FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549


[X]  Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
     Act of 1934

 For the fiscal quarter ended November 30, 1997 or
                              -----------------

[ ]  Transition  report  pursuant  to  section  13 or  15(d)  of the  Securities
     Exchange Act of 1934
                
For the transition period from               to
                               -------------     --------------

Commission file number   0-8773

                                  CRESTED CORP.
              ----------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

           Colorado                                           84-0608126
           --------                                           ----------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                            Identification No.)

        877 North 8th West, Riverton, WY                         82501
        --------------------------------                         -----
    (Address of principal executive offices)                  (Zip Code)

Registrant's telephone Number, including area code:   (307) 856-9272
                                                      --------------


                                      NONE
               ---------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)


     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                          YES   X             NO
                              -----               -----

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date.

              Class                             Outstanding at January 14, 1998
              -----                             -------------------------------
    Common stock, $.001 par value                      10,302,694 Shares



<PAGE>

                                  CRESTED CORP.

                                      INDEX

                                                                        Page No.
PART I.  FINANCIAL INFORMATION

ITEM 1.  Financial Statements.

         Condensed Consolidated Balance Sheets
             November 30, 1997 and May 31, 1997.......................... 3-4

         Condensed Consolidated Statements of Operations
             Three and Six Months Ended November 30, 1997 and 1996....... 5-6

         Condensed Consolidated Statements of Cash Flows
             Six Months Ended November 30, 1997 and 1996................. 7-8

         Notes to Condensed Consolidated Financial Statements............   9

ITEM 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations................... 10-13

PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings...............................................  13

ITEM 6.  Exhibits and Reports on Form 8-K................................  14

         Signatures......................................................  15


                                       2

<PAGE>



                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements.

                           CRESTED CORP. AND AFFILIATE

                      Condensed Consolidated Balance Sheets

                                     ASSETS

                                                   November 30,       May 31,
                                                      1997             1997
                                                   ------------     -----------
                                                   (Unaudited)
CURRENT ASSETS:
      Cash and cash equivalents                    $ 1,493,700      $    37,100
      Accounts receivable
         Trade                                         135,200           63,900
         Affiliates                                    456,500          596,200
      Current portion of long-term
       notes receivable
         Related parties                               317,900          304,000
         Other                                          79,000             --
      Inventory and other                               88,600           48,300
                                                   -----------      -----------

             TOTAL CURRENT ASSETS                    2,570,900        1,049,500

LONG-TERM NOTES RECEIVABLE                             403,600          474,600

INVESTMENTS IN AFFILIATES                            1,889,400        1,796,800

INVESTMENT IN CONTINGENT
      STOCK PURCHASE WARRANT                           651,000          651,000

PROPERTIES AND EQUIPMENT                             5,607,200        5,181,300
      Less accumulated depreciation,
      depletion and amortization                    (3,103,800)      (3,017,700)
                                                   -----------      -----------
                                                     2,503,400        2,163,600


OTHER ASSETS                                           150,200          150,200
                                                   -----------      -----------
                                                   $ 8,168,500      $ 6,285,700
                                                   ===========      ===========


                                        3

<PAGE>



                           CRESTED CORP. AND AFFILIATE

                      Condensed Consolidated Balance Sheets

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

                                                   November 30,      May 31,
                                                      1997            1997
                                                   ------------    ----------
                                                   (Unaudited)

CURRENT LIABILITIES:
      Accounts payable and accrued expenses        $   168,700        556,600
      Deferred income (Note 4)                       2,000,000           --
      Current portion of long-term debt
       (Note 5)
         Affiliates                                  6,256,200      6,023,400
         Others                                         66,700         12,400
                                                   -----------    -----------
TOTAL CURRENT LIABILITIES                            8,491,600      6,592,400

LONG-TERM DEBT (Note 5)                                 10,800         15,800

ACCRUED RECLAMATION COSTS (Note 6)                     725,900        725,900

COMMITMENTS AND CONTINGENCIES

FORFEITABLE COMMON STOCK, $.001 par value
      65,000 shares issued, forfeitable
       until earned                                     43,900         43,900

SHAREHOLDERS' DEFICIT:
      Preferred stock, $.001 par value;
         authorized, 100,000 shares;
         none issued or outstanding                       --             --
      Common stock, $.001 par value;
         authorized 20,000,000 shares;
         issued, 10,237,694                             10,200         10,200
      Additional paid-in capital                     6,375,400      6,375,400
      Accumulated deficit                           (7,489,300)    (7,477,900)
                                                   -----------    -----------
TOTAL SHAREHOLDERS' DEFICIT                         (1,103,700)    (1,092,300)
                                                   -----------    -----------
                                                   $ 8,168,500    $ 6,285,700
                                                   ===========    ===========


