----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-K**

| X       | Annual                report pursuant to section 13 or 15(d) of the Securities Exchange                Act of                1934 for the fiscal year ended December 31, 2006 |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                          |
| ⁬ | Transition                report pursuant to section 13 or 15(d) of the Securities Exchange                Act of                1934 for the                                 |
|    | transition                period from ___________ to                ___________                                                                                               |

| **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)**      |
|                                                               |   |                               |
| Registrant's                telephone number, including area code: |   | **(307)                856-9271**  |

| Securities                registered pursuant to Section 12(b) of the Act:**None**                                          |
|-----------------------------------------------------------------------------------------------------------------------------|
| Securities                registered pursuant to Section 12(g) of the Act:**Common                Stock, $0.001 par value** |

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| Class                                        |   | Outstanding                at March 30, 2007 |
|----------------------------------------------|--------|----------------------------------------------|
| Common                stock, $.001 par value |   | 17,182,704                Shares             |

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**DISCLOSURE      REGARDING FORWARD-LOOKING STATEMENTS**

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**DISCLOSURE      REGARDING MINERAL RESOURCES UNDER SEC AND**

**CANADIAN      REGULATIONS**

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**PART      I**

**ITEM      1. BUSINESS**

**GENERAL**

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**SUMMARY      INFORMATION ABOUT THE SUBSIDIARIES**

|                                   | Percent                         | Primary                                                                                                                                                                                                                                                                    |
|----------------------------------------|---------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Subsidiary                             | Owned                by Crested | Business                Conducted                                                                                                                                                                                                                                          |
| Sutter                Gold Mining Inc. | 0.9%                            | Gold                (California) - being reactivated on a limited basis (permitting and                exploration)                                                                                                                                                        |
| USECC                Joint Venture     | 50.0%                           | Uranium                and molybdenum (inactive with limited reactivation in uranium and                molybdenum planned for 2007), and gold (through Sutter Gold Mining                Inc.,                being reactivated on a limited basis). Limited real estate. |
| U.S.                Moly Corp.         | 45%                             | Molybdenum                (Colorado) - limited reactivation ( operation of water treatment                plant,                permitting)                                                                                                                                |
| InterWest,                Inc.         | 45%                             | Real                Estate - inactive, working on properties prospective for                development                                                                                                                                                                    |

***Potential      Merger of Crested with USE***

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**Industry      Segments/Principal Products**

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***Minerals      - Molybdenum (Inactive and Permitting)***

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| Date                  or                 |   | Option  |              |         |   |
|------------------------------------------|--------|---------|-------------------|--------------|--------|
| Anniversary(1)                           |   | Payment |              | Expenditures |   |
|                                     |   |    |              |         |   |
| 10                  business days        |   |    |              |         |   |   |   |
| after                  Effective Date(2) |   | $       | 750,000           |         |   | -0- |   |
|                                     |   |    |              |         |   |   |   |
| By                  first anniversary(3) |   | $       | 500,000/1,200,000 |         | $      | 3,500,000/4,200,000 |   |
|                                     |   |    |              |         |   |   |   |
| By                  second anniversary   |   | $       | 500,000           |         | $      | 5,000,000 |   |
|                                     |   |    |              |         |   |   |   |
| By                  third anniversary    |   | $       | 500,000           |         | $      | 5,000,000 |   |
|                                     |   |    |              |         |   |   |   |
| By                  fourth anniversary   |   | $       | 500,000           |         | $      | 2,500,000 |   |
|                                     |   |    |              |         |   |   |   |
| By                  fifth anniversary    |   | $       | 500,000           |         |   |   |   |
|                                     |   |    |              |         | $      | 30,000,000 | (4) |
|                                     |   | $       | 3,950,000         |         | $      | 46,000,000 |   |

