Item
1.01. Entry into a Material Definitive Agreement.
On November 12, 2020,
U.S. Energy Corp. (the “Company”), entered into an underwriting agreement (the “Underwriting Agreement”)
with Kingswood Capital Markets, division of Benchmark Investments, Inc., as representative of the underwriters name therein
(the “Kingswood”), pursuant to which the Company agreed to sell to the underwriters in a firm commitment
underwritten public offering (the “Offering”) an aggregate of 1,000,000 shares of the Company’s common
stock, par value $0.01 per share (the “Common Stock”), at a public offering price of $3.00 per share. The Company
also granted the underwriters a 45-day option to purchase up to an additional 150,000 shares
of Common Stock to cover over-allotments, if any, which over-allotment option was exercised in full. The
Offering closed on November 16, 2020.
Kingswood acted as
sole bookrunner for the Offering and R.F. Lafferty & Co., Inc. acted as co-manager in the Offering. The shares of Common Stock
were offered by the Company pursuant to a registration statement on Form S-1, as amended (File No. 333-249738),
filed with the Securities and Exchange Commission (the “Commission”), which was declared effective by the Commission
on November 12, 2020 (the “Registration Statement”). The Offering was made by means of a prospectus
forming a part of the effective registration statement. The Company paid the underwriters a cash fee equal to 7% of the
aggregate gross proceeds received by the Company in connection with the Offering and reimbursed certain expenses.
The net proceeds to the
Company from the Offering, after deducting the underwriting discounts and commissions and Offering expenses, were
approximately $3.0 million, when including the exercise of the over-allotment option. The Company intends to use the net
proceeds from this offering for general corporate purposes, capital expenditures, working capital, and potential acquisitions
of oil and gas properties.
The
Underwriting Agreement contains customary representations and warranties that the parties made to, and solely for the benefit
of, the other party in the context of all of the terms and conditions of that agreement and in the context of the specific relationship
between the parties. The provisions of the Underwriting Agreement, including the representations and warranties contained therein,
are not for the benefit of any party other than the parties to such agreements and are not intended as documents for investors
and the public to obtain factual information about the current state of affairs of the parties to those documents and agreements.
Rather, investors and the public should look to other disclosures contained in the Company’s filings with the Securities
and Exchange Commission.
Pursuant
to the Underwriting Agreement, the Company agreed, subject to certain exceptions, not to offer, issue or sell any shares of Common
Stock or securities convertible into or exercisable or exchangeable for shares of Common Stock for a period of one hundred and
eighty (180) days following the Offering without the prior written consent of Kingswood.
In
connection with the Offering, each of our officers, directors, and certain holders of our outstanding securities agreed,
subject to certain exceptions, not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise
dispose of any shares of our Common Stock or other securities convertible into or exercisable or exchangeable for shares of our
Common Stock for a period of one hundred eighty (180) days after the Offering is completed, without the prior written consent
of Kingswood.
The
foregoing summary of the terms of the Underwriting Agreement is subject to, and qualified in its entirety by reference to, a copy
of the Underwriting Agreement that is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein
by reference.
This
Current Report on Form 8-K does not constitute an offer to sell any securities or a solicitation of an offer to buy any securities,
nor shall there be any sale of any securities in any state or jurisdiction in which such an offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
A
copy of the opinion of The Loev Law Firm, PC, relating to the validity of the issuance of the shares of Common Stock, is attached
as Exhibit 5.1 hereto.