                                       4

<PAGE>
<TABLE>
<CAPTION>
                                                          CRESTED CORP. AND AFFILIATE

                                           Condensed Consolidated Statements of Operations


                                                 Three Months Ended                         Six Months Ended
                                                    November 30,                               November 30,
                                         --------------------------------          --------------------------------
                                             1997                1996                 1997                  1996
                                             ----                ----                 ----                  ----
                                          (Unaudited)         (Unaudited)          (Unaudited)           (Unaudited)
REVENUES:
<S>                                      <C>                  <C>                  <C>                  <C>      
   Mineral sales                         $      --            $      --            $   429,300          $      --
   Oil and gas sales                          14,000               11,600               38,300               31,100
   Mineral property transactions              26,400               27,500               55,200               48,400
   Interest                                   23,600                8,500               51,900               14,900
   Rental                                    171,500               61,300              392,200              129,100
   Gain on sale of assets                        800                 --                    800                 --
   Other                                     184,300               92,900              339,700              163,600
                                         -----------          -----------          -----------          -----------
                                             420,600              201,800            1,307,400              387,100
COSTS AND EXPENSES:
   Cost of sales                              44,100               22,700               71,700               49,200
   Mineral operations                        174,200               77,100              361,600              158,500
   Interest                                    6,200                6,200               10,600               13,700
   General and
      administrative                         356,700              258,200              686,800              437,200
   Depreciation and
      amortization                            52,600               49,000               96,700               93,100
                                         -----------          -----------          -----------          -----------

                                             633,800              413,200            1,227,400              751,700
                                         -----------          -----------          -----------          -----------

LOSS BEFORE EQUITY
   LOSS AND TAX PROVISION                   (213,200)            (211,400)              80,000             (364,600)

EQUITY IN LOSS OF
   AFFILIATES                                (44,100)             (68,100)             (91,400)            (126,900)
                                         -----------          -----------          -----------          -----------

LOSS BEFORE PROVISION
   FOR INCOME TAXES                         (257,300)            (279,500)             (11,400)            (491,500)

(continued)



                                                                      5

<PAGE>
                                                       CRESTED CORP. AND AFFILIATE

                                           Condensed Consolidated Statements of Operations
                                                             (continued)


                                                 Three Months Ended                      Six Months Ended
                                                    November 30,                            November 30,
                                      -------------------------------------      --------------------------------
                                            1997                  1996               1997               1996
                                            ----                  ----               ----               ----
                                         (Unaudited)           (Unaudited)        (Unaudited)        (Unaudited)
PROVISION FOR
   INCOME TAXES                                   --                    --               --                  --
                                      ----------------      ----------------     ------------      --------------


NET LOSS                              $       (257,300)     $       (279,500)    $    (11,400)     $     (491,500)
                                      ================      ================     ============      ==============

NET LOSS PER SHARE                    $          (.02)     $           (.03)     $        *        $         (.05)
                                      ================      ================     ============      ==============

WEIGHTED AVERAGE
   NUMBER OF SHARES
   OUTSTANDING                              10,302,694            10,156,094       10,302,694          10,156,094
                                      ================      ================     ============      ==============


</TABLE>

                                                                       6

<PAGE>
<TABLE>
<CAPTION>

                               CRESTED CORP. AND AFFILIATE

                      Condensed Consolidated Statements of Cash Flows

                                                                       Six Months Ended
                                                                          November 30,
                                                             -----------------------------------
                                                                 1997                     1996
                                                                 ----                     ----
                                                             (Unaudited)              (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                          <C>                      <C>         
   Net loss                                                  $   (11,400)             $  (491,500)
   Adjustments to reconcile net loss to net cash
      used in operating activities:
         Depreciation, depletion and amortization                 96,700                   93,100
         Equity in loss on affiliates                             91,400                  126,900
         Gain on sale of assets                                     (800)                    --
         Deferred income                                       2,000,000                2,103,800
      Net changes in components
         of working capital                                     (359,800)                (323,300)
                                                             -----------              -----------
NET CASH PROVIDED BY
  OPERATING ACTIVITIES                                         1,816,100                1,509,000
                                                             -----------              -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Increase in notes receivable                                  (35,000)                    --
   Proceeds from collection
      of notes receivable                                         13,100                  (45,800)
   Investments in affiliates                                    (184,000)                (249,900)
   Purchase of property and equipment                           (437,700)                 (17,700)
   Proceeds from sale of assets                                    2,000                     --
                                                             -----------              -----------
NET CASH USED IN INVESTING ACTIVITIES                           (641,600)                (313,400)
                                                             -----------              -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Increase in debt                                              313,300                  112,600
   Principle payments on long-term debt                          (31,200)              (1,342,700)
                                                             -----------              -----------
NET CASH PROVIDED BY (USED IN)
   FINANCING ACTIVITIES                                          282,100               (1,230,100)
                                                             -----------              -----------