| (1) | Anniversary                of Effective Date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | If                paid in KBX stock, 10 business days after Canadian regulatory and                stock                exchange approval which has not yet occurred.                                                                                                                                                                                                                                                                                                                                                                           |
| (3) | Of                this amount, $700,000 is payable by the first anniversary of the                Effective                Date, either by KBX paying an additional like amount in Expenditures,                in                the first year; or increasing the first anniversary option payment                by a                like amount (payable in cash or KBX common stock); or a combination                of the                preceding.                                                                                     |
| (4) | Delivery                of a bankable feasibility study (“BFS”) on the Property. If the total                Option Payments and Expenditures and costs to prepare the BFS are                less                than $50 million, KBX will pay the Company and USE the difference                in cash.                If the total is more than $50 million before the BFS is completed,                the                Company and USE and KBX each will pay 50% of the balance needed to                complete the BFS. |

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***Minerals      - Uranium (Inactive, Standby, Exploration; Under Contract to      Sale)***

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***Contract      to Sell Uranium Assets to Uranium One - Uranium***

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| ·   | $750,000                cash (paid in advance on July 13, 2006 after the parties signed the                Exclusivity Agreement). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 6,607,605                Uranium One common shares, at closing. |
|--------------------|-----------------------------------------------------------------|

| ·   | Approximately                $5,000,000 at closing, as a UPC-related payment. On January 31, 2007,                USE                and Crested, and Uranium Power Corp. (“UPC), amended their purchase and                sale agreement for UPC to buy a 50% interest in certain of the Company                and                USE’s mining properties (as well as the mining venture agreement between                the Company and USE, and UPC, to acquire and develop additional                properties, and other agreements), to grant the Company and USE the                right                to transfer several UPC agreements, including the right to receive                all                future payments there under from UPC ($4,100,000 cash plus 1,500,000                UPC                common shares), to Uranium One. For information about the agreements                with                UPC, see below. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Approximately                $1,400,000, at closing, to reimburse the Company and USE for uranium                property exploration and acquisition expenditures from July 10, 2006                to                the closing of the APA. These reimbursable costs relate to the Company                and                USE’s expenditures on the properties being sold to Uranium One since                the                signing of the Exclusivity Agreement. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Additional                consideration, if and when certain events occur as                follows: |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | $20,000,000                cash when commercial production occurs at the Shootaring Canyon Mill                (when                the Shootaring Canyon Mill has been operating at 60% or more of its                design                capacity of 750 short tons per day for 60 consecutive                days). |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $7,500,000                cash on the first delivery (after commercial production has occurred)                of                mineralized material from any of the properties being sold to Uranium                One                under the APA (excluding existing ore stockpiles on the                properties). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | From                and after commercial production occurs at the Shootaring Canyon Mill,                a                production royalty (up to but not more than $12,500,000) equal to                five                percent of (i) the gross value of uranium and vanadium products produced                at and sold from the mill; or (ii) mill fees received by Uranium                One from                third parties for custom milling or tolling arrangements, as applicable.                If production is sold to a Uranium One affiliate, partner, or joint                venturer, gross value shall be determined by reference to mining                industry                publications or data. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | Assumption                of assumed liabilities: Uranium One will assume certain specific                liabilities associated with the assets to be sold, including (but                not                limited to) those future reclamation liabilities associated with                the                Shootaring Canyon Mill in Utah, and the Sheep Mountain properties                in                Wyoming. Subject to regulatory approval of replacement bonds issued                by a                Uranium One subsidiary as the responsible party, cash bonds in the                approximate amount of $6,883,300 on the Shootaring Canyon Mill and                other                reclamation cash bonds in the approximate amount of $413,400 will                be                released and the cash will be returned to USE by the regulatory                authorities. Receipt of these amounts is expected to follow closing                of the                APA. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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** **

***Minerals      - Gold (Permitting and Exploration)***

***Real      Estate***

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**CAPITAL      ACTIVITIES IN 2006**

***Sale      of Equity Interests Related to Coalbed Methane.***

***Liquidation      of Enterra Units (part of 2005 sale of RMG).***

***Sale      of Pinnacle Gas Resources, Inc. Stock.***

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***Exercise      of Warrants and Options***

