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 August 31, 2001 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 Company 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)

Company's telephone Number, including area code:            (307) 856-9271
                                                       -------------------------


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


     Indicate  by check  mark  whether  the  Company  (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 Company
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 October 12, 2001
-----------------------------------     ----------------------------------------
   Common stock, $.001 par value                   17,088,330 Shares



<PAGE>



                                  CRESTED CORP.

                                      INDEX

                                                                        Page No.
PART I.      FINANCIAL INFORMATION

ITEM 1.      Financial Statements.

             Condensed Balance Sheets
                 August 31, 2001 and May 31, 2001...........................3

             Condensed Statements of Operations
                 Three Months Ended August 31, 2001 and 2000................4

             Condensed Statements of Cash Flows
                 Three Months Ended August 31, 2001 and 2000................5

             Notes to Condensed Financial Statements........................6

ITEM 2.      Management's Discussion and Analysis of
                 Financial Condition and Results of Operations............7-8

PART II.     OTHER INFORMATION

ITEM 6.      Exhibits and Reports on Form 8-K...............................9

             Signatures.....................................................9



                                        2

<PAGE>



                          PART I. FINANCIAL INFORMATION

ITEM 1.      FINANCIAL STATEMENTS.

                                  CRESTED CORP.
                            CONDENSED BALANCE SHEETS
                                     ASSETS
<TABLE>
<CAPTION>
                                                              August 31,           May 31,
                                                                2001                2001
                                                           ---------------      -------------

                                                               (Unaudited)
CURRENT ASSETS:
<S>                                                        <C>                  <C>
    Cash and cash equivalents                              $       3,200        $       3,200

INVESTMENTS IN AFFILIATES                                      5,858,600            6,205,800

PROPERTIES AND EQUIPMENT                                         896,800              896,800
    Less accumulated depreciation,
    depletion and amortization                                  (886,800)            (886,800)
                                                           -------------        -------------
                                                                  10,000               10,000

OTHER ASSETS                                                       2,000                2,100
                                                           -------------        -------------
                                                           $   5,873,800        $   6,221,100
                                                           =============        =============
</TABLE>
<TABLE>
<CAPTION>

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES:
<S>                                                        <C>                  <C>
    Current portion of long-term debt to affiliate             6,019,100            5,740,200

COMMITMENT TO FUND EQUITY INVESTEES                              215,600              215,600

RECLAMATION LIABILITY                                            748,400              748,400

COMMITMENTS AND CONTINGENCIES

FORFEITABLE COMMON STOCK, $.001 par value
    15,000 shares issued, forfeitable until earned                10,100               10,100

SHAREHOLDERS' equity
    Preferred stock, $.001 par value;
        100,000 shares authorized;
        none issued or outstanding                                  --                   --
    Common stock, $.001 par value;
        20,000,000 shares authorized;
        issued 17,073,330                                         17,200               17,200
    Additional paid-in capital                                11,783,800           11,783,800
    Accumulated deficit                                      (12,920,400)         (12,294,200)
                                                           -------------        -------------
TOTAL SHAREHOLDERS' DEFICIT                                   (1,119,400)            (493,200)
                                                           -------------        -------------
                                                           $   5,873,800        $   6,221,100
                                                           =============        =============
</TABLE>


            See notes to Condensed Consolidated Financial Statements.

                                        3

<PAGE>



                                  CRESTED CORP.

                       CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                                 August 31,
                                                   -----------------------------------
                                                         2001                  2000
                                                         ----                  ----
                                                      (Unaudited)           (Unaudited)
REVENUES:
<S>                                                <C>                    <C>
    Mineral revenue                                $      --              $     16,700

COSTS AND EXPENSES:
    General and administrative                           48,000                 79,700
                                                   ------------           ------------

LOSS BEFORE EQUITY LOSS AND TAX PROVISION               (48,000)               (63,000)

EQUITY IN LOSS OF AFFILIATES                           (578,200)              (340,900)
                                                   ------------           ------------

LOSS BEFORE PROVISION FOR INCOME TAXES                 (626,200)              (403,900)

PROVISION FOR INCOME TAXES                                --                     --
                                                   ------------           ------------

NET LOSS                                           $   (626,200)          $   (403,900)
                                                   ============           ============

NET LOSS PER SHARE, BASIC AND DILUTED              $      (0.04)          $      (0.04)
                                                   ============           ============

BASIC WEIGHTED AVERAGE SHARES OUTSTANDING            17,073,330            10,316,664
                                                   ============           ===========

DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING          17,073,330             10,316,664
                                                   ============           ============
</TABLE>


            See notes to Condensed Consolidated Financial Statements.

                                        4

<PAGE>



                                  CRESTED CORP.