NET INCREASE (DECREASE) IN
   CASH AND CASH EQUIVALENTS                                   1,456,600                  (34,500)
(continued)


                                                     7
</TABLE>

<PAGE>

                           CRESTED CORP. AND AFFILIATE

                 Condensed Consolidated Statements of Cash Flows
                                   (continued)

                                                         Six Months Ended
                                                            November 30,
                                                    ----------------------------
                                                       1997             1996
                                                       ----             ----
                                                    (Unaudited)      (Unaudited)

CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD                                  37,100            52,600
                                                    ----------        ----------

CASH AND CASH EQUIVALENTS AT
   END OF PERIOD                                    $1,493,700        $   18,100
                                                    ==========        ==========

SUPPLEMENTAL DISCLOSURES:
   Income tax paid                                  $     --          $     --
                                                    ==========        ==========

   Interest paid                                    $   10,600        $   13,700
                                                    ==========        ==========




                                       8

<PAGE>



                                  CRESTED CORP.

              Notes to Condensed Consolidated Financial Statements

     1) The Condensed  Consolidated  Balance Sheet as of November 30, 1997,  the
Condensed  Consolidated  Statements of  Operations  for the three and six months
ended November 30, 1997 and 1996, and the Condensed  Consolidated  Statements of
Cash  Flows for the six  months  ended  November  30,  1997 and 1996,  have been
prepared by the Company without audit. The Condensed  Consolidated Balance Sheet
of May 31, 1997, has been taken from the audited financial  statements  included
in the Company's  Annual  Report on Form 10-K filed for the year then ended.  In
the opinion of the Company,  the accompanying  financial  statements contain all
adjustments  (consisting of only normal recurring  accruals) necessary to fairly
present the  financial  position of the Company and its affiliate as of November
30, 1997 and May 31, 1997,  the results of  operations  for the six months ended
November 30, 1997 and 1996, and the cash flows for the six months then ended.

     2) Certain  information  and  footnote  disclosures  normally  included  in
financial  statements  prepared in accordance with generally accepted accounting
principles have been condensed or omitted.  It is suggested that these financial
statements be read in conjunction with the Company's May 31, 1997 Form 10-K. The
results of operations  for the periods ended  November 30, 1997 and 1996 are not
necessarily indicative of the operating results for the full year.

     3) The condensed  consolidated  financial statements of the Company include
its proportionate  share of the accounts of USECB Joint Venture (USECB) which is
owned 50% by Company and 50% by Company's  parent,  U.S. Energy Corp. (USE). All
material intercompany profits and balances have been eliminated.

     4) Deferred income consists of the Company's half of the $4,000,000 Signing
Bonus received when the Company and its parent,  USE entered into an Acquisition
Agreement with Kennecott Uranium Company to develop  properties.  The amount was
forfeitable  until  certain  actions  are taken by the Company and USE (See GMMV
discussion in Item 2).

     5) Debt consists primarily of a note payable to the Company's parent USE of
$6,256,200.  The remaining  debt is for various  equipment  and insurance  loans
through financial institutions.

     6) Accrued reclamation obligation of $725,900 is the Company's share of the
reclamation  liability at the Sheep  Mountain/Green  Mountain Mining  Districts.
This reclamation work may be performed over several years.

     7) Certain  reclassifications  have been made in the May 31, 1997 financial
statements to conform to the classifications used in November 30, 1997.


                                       9

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.
        ------------------------------------------------------------------------

Liquidity and Capital Resources

On June 23, 1997, the Company and its parent, U.S. Energy Corp. ("USE"), entered
into an  Acquisition  Agreement  with Kennecott  Uranium  Company  ("Kennecott")
whereby  the  Company  and USE  received  a  signing  bonus  from  Kennecott  of
$4,000,000  and a loan to  develop  the Green  Mountain  Mining  Venture  (GMMV)
properties of $16,000,000.  The $4,000,000, one half of which is attributable to
the Company,  is shown as deferred income on the November 30, 1997 balance sheet
as it was  forfeitable  until  certain  conditions  were met.  During  the third
quarter of fiscal 1998 the forfeitable terms were satisfied which will allow the
signing  bonus to be recognized  as income for the quarter  ending  February 28,
1998.