**RESEARCH      AND DEVELOPMENT**

**ENVIRONMENTAL**

***General***

***Other      Environmental Costs***

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**EMPLOYEES**

**MINING      CLAIM HOLDINGS**

***Title***

**PROPOSED      FEDERAL LEGISLATION**

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**ITEM      1. A RISK FACTORS**

**THE      FOLLOWING RISK FACTORS SHOULD BE CONSIDERED IN EVALUATING**

**THE      INFORMATION IN THIS FORM 10-K**

***The      Company has a history of operating losses***

***Concerning      the Contract with Uranium One***

***No      recurring business revenues and uncertainties associated with transaction-based      revenues***
**.      **

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***Uncertainties      in the value of the mineral properties***

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***Compliance      with environmental regulations may be costly***

***We      depend on key personnel***

***We      will seek additional business activities if the uranium assets are sold to      Uranium One.***

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***The      Company does not expect to pay dividends on its common      stock.***

**ITEM      2. PROPERTY**

***Molybdenum      - Lucky Jack Molybdenum Property***

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***Uranium      - Mining Properties***

**·**
**Utah**

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**Green      River North and South Projects, Utah**

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**Lisbon      Valley, Utah**

**Henry      Mountains, Utah**

**·**
**Wyoming**

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**·**
**Arizona**

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**·**
**Colorado**

***Other      Properties***

| ·   | Fort                Peck Lustre Field (Montana) |
|--------------------|-------------------------------------------------|

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**ITEM      3. LEGAL PROCEEDING**

***Phelps      Dodge - Lucky Jack Molybdenum Property***

***Patent      Claims Litigation - Lucky Jack Molybdenum Property***

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**ITEM      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

| Name                of Director |   | Term                Expires |   | For        |   | Abstain |
|---------------------------------|--------|-----------------------------|--------|------------|--------|---------|
|                            |   |                        |   |       |   |    |
| Keith                G. Larsen  |   | 2009                        |   | 15,594,176 |   | 287,566 |
| Harold                F. Herron |   | 2009                        |   | 15,597,276 |   | 284,466 |

|                                                                                                                     |   | Votes                For |   | Votes                Against |   | Abstain |
|--------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|------------------------------|--------|---------|
|                                                                                                                     |   |                     |   |                         |   |    |
| Appointment                of Epstein, Weber & Conover, PLC as independent                auditors for calendar 2006 |   | 15,760,107               |   | 113,052                      |   | 8,582   |

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**PART      II**

**ITEM      5. Market for Registrant's common equity, related Stockholder Matters and Issuer      Purchases of Equity Securities**

|                                                   |   | High   |   | Low    |   |
|--------------------------------------------------------|--------|--------|--------|--------|--------|
| Calendar                  year ended December 31, 2006 |   |   |   |   |   |   |   |
| Fourth                  quarter ended 12/31/06         |   |   | 2.54   |   |   | 1.52 |   |
| Third                  quarter ended 09/30/06          |   |   | 2.25   |   |   | 1.28 |   |
| Second                  quarter ended 06/30/06         |   |   | 3.09   |   |   | 1.67 |   |
| First                  quarter ended 03/31/06          |   |   | 3.12   |   |   | 2.50 |   |
|                                                   |   |   |   |   |   |   |   |
| Calendar                  year ended December 31, 2005 |   |   |   |   |   |   |   |
| Fourth                  quarter ended 12/31/05         |   |   | 2.55   |   |   | 1.70 |   |
| Third                  quarter ended 09/30/05          |   |   | 1.82   |   |   | 1.36 |   |
| Second                  quarter ended 06/30/05         |   |   | 1.99   |   |   | 1.21 |   |
| First                  quarter ended 03/31/05          |   |   | 3.42   |   |   | 0.35 |   |

