PROSPECTUS
SUPPLEMENT NO. 1 FILED
PURSUANT TO RULE 424(B)(3) AND (C)
(TO
PROSPECTUS DATED JUNE 13, 2005) REGISTRATION
NO. 333-124277
This
prospectus supplement supplements the prospectus dated June 13, 2005 of U.S.
Energy Corp. (“USE” or the “company”) relating to the public offer and sale by
the selling shareholders of up to 4,520,375 shares of common stock ($0.01
par
value): 2,913,582 shares which may be issued on conversion of outstanding
debentures ($4,720,000 principal and interest) at $2.43 per share (with the
number of shares multiplied by 150%) and up to 1,606,793 shares which may
be
issued on exercise of outstanding warrants at $3.63 per share (with the number
of shares multiplied by 150%).
This
prospectus supplement should be read in conjunction with the prospectus.
This
prospectus supplement is qualified by reference to the prospectus, except
to the
extent that the information provided by this supplement supersedes the
information contained in the prospectus.
SEE
“RISK
FACTORS” BEGINNING ON PAGE 9 OF THE PROSPECTUS AND THE TABLE OF CONTENTS ON PAGE
3 OF THE PROSPECTUS.
The
selling shareholder identified as “HPC Capital Management” has assigned 50,000
of the total 100,000 warrants held by it, to PEF Advisors LLC, and 25,000
of the
warrants to Vincent Sbarra. Accordingly, the number of shares registered
for
resale by HPC Capital Management, using the 150% anti-dilution formula, is
now
37,500 shares if it exercises its 25,000 remaining warrants and the
anti-dilution provisions of the warrant are triggered before exercise; PEF
Advisors LLC is now added as a potential seller of up to 50,000 shares, having
exercised its warrant without the anti-dilution provisions being triggered
(PEF
Advisors LLC has exercised its warrants for 50,000 shares); and Vincent Sbarra
is now a potential seller of up to 37,500 shares if he exercises his 25,000
warrants and the anti-dilution provisions of the warrant are triggered before
exercise.
The
date
of this prospectus supplement is January 18, 2006
End
of
prospectus supplement