The Company also  received cash from the sale of uranium under the SMP contracts
of $429,300;  its advance royalty payment from Cyprus AMAX of $55,200;  $392,200
from the rental of  equipment  and real estate  properties,  and $239,300 in the
form of  management  fees.  The receipt of these funds  increased  the Company's
liquidity position significantly.

The Company utilized $641,600 in its investing  activities during the six months
ended  November 30, 1997.  This was primarily as a result of the Company and USE
purchasing  $437,700  worth of  equipment,  and the funding of standby  costs of
Sheep Mountain Partners ("SMP") and Plateau Resources Limited  ("Plateau").  Due
to the disputes existing between the SMP partners,  the Company and USE have not
been reimbursed for the care,  maintenance and standby costs expended on the SMP
mineral properties in Wyoming since the spring of 1991.

The  Company  netted  $282,100  from its  financing  activities  as a result  of
increased long term-debt primarily to USE because of USE paying certain expenses
on the Company's  behalf.  Cash  provided by  operations of $1,816,100  plus the
$282,100  provided by  financing  activities,  less  $641,600  used in investing
activities  resulted  in  a  net  increase  in  cash  and  cash  equivalents  of
$1,456,600.  This  increase  places the Company in the strong  cash  position of
$1,493,700  at November  30, 1997 as compared to $18,100 at the same date of the
prior year and $37,100 as of May 31, 1997.

The  primary  requirements  for the  Company's  working  capital  continue to be
funding of the on-going  administrative  expenses; the mine and mill holding and
start-up  costs  of  Plateau;  the  holding  costs  of the SMP  mines,  on going
litigation  expenses  associated  with  the SMP  dispute;  and  certain  uranium
delivery  costs to SMP  contracts.  Nukem is  currently  making  most of the SMP
deliveries.  No  assurances  can be given  that  this  method of  delivery  will
continue.  The capital  requirements  to fill the Company's and USE's portion of
the remaining commitments in fiscal 1998 will depend on the spot market price of
uranium and may also be dependent  on the outcome of the  Arbitration/Litigation
Award  involving  Nukem and CRIC,  which they have  appealed to the 10th Circuit
Court of Appeals.

The primary  source of the  Company's  capital  resources  for the  remainder of
fiscal  1998 will be cash on hand;  financing  available  through  the GMMV (see
discussion below); eventual settlement of the Nukem/CRIC Arbitration/Litigation;
uranium deliveries  pursuant to the SMP contracts;  the borrowing from financial


                                       10

<PAGE>


institutions (primarily the line of credit), and the sale of equity or interests
in  investment  properties.  Fees from oil  production;  rentals of various real
estate  holdings and equipment,  and the sale of aviation fuel will also provide
cash.

The Company,  USE and Sutter Gold Mining Company ("SGMC") are currently  seeking
additional  financing for the  construction of the gold processing mill and mine
development of SGMC.  See discussion of SGMC below.  An additional $8 million in
financing is being  sought,  however,  there is no  assurance  the funds will be
raised.

The expenditures for the SMP care and maintenance  costs may require  additional
funding,  depending on the outcome of the SMP  Arbitration/Litigation.  See Part
II, Item 1 "Legal Proceedings" below.

GMMV
----

On June 23,  1997,  the Company  and USE signed an  Acquisition  Agreement  with
Kennecott  Uranium Company  ("Kennecott")  for the right to acquire  Kennecott's
interest in the GMMV for $15,000,000 and other  consideration.  This information
was  previously  reported  in the  Company's  Form 10-Q  (Item 2) for the fiscal
quarter  ended  August 31,  1997.  Kennecott  paid USE and USECC  $4,000,000  on
signing,  and  committed  to provide  the GMMV a loan of up to  $16,000,000  for
payment  of costs  incurred  by USECC in  developing  the  proposed  underground
Jackpot  uranium mine and permitting  the Sweetwater  Mill. As a result of these
agreements,  it is  believed  that no internal  funding  will be required by the
Company and USE for the GMMV at either the Sweetwater Mill or the Jackpot mine.