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**ITEM      6. Selected Financial Data**

|                                                                                                                                                            |   | December                  31, |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|------------|
|                                                                                                                                                            |   | 2006                          |       | 2005 |   | 2004 |   | 2003 |   | 2002 |   |
|                                                                                                                                                            |   |                          |       |   |   |   |   |   |   |   |   |
| Current                  assets                                                                                                                                 |   | $                             | 10,751,300 |   | $ | 95,100 |   | $ | 3,800 |   | $ | 3,300 |   | $ | 3,300 |   |
| Current                  liabilities                                                                                                                            |   |                          | 14,482,100 |   |   | 10,928,000 |   |   | 9,747,300 |   |   | 9,408,300 |   |   | 8,553,900 |   |
| working                  capital deficit                                                                                                                        |   |                          | (3,730,800 | ) |   | (10,832,900 | ) |   | (9,743,500 | ) |   | (9,405,000 | ) |   | (8,550,600 | ) |
| Total                  assets                                                                                                                                   |   |                          | 15,123,000 |   |   | 8,682,200 |   |   | 2,983,600 |   |   | 4,387,100 |   |   | 5,889,900 |   |
| Long-term                  obligations(1)                                                                                                                       |   |                          | 266,600    |   |   | 1,260,800 |   |   | 1,289,100 |   |   | 1,268,900 |   |   | 964,000 |   |
| Shareholders'                  equity (deficit)                                                                                                                 |   |                          | 364,200    |   |   | (3,516,700 | ) |   | (8,062,900 | ) |   | (6,300,200 | ) |   | (3,638,100 | ) |
|                                                                                                                                                            |   |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1)                  Included $51,000, $1,045,200, 1,073,500, $1,053,300 and $748,400                  of                  accrued reclamation costs on mineral |   |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| properties                  at December 31, 2006, 2005, 2004, 2003, and 2002, respectively.                                                                     |   |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                            |   |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                                                                                                                                        |   | $                             | --         |   | $ | -- |   | $ | -- |   | $ | -- |   | $ | -- |   |
| (Loss)                  income before equity in loss                                                                                                            |   |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                  affiliates and income taxes                                                                                                                 |   |                          | (157,300   | ) |   | 6,341,200 |   |   | (320,000 | ) |   | (263,300 | ) |   | (102,400 | ) |
| Equity                  in loss of affiliates                                                                                                                   |   |                          | (3,625,600 | ) |   | (1,699,800 | ) |   | (1,447,500 | ) |   | (2,114,600 | ) |   | (1,055,000 | ) |
| Income                  taxes                                                                                                                                   |   |                          | 7,633,800  |   |   | (100,000 | ) |   | -- |   |   | -- |   |   | -- |   |
| Cumulative                  effect of                                                                                                                           |   |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| accounting                  change                                                                                                                              |   |                          | --         |   |   | -- |   |   | -- |   |   | (293,800 | ) |   | -- |   |
|                                                                                                                                                            |   |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss)                                                                                                                              |   | $                             | 3,850,900  |   | $ | 4,541,400 |   | $ | (1,767,500 | ) | $ | (2,671,700 | ) | $ | (1,157,400 | ) |
|                                                                                                                                                            |   |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss) per share                                                                                                                    |   | $                             | 0.22       |   | $ | 0.26 |   | $ | (0.10 | ) | $ | (0.16 | ) | $ | (0.07 | ) |
| Cash                  dividends per share                                                                                                                       |   | $                             | -0-        |   | $ | -0- |   | $ | -0- |   | $ | -0- |   | $ | -0- |   |

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**ITEM      7. Management’s Discussion and Analysis of Financial Condition and Results of      Operations**

**General      Overview**

**Uranium**

**Gold**

**Molybdenum**

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***Proposed      merger with USE***

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**Forward      Looking Statements**

**Critical      Accounting Policies**

*Marketable      Securities *

*Asset      Impairments*

*Asset      Retirement Obligations*

*Liabilities      Held for Sale*

*Revenue      Recognition*

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*Income      Taxes*

*Use      of Accounting Estimates*

**Recent      Accounting Pronouncements**

**FIN      48 **

**FAS      157**

*Considering      the Effects of Prior Year Misstatements when Quantifying Misstatements in      Current Year Financial Statements *

