbered exhibit to the
Registrant's Annual Report on Form 10-K for the year ended May 31,
2000, filed September 13, 2000.
[10] Incorporated by reference from the like-numbered exhibit to the
Registrant's Form 8-K, filed February 5, 2001.
[11] Incorporated by reference from the like-numbered exhibit to the
Registrant's Annual Report on Form 10-K, filed August 29, 2001.
[12] Incorporated by reference to exhibit number 4.1 to the Registrant's
Form 8-A12G filed, September 20, 2001.
31
[13] Incorporated by reference from the like-numbered exhibit to the
Registrant's Form S-3 registration statement (SEC File No. 333-73546),
filed November 16, 2001.
[14] Incorporated by reference from the like-numbered exhibit to the
Registrant's Form S-3 registration statement (SEC File No. 333-75864),
filed December 21, 2001.
[15] Incorporated by reference from the like-numbered exhibit to the
Registrant' Form S-3 registration statement (SEC File No. 333-83040),
filed February 19, 2002.
[16] Incorporated by reference from the like-numbered exhibit to the
Registrant's Form S-3 registration statement, amendment no. 1 (SEC File
No. 333-83040), filed May 17, 2002.
[17] Incorporated by reference from the like-numbered exhibit to the
Registrant's Form 8-K, filed June 6, 2002.
[18] Incorporated by reference from the like-numbered exhibit to the
Registrant's Annual Report on Form 10-K for the year ended May 31,
2002, filed September 13, 2002.
[19] Incorporated by reference from the like-numbered exhibit to the
Registrant's Form 8-K, filed December 9, 2002.
[20] Incorporated by reference from the like-numbered exhibit to the
Registrant's Form S-3 registration statement, amendment no. 4 (SEC File
No. 333-83040), filed March 3, 2003.
32
ITEM 17. UNDERTAKINGS.
(a) RULE 415 OFFERING.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or in the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply to this
registration statement if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the registrant pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) FILING INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE.
The undersigned registrant hereby undertakes that for purposes of
determining any liability under the Securities Act , each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
33
(h) RELATIVE TO REQUEST FOR ACCELERATION OF EFFECTIVE DATE.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers, and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933, as amended, and will be governed by the final adjudication of such
issue.
34
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment no. 2 to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the city of Riverton, state of Wyoming on April 2,
2003.
U.S. ENERGY CORP.
(Registrant)
Date: April 2, 2003 By: /s/ John L. Larsen
-------------------------------
John L. Larsen,
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this amendment no. 1 to the registration statement on Form S-3 has been signed
below by the following persons on behalf of the Registrant and in the capacities
and on the dates indicated.
Date: April 2, 2003 By: /s/ John L. Larsen
-------------------------------
John L. Larsen Director
Date: April 2, 2003 By: /s/ Keith G. Larsen
-------------------------------
Keith G. Larsen, Director
Date: April 2, 2003 By: /s/ Harold F. Herron
-------------------------------
Harold F. Herron, Director
Date: April 2, 2003 By: /s/ Don C. Anderson
-------------------------------
Don C. Anderson, Director
Date: April 2, 2003 By: /s/ Nick Bebout
-------------------------------
Nick Bebout, Director
Date: April 2, 2003 By: /s/ H. Russell Fraser
-------------------------------
H. Russell Fraser,
Director
Date: April 2, 2003 By: /s/ Robert Scott Lorimer
-------------------------------
Robert Scott Lorimer,
Principal Financial Officer/
Chief Accounting Officer
35