Pursuant to the  Acquisition  Agreement and the Mineral Lease and Mill Contract,
USECC is  developing  the proposed  Jackpot  Mine and working with  Kennecott in
preparing the Sweetwater Mill for renewed operations.  Such work is being funded
from the  $16,000,000  loan being  provided to the GMMV by Kennecott.  Under the
Fourth  Amendment of the GMMV Agreement,  Kennecott will be entitled to a credit
against  Kennecott's  original  $50,000,000  commitment to fund the GMMV, in the
amount of two  dollars  of credit  for each one  dollar of such funds out of the
$16,000,000  provided by Kennecott to the GMMV,  plus the $4,000,000 paid to USE
and USECC on signing of the Acquisition Agreement.

Closing of the  Acquisition  Agreement  is  subject to USE and USECC  satisfying
several conditions,  on or before the extended closing date of October 30, 1998.
If the  Acquisition  Agreement were not closed by December 1, 1997, then USE and
USECC  (or an  entity  formed  by them to  acquire  the GMMV  interest  owned by
Kennecott)  were to provide to Kennecott a  commitment  letter from a recognized
national  investment banking firm to complete an underwritten public offering of
the securities of USE (or an entity formed or introduced to acquire  Kennecott's
GMMV  interest  (the  "Acquiring  Entity"),  in amount  sufficient  to close the
Acquisition Agreement transactions.  Such amount is estimated by the company and
USE to be approximately $40,000,000. The Acquisition Agreement was not closed by
December 1, 1997 but USE and USECC provided Kennecott a commitment letter from a
recognized  national  investment banking firm to meet the timely requirements of
the Acquisition Agreement.  Thus, the $4,000,000 signing bonus paid by Kennecott
became nonrefundable.

                                       11

<PAGE>


Sutter Gold Mining Company
--------------------------

A  preliminary  prospectus  to  qualify  a  previous  special  warrant  offering
prospectus  of Sutter Gold  Mining,  has been filed with the Ontario  Securities
Commission  and the Toronto  Stock  Exchange.  An  additional $8 million must be
raised to fund the development costs to place the SGMC properties in production.
It is not  anticipated  that any of the Company's funds will be required to fund
these operations.

Sheep Mountain Partners
-----------------------

Nukem and CRIC filed their opening brief in their appeal before the 10th Circuit
Court of Appeals on December  12,  1997.  The Company and USE filed their answer
brief on January 12, 1998. Nukem and CRIC now have fourteen days to file a reply
brief after which time the 10th Circuit  Court may set oral  arguments  and then
decide the case. No assurance can be given as to the ultimate  outcome,  however
management  of the  Company and USE are  optimistic  the ruling will be in their
favor.

Until  such  time as these  issues  are  resolved,  the  Company  and USE may be
required to fund the standby costs of the Sheep Mountain mines.  The Company and
USE have filed a lien on the SMP  properties as a protection  for the payment of
past and  future  standby  costs for  which  they  have not been  reimbursed  by
Nukem/CRIC  and filed suit in Wyoming to foreclose the lien.  The case is in the
discovery stage.

Results of Operations

Six months  ended  November 30, 1997  Compared to Six Months Ended  November 30,
1996

Revenues for the six month period ended November 30, 1997, increased by $920,300
over the same period of the prior year. The increase in revenues primarily is as
a result  of a  delivery  of  uranium  concentrates  pursuant  to one of the SMP
delivery  contracts  wherein a net  profit of  $429,300  was  recognized  by the
Company and an increase  of  $263,100 in revenues  generated  from the rental of
equipment  and certain real estate.  There were no Uranium  sales during the six
month period ended  November 30, 1996.  The increase in rental  revenues is as a
result of  increased  equipment  rentals  to the GMMV  under  the June 23,  1997
Agreement discussed above. Finally,  other revenues increased by $176,100 during
the six months ended November 30, 1997, over the six month period ended November
30, 1996.  This increase was primarily as a result of management fees increasing
by $107,600 because of increased  activities  provided to the various subsidiary
companies and partnerships by the Company.

Costs and expenses  increased by $475,700 over the same six month period for the
prior  year.  This  is  as a  result  of  Mineral  Operations  and  General  and
Administrative expenses increasing by $203,100 and $249,600 respectively.  These
increases  were due primarily to requiring  additional  staff to administer  the
development of the GMMV and Plateau mining properties.