*The      Fair Value Option for Financial Assets and Financial Liabilities*

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**Liquidity      and Capital Resources**

**Capital      Resources**

***Contract      to Sell Uranium Assets to Uranium One and the UPC      Agreement***

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***Kobex      Resources Ltd. Agreement***

**Capital      Requirements**

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**Maintaining      Mineral Properties**

**Uranium      Properties**

**Lucky      Jack Molybdenum Property**

***Asset      Retirement Obligations***

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***InterWest***

***Debt***

***Other***

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**Results      of Operations**

**Year      Ended December 31, 2006 as Compared to the Year Ended December 31,      2005**

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**Year      ended December 31, 2005 compared to Year ended December 31,      2004**

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**Future      Operations**

**Effects      of Changes in Prices**

**Uranium      and Gold.**

**Molybdenum.**

**Contractual      Obligations**

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**ITEM      8. Financial Statements**

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**Report      of Independent Registered Public Accounting Firm**

*Share-Based      Payment.*

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**Report      of Independent Registered Public Accounting Firm**

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| **CRESTED                CORP.**                                               |   |
|--------------------------------------------------------------------------------|--------|
| **BALANCE                SHEETS**                                              |   |
| **ASSETS**                                                                     |   |
|                                                                           |   |   |   |   |   |
|                                                                           |   | December                31, |   |
|                                                                           |   | 2006 |   | 2005 |   |
| CURRENT                ASSETS:                                                 |   |   |   |   |   |   |   |
| Cash                and cash equivalents                                  |   | $ | 3,236,600 |   | $ | 95,100 |   |
| Accounts                receivable                                        |   |   | 72,200 |   |   | -- |   |
| Deferred                tax assets                                        |   |   | 7,442,500 |   |   | -- |   |
|                                                                           |   |   | 10,751,300 |   |   | 95,100 |   |
|                                                                           |   |   |   |   |   |   |   |
| INVESTMENTS                IN AFFILIATES                                       |   |   |   |   |   |   |   |
| Affiliated                companies                                       |   |   | 4,280,400 |   |   | 3,348,800 |   |
| Non-affiliated                companies                                   |   |   | -- |   |   | 5,228,300 |   |
|                                                                           |   |   | 4,280,400 |   |   | 8,577,100 |   |
| PROPERTIES                AND EQUIPMENT                                        |   |   |   |   |   |   |   |
| Library                                                                   |   |   | -- |   |   | 10,000 |   |
| Developed                oil properties, full cost method                 |   |   | -- |   |   | 886,800 |   |
|                                                                           |   |   | -- |   |   | 896,800 |   |
| Less                accumulated depreciation, depletion and amortization  |   |   | -- |   |   | (886,800 | ) |
|                                                                           |   |   | -- |   |   | 10,000 |   |
|                                                                           |   |   |   |   |   |   |   |
| DEFERRED                TAX ASSETS                                             |   |   | 91,300 |   |   | -- |   |
|                                                                           |   | $ | 15,123,000 |   | $ | 8,682,200 |   |
|                                                                           |   |   |   |   |   |   |   |