                       CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                   Three Months Ended
                                                                      August 31,
                                                           ------------------------------
                                                              2001                2000
                                                           -----------        -----------
                                                            Unaudited)        (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                        <C>                  <C>
  Net loss                                                 $ (626,200)        $ (403,900)
  Adjustments to reconcile net loss to net cash
      used in operating activities:
         Equity in loss of affiliates                         578,200            340,900
                                                           -----------        ----------

NET CASH USED IN OPERATING ACTIVITIES                         (48,000)           (63,000)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Investments and decrease in other assets                   (231,000)          (251,200)
  Decrease in other assets                                        100                100
                                                           ----------         ----------
NET CASH USED IN  INVESTING ACTIVITIES                       (230,900)          (251,100)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net activity on debt to affiliate                           278,900            313,700
                                                           ----------         ----------

NET INCREASE (DECREASE) IN
  CASH AND CASH EQUIVALENTS                                    --                   (400)

CASH AND CASH EQUIVALENTS AT
  BEGINNING OF PERIOD                                           3,200              3,000
                                                           ----------         ----------

CASH AND CASH EQUIVALENTS AT
  END OF PERIOD                                            $    3,200              2,600
                                                           ==========         ==========

SUPPLEMENTAL DISCLOSURES:
  Interest paid                                            $   --             $   --
                                                           ==========         ==========

  Noncash investing and financing activities:

  Net noncash distribution from affiliate                  $   --             $      --
                                                           ==========         ==========

  Net noncash borrowings from affiliate                    $   --             $      --
                                                           ==========         ==========

</TABLE>

            See notes to Condensed Consolidated Financial Statements.

                                        5

<PAGE>



                                  CRESTED CORP.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS


     1) The  Condensed  Balance  Sheet as of August 31,  2001 and the  Condensed
Statements  of  Operations  and Cash Flows for the three months ended August 31,
2001 and 2000,  have been prepared by the Company  without audit.  The Condensed
Balance  Sheet at May 31,  2001,  has been  derived  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 August 31, 2001 and the results of operations and cash flows
for the three months ended August 31, 2001 and August 31, 2000.

     2) Certain  information  and  footnote  disclosures  normally  included  in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been  condensed or omitted.  It is
suggested  that  these  financial  statements  be read in  conjunction  with the
Company's  May 31,  2001 Form 10-K.  The results of  operations  for the periods
ended August 31, 2001 and 2000 are not  necessarily  indicative of the operating
results for the full year.

     3) Debt at August 31, 2001 and May 31,  2001,  consists of the balance on a
note payable to U.S. Energy Corp. of $6,019,100 and $5,740,200, respectively.

     4) The reclamation  liability of $748,400 represents the Company's share of
the  liability at the Sheep  Mountain  Mines in the Crooks Gap Mining  District.
This  reclamation  work may be  performed  over  several  years  and will not be
commenced  until such time as all the uranium  mineralization  contained  in the
properties is produced or the properties are abandoned.  It is anticipated  that
neither of these events will occur for sometime into the future.

     5) The Company  presents basic and diluted earnings per share in accordance
with the  provisions  of Statement of Financial  Accounting  Standards  No. 128,
"Earnings per Share".  Basic  earnings per common share is based on the weighted
average number of common shares outstanding during the period.  Diluted earnings
per share does not include the dilutive  effect of common stock  equivalents for
the three  months ended  August 31,  20001 and 2000  because  stock  options and
warrants which comprised common stock equivalents would have been anti-dilutive.

     6) Certain  reclassifications  have been made in the May 31, 2001 financial
statements to conform to the classifications used in August 31, 2001.



                                        6

<PAGE>



ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
             RESULTS OF OPERATIONS.

     The  following  is  Management's  Discussion  and  Analysis of  significant
factors  which have  affected the  Company's  liquidity,  capital  resources and
results of operations during the periods included in the accompanying  financial
statements. For a detailed explanation of the Company's Business Overview, it is
suggested that Management's  Discussion and Analysis of Financial  Condition and
Results  of  Operations  for  the  quarter  ended  August  31,  2001  be read in
conjunction with the Company's Form 10-K for the year ended May 31, 2001.

OVERVIEW OF BUSINESS

     The Company is engaged in the mineral development and extraction  business.
The Company has interests in a uranium mine and mill in Southern  Utah,  uranium
mines in  Central  Wyoming,  a gold  property  in  California,  coalbed  methane
properties  in the Powder  River Basin in Wyoming  and Montana and various  real
estate operations including a motel operation near Lake Powell, Utah.

     All these business are operated in conjunction  with the Company's  parent,
U.S. Energy Corp. ("USE") through a joint venture between the two companies, the
USECB Joint Venture  ("USECB").  The Company accounts for USECB using the equity
method of accounting.

LIQUIDITY AND CAPITAL RESOURCES

     The  Company's  working  capital  deficit  at May 31,  2001  of  $5,737,000
increased to a working  capital  deficit of $6,015,900 at August 31, 2001.  This
increase of $278,900 in the working capital deficit was caused by increased debt
to  USE .  USE  continues  to  fund  a  significant  portion  of  the  Company's
obligations from the various ventures in which they operate jointly.