Operations  for the six months ended  November  30, 1997,  resulted in a loss of
$11,400,  less than $0.01 per share as  compared  to a loss of $491,500 or $0.05
per share for the same period last year.  The  increase in earnings is primarily
as a result of  increased  revenues  from the sale of uranium  and the rental of
equipment.

                                       12

<PAGE>


                           PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings.
         ------------------

     (a) Sheep Mountain Partners Arbitration/Litigation.  The information called
for in this Item 1 has been previously reported in the Company's Form 10-K (Item
3) for the fiscal year ended May 31,  1997 and Item 1, Part II of the  Company's
Form 10-Q for the quarter  ended  August 31,  1997.  This report  discloses  the
status of the consensual  arbitration/litigation  in the U.S.  District Court of
Colorado and 10th Circuit  Court of Appeals  involving the Company and USE d/b/a
USECC and Nukem, Inc. and its wholly-owned  subsidiary Cycle Resource Investment
Corp.  (CRIC)  over  disputes   involving  the  Sheep  Mountain  Partners  (SMP)
partnership  concerning the marketing and sale of uranium and mining  operations
in Wyoming.  As was reported  earlier,  a Second Amended Judgment was entered on
June 30, 1997, by Judge Lewis T. Babcock of the U.S.  District Court of Colorado
wherein the Court again  confirmed the  Arbitration  Award ordering Nukem to pay
USECC a net of  approximately  $8,600,000  as monetary  damages  and  imposing a
constructive  trust in favor of SMP on Nukem's  rights to purchase  CIS uranium,
the uranium  acquired  pursuant to those rights and the profits  therefrom  (the
"CIS  contracts").  Nukem/CRIC filed a motion for  clarification  and/or limited
remand of the Second Amended  Judgment.  On August 13, 1997,  the U.S.  District
Court denied the motion.  Nukem and CRIC then filed an amended  notice of appeal
of the District  Court's  Judgment  and Second  Amended  Judgment  with the 10th
Circuit Court of Appeals.  USECC filed a motion to increase the supersedeas bond
Nukem posted for  $8,613,600  to cover the value of the CIS  contracts,  but the
10th Circuit Court denied the motion. Nukem/CRIC filed their Appellants' opening
brief with the 10th Circuit  Court of Appeals on December 12, 1997.  USECC filed
its Appellees'  brief on January 12, 1998.  Nukem/CRIC may file a reply brief on
or before  January 26, 1998. The Court may hear oral arguments on the appeal and
a decision from the Court is expected in late spring or early summer 1998.

     (b). BGBI  Litigation.  The information  called for in this Item 1 has been
previously  reported  in the  Company's  Form 10-K (Item 3) for the fiscal  year
ended May 31, 1997.  This report  discloses  the status of the lawsuit  filed by
Bond Gold  Bullfrog  Inc.  ("BGBI"  or "Bond  Gold") in Nye  County,  NV against
Company,  USE and Parador Mining Company,  Inc. regarding Parador's mining lease
to Bond Gold of two patented  mining  claims.  The District Court had bifurcated
the trial of the issues and heard the issue of whether  Parador's  mining claims
had  extralateral  rights,  in December 1995. On December 18, 1997, at a hearing
before the District  Court on motions for summary  judgment by all parties,  the
Court granted various motions for summary judgment of the parties.  However, the
Court denied plaintiff's motions for summary judgment on the breach of Parador's
lease and the issue of specific  performance by plaintiff and denied defendants'
motion for summary judgment on plaintiff's  claim for breach of contract.  Thus,
the issues of breach of contract by both BGBI and the  defendants  Company,  USE
and Parador and these defendants'  claim against BGBI for specific  performance,
will be tried before the Court commencing on January 26, 1998.

                                       13


<PAGE>



ITEM 6.  Exhibits and Reports on Form 8-K.
         ---------------------------------

     (a) Exhibits. None.

     (b) Reports on Form 8-K.  The  Company  filed no Reports on Form 8-K during
the quarter ended November 30, 1997.




                                       14
<PAGE>



                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Company  has  duly  caused  this  report  to be  signed  on  its  behalf  by the
undersigned, thereunto duly authorized.

                                                 CRESTED CORP.
                                                 (Company)



Date:  January 14, 1998                 By:      /s/ Max T. Evans
                                                 ------------------------------
                                                 MAX T. EVANS,
                                                 President



Date:  January 14, 1998                 By:      /s/ Robert Scott Lorimer
                                                 ------------------------------
                                                 ROBERT SCOTT LORIMER,
                                                 Principal Financial Officer
                                                 and Chief Accounting Officer

                                       15