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| **CRESTED                  CORP.**                                          |   |
|-----------------------------------------------------------------------------|--------|
| **BALANCE                  SHEETS**                                         |   |
| **LIABILITIES                  AND SHAREHOLDERS' EQUITY (DEFICIT)**         |   |
|                                                                        |   |   |   |   |   |
|                                                                        |   | December                  31, |   |
|                                                                        |   | 2006 |   | 2005 |   |
| CURRENT                  LIABILITIES:                                       |   |   |   |   |   |   |   |
| Current                  debt to affiliate                             |   | $ | 13,277,200 |   | $ | 10,821,800 |   |
| Liabilities                  held for sale                             |   |   | 1,204,900 |   |   | -- |   |
| Asset                  retirement obligation                           |   |   | -- |   |   | 106,200 |   |
|                                                                        |   |   | 14,482,100 |   |   | 10,928,000 |   |
|                                                                        |   |   |   |   |   |   |   |
| COMMITMENT                  TO FUND EQUITY INVESTEES                        |   |   | 215,600 |   |   | 215,600 |   |
|                                                                        |   |   |   |   |   |   |   |
| ASSET                  RETIREMENT OBLIGATION                                |   |   | 51,000 |   |   | 1,045,200 |   |
|                                                                        |   |   |   |   |   |   |   |
| COMMITMENTS                  AND CONTINGENCIES                              |   |   | -- |   |   | -- |   |
|                                                                        |   |   |   |   |   |   |   |
| FORFEITABLE                  COMMON STOCK, $.001 par value                  |   |   |   |   |   |   |   |
| 15,000                  shares issued, forfeitable until earned        |   |   | 10,100 |   |   | 10,100 |   |
|                                                                        |   |   |   |   |   |   |   |
| SHAREHOLDERS'                  EQUITY (DEFICIT)                             |   |   |   |   |   |   |   |
| Preferred                  stock, $.001 par value;                     |   |   |   |   |   |   |   |
|  100,000                  shares authorized none issued or outstanding |   |   | -- |   |   | -- |   |
| Common                  stock, $.001 par value; 100,000,000 shares     |   |   |   |   |   |   |   |
|  authorized;                  17,167,704 and 17,149,298                |   |   |   |   |   |   |   |
|  shares                  issued and outstanding                        |   |   | 17,200 |   |   | 17,200 |   |
| Additional                  paid-in capital                            |   |   | 11,844,400 |   |   | 11,814,400 |   |
| Accumulated                  deficit                                   |   |   | (11,497,400 | ) |   | (15,348,300 | ) |
|                                                                        |   |   | 364,200 |   |   | (3,516,700 | ) |
|                                                                        |   | $ | 15,123,000 |   | $ | 8,682,200 |   |
|                                                                        |   |   |   |   |   |   |   |