     During the three months ended August 31,  2001,  operations  and  investing
activities   consumed  $48,000  and  $230,900,   respectively   while  financing
activities  generated  $278,900.  During the quarter ended August 31, 2001, cash
was primarily  consumed in the investment in affiliates,  $231,000 and generated
through increased debt to USE of $278,900.

CAPITAL RESOURCES

     The Company and USE have a $750,000 line of credit with a commercial  bank.
The line of credit is secured by various  real  estate  holdings  and  equipment
belonging  to the Company and USE.  At August 31,  2001,  the line of credit had
been  drawn  down by  $350,000.  The line of credit is being used for short term
working capital needs associated with operations.  The Company and USE also have
a $500,000 line of credit through their affiliate Plateau  Resources.  This line
of credit is for the  development  of the Ticaboo  town site in  southern  Utah.
Plateau has drawn down this financing  facility $300,000 which is repayable over
a period of 10 years.

     The Company's cash  resources will not be sufficient to sustain  operations
during  fiscal 2002.  The Company will continue to rely upon funding from USE to
meet its operating and administration capital requirements. The Company may also
receive funds from a settlement  of the Sheep  Mountain  Partners  ("SMP") legal
issues with Nukem,  Inc. and its affiliates.  Additionally  the Company may sell
additional  equipment or an interest in its various  mineral  properties to fund
its capital requirements.


                                        7

<PAGE>



CAPITAL REQUIREMENTS

     The Company and USE jointly  fund the holding  costs of the Sheep  Mountain
uranium  mines;  the Plateau  uranium mine and mill,  real estate and commercial
operations and the development of the coalbed methane gas properties.

     The Company and USE, through RMG, have  requirements for their cash to make
delay rental  payments on RMG's portion of coalbed  methane  leases.  During the
balance  of fiscal  2002,  the  Company,  USE and RMG will be  required  to fund
$50,200 in delay rentals.  RMG has entered into various agreements with industry
partners  where a portion  or all of its  drilling  commitments  on the  coalbed
methane properties are carried.

     The Company owes USE  $6,019,100 as a result of USE funding  operations and
capital  expansion  expenses.  The Company does not have the  resources to repay
this debt and must negotiate  continued  terms with USE or find some other means
of retiring the debt. To date, USE has not called the debt.

     During the quarter  ended  August 31, 2001,  the Company and USE  partially
reclaimed  the Ion  Exchange  Plant  ("GMIX")  at the SMP  properties.  With the
exception of the final  reclamation work to be done in the GMIX Plant during the
second quarter of fiscal 2002, it is not  anticipated  that any of the Company's
working capital will be used for the reclamation of any of its mineral  property
interests.  The future  reclamation  costs on the Sheep Mountain  properties are
covered  by a  reclamation  bond  which is secured by a pledge of certain of the
Company  and USE's real  estate  assets and a cash bond on the GMIX  plant.  The
reclamation bond amount is reviewed annually by State regulatory agencies.

RESULTS OF OPERATIONS

     Revenues  for the quarter  ended  August 31, 2001  decreased  $16,700  from
revenues for the same period of the previous year. This decrease was a result of
Phelps  Dodge  suspending  the payment of advance  royalties  on the Mt.  Emmons
molybdenum  property.  The Company and USE are investigating what legal recourse
they may have to cause Phelps Dodge reinstate the advance royalty payments.  The
Company had no revenues during the quarter ended August 31, 2001.

     Costs and  expenses  decreased  by $31,700  during the three  months  ended
August 31, 2001 from the same period of the prior year.  This  decrease was as a
result of reductions in the Company's  workforce.  The reduced workforce reduced
the Company's  obligation to fund retirement  benefits.  The Company recorded an
equity  loss from USECC in the amounts of $578,200  and  $340,900  for the three
months ended August 31, 2001 and August 31, 2000, respectively.

     Operations  for the three months ended August 31, 2001,  resulted in a loss
of $626,200 as compared to a loss of $403,900  for the same three  months in the
previous year.




                                        8

<PAGE>


                           PART II. OTHER INFORMATION


ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K.

     (a)  Exhibits.  None.

     (b)  Reports  on Form 8-K.  The  Company  filed one (1)  Report on Form 8-K
during the quarter  ended  August 31, 2001  reporting an event of July 10, 2001,
under item 5.



                                   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, there unto duly authorized.

                                                CRESTED CORP.
                                                (Company)



Date:  October 12, 2001                By:         /s/ Max T. Evans
                                                --------------------------------
                                                MAX T. EVANS,
                                                President



Date:  October 12, 2001                By:         /s/ Robert Scott Lorimer
                                                --------------------------------
                                                ROBERT SCOTT LORIMER,
                                                Principal Financial Officer
                                                and Chief Accounting Officer


                                        9

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