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| **CRESTED                  CORP.**                                        |   |
|---------------------------------------------------------------------------|--------|
| **STATEMENTS                  OF OPERATIONS**                             |   |
|                                                                      |   |   |   |   |   |   |   |
|                                                                      |   | Year                  ended December 31, |   |
|                                                                      |   | 2006 |   | 2005 |   | 2004 |   |
|                                                                      |   |   |   |   |   |   |   |
| REVENUES:                                                                 |   | $ | -- |   | $ | -- |   | $ | -- |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| COSTS                  AND EXPENSES:                                      |   |   |   |   |   |   |   |   |   |   |
| Accretion                  of asset retirement obligation            |   |   | 113,000 |   |   | 90,900 |   |   | 90,900 |   |
| Change                  in estimate of asset retirement obligation   |   |   | (8,500 | ) |   | (109,500 | ) |   | 25,700 |   |
| General                  and administrative                          |   |   | 531,000 |   |   | 179,500 |   |   | 203,400 |   |
|                                                                      |   |   | 635,500 |   |   | 160,900 |   |   | 320,000 |   |
| LOSS                  BEFORE INVESTMENT AND                               |   |   |   |   |   |   |   |   |   |   |
| PROPERTY                  TRANSACTIONS                               |   |   | (635,500 | ) |   | (160,900 | ) |   | (320,000 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| OTHER                  REVENUES AND (EXPENSES):                           |   |   |   |   |   |   |   |   |   |   |
| Interest                                                             |   |   | 44,700 |   |   | 1,100 |   |   | -- |   |
| Dividend                  income                                     |   |   | 27,000 |   |   | 12,400 |   |   | -- |   |
| Gain                  (loss) on sale of investment                   |   |   | 3,794,800 |   |   | -- |   |   | -- |   |
| Gain                  on sale of Rocky Mountain Gas                  |   |   | -- |   |   | 5,816,700 |   |   | -- |   |
| Loss                  on write off of fixed assets                   |   |   | (10,000 | ) |   | -- |   |   | -- |   |
| Loss                  on exchange of Enterra Acquisition shares      |   |   | (1,354,200 | ) |   | -- |   |   | -- |   |
| (Loss)                  gain on sale of marketable securities        |   |   | (324,300 | ) |   | 448,300 |   |   | -- |   |
| (Loss)                  gain on valuation of derivatives             |   |   | (223,600 | ) |   | 223,600 |   |   | -- |   |
| Gain                  on sale of U.S. Energy stock                   |   |   | 2,023,800 |   |   | -- |   |   | -- |   |
| Litigation                  settlement                               |   |   | (3,500,000 | ) |   | -- |   |   | -- |   |
|                                                                      |   |   | 478,200 |   |   | 6,502,100 |   |   | -- |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| (LOSS)                  GAIN BEFORE EQUITY LOSS,                          |   |   |   |   |   |   |   |   |   |   |
| AND                  INCOME TAXES                                    |   |   | (157,300 | ) |   | 6,341,200 |   |   | (320,000 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| EQUITY                  IN LOSS OF AFFILIATE                              |   |   | (3,625,600 | ) |   | (1,699,800 | ) |   | (1,447,500 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| (LOSS)                  INCOME BEFORE                                     |   |   |   |   |   |   |   |   |   |   |
| INCOME                  TAXES                                        |   |   | (3,782,900 | ) |   | 4,641,400 |   |   | (1,767,500 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| INCOME                  TAXES                                             |   |   |   |   |   |   |   |   |   |   |
| Current                  benefit from (provision for)                |   |   | 100,000 |   |   | (100,000 | ) |   | -- |   |
| Deferred                  benefit                                    |   |   | 7,533,800 |   |   | -- |   |   | -- |   |
|                                                                      |   |   | 7,633,800 |   |   | (100,000 | ) |   | -- |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| NET                  INCOME (LOSS)                                        |   | $ | 3,850,900 |   | $ | 4,541,400 |   | $ | (1,767,500 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| PER                  SHARE DATA                                           |   |   |   |   |   |   |   |   |   |   |
| NET                  INCOME (LOSS) PER SHARE, BASIC                  |   | $ | 0.22 |   | $ | 0.26 |   | $ | (0.10 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| NET                  INCOME (LOSS) PER SHARE, DILUTED                |   | $ | 0.22 |   | $ | 0.26 |   | $ | (0.10 | ) |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| BASIC                  WEIGHTED AVERAGE                                   |   |   |   |   |   |   |   |   |   |   |
| SHARES                  OUTSTANDING                                  |   |   | 17,153,282 |   |   | 17,146,306 |   |   | 17,124,568 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |
| DILUTED                  WEIGHTED AVERAGE                                 |   |   |   |   |   |   |   |   |   |   |
| SHARES                  OUTSTANDING                                  |   |   | 17,711,842 |   |   | 17,161,306 |   |   | 17,124,568 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |

----

| **CRESTED                  CORP.**                                                                                                                                                                                                                                                                             |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **STATEMENT                  OF SHAREHOLDERS' EQUITY (DEFICIT)**                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                           |   |   |   |   |   | Additional |   |   |   | Total |   |
|                                                                                                                                                                                                                                                                                                           |   | Common                  Stock |   |   |   | Paid-In |   | Accumulated |   | Shareholders' |   |
|                                                                                                                                                                                                                                                                                                           |   | Shares |   | Amount |   | Capital |   | Deficit |   | Equity                  (Deficit) |   |
| Balance                  December 31, 2003                                                                                                                                                                                                                                                                     |   |   | 17,118,098 |   | $ | 17,200 |   | $ | 11,804,800 |   | $ | (18,122,200 | ) | $ | (6,300,200 | ) |
|                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of stock to directors                                                                                                                                                                                                                                                                |   |   | 19,200 |   |   | -- |   |   | 4,800 |   |   | -- |   |   | 4,800 |   |
|                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  Loss                                                                                                                                                                                                                                                                                      |   |   | -- |   |   | -- |   |   | -- |   |   | (1,767,500 | ) |   | (1,767,500 | ) |
| Balance                  December 31, 2004                                                                                                                                                                                                                                                                     |   |   | 17,137,298 |   | $ | 17,200 |   | $ | 11,809,600 |   | $ | (19,889,700 | ) | $ | (8,062,900 | ) |
|                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of stock to directors                                                                                                                                                                                                                                                                |   |   | 12,000 |   |   | -- |   |   | 4,800 |   |   | -- |   |   | 4,800 |   |
|                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  Income                                                                                                                                                                                                                                                                                    |   |   | -- |   |   | -- |   |   | -- |   |   | 4,541,400 |   |   | 4,541,400 |   |
| Balance                  December 31, 2005                                                                                                                                                                                                                                                                     |   |   | 17,149,298 |   | $ | 17,200 |   | $ | 11,814,400 |   | $ | (15,348,300 | ) | $ | (3,516,700 | ) |
|                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of stock to directors                                                                                                                                                                                                                                                                |   |   | 18,406 |   |   | -- |   |   | 30,000 |   |   | -- |   |   | 30,000 |   |
|                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  Income                                                                                                                                                                                                                                                                                    |   |   | -- |   |   | -- |   |   | -- |   |   | 3,850,900 |   |   | 3,850,900 |   |
| Balance                  December 31, 2006                                                                                                                                                                                                                                                                     |   |   | 17,167,704 |   | $ | 17,200 |   | $ | 11,844,400 |   | $ | (11,497,400 | ) | $ | 364,200 |   |
|                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  Shareholders' Equity at December 31, 2006, Deficit at December                  31, 2005,                  and December 31, 2004 does not                  include 15,000 shares currently issued but forfeitable if certain                  conditions are not met by the recipients. |   |

----

| **CRESTED                  CORP.**                                      |   |
|-------------------------------------------------------------------------|--------|
| **STATEMENTS                  OF CASH FLOWS**                           |   |
|                                                                    |   |   |   |   |   |   |   |
|                                                                    |   | Year                  ended December 31, |   |
|                                                                    |   | 2006 |   | 2005 |   | 2004 |   |
| CASH                  FLOWS FROM OPERATING ACTIVITIES:                  |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss)                                      |   | $ | 3,850,900 |   | $ | 4,541,400 |   | $ | (1,767,500 | ) |
| Adjustments                  to reconcile net income (loss) to net cash |   |   |   |   |   |   |   |   |   |   |
| used                  in by operating activities:                       |   |   |   |   |   |   |   |   |   |   |
| Equity                  in loss of affiliate                            |   |   | 3,625,600 |   |   | 1,699,800 |   |   | 1,447,500 |   |
| Loss                  on exchange of Enterra acquisition shares         |   |   | 1,354,200 |   |   | -- |   |   | -- |   |
| Loss                  (gain) on sale of marketable securities           |   |   | 324,300 |   |   | (448,300 | ) |   | -- |   |
| Loss                  from write off of fixed assets                    |   |   | 10,000 |   |   | -- |   |   | -- |   |
| Loss                  from litigation settlement                        |   |   | 3,500,000 |   |   | -- |   |   | -- |   |
| Gain                  on sale of investment                             |   |   | (3,794,800 | ) |   | -- |   |   | -- |   |
| Gain                  on sale of U.S. Energy stock                      |   |   | (2,023,800 | ) |   | -- |   |   | -- |   |
| Benefit                  from deferred tax assets                       |   |   | (7,533,800 | ) |   | -- |   |   | -- |   |
| Gain                  on sale of Rocky Mountain Gas                     |   |   | -- |   |   | (5,816,700 | ) |   | -- |   |
| Noncash                  compensation                                   |   |   | 415,900 |   |   | 136,100 |   |   | 4,800 |   |
| Loss                  (gain) valuation of derivatives                   |   |   | 223,600 |   |   | (223,600 | ) |   | -- |   |
| Accretion                  of asset retirement obligation               |   |   | 113,000 |   |   | 90,900 |   |   | 90,900 |   |
| Change                  is accounts receivable                          |   |   | (72,200 | ) |   | -- |   |   | -- |   |
| Change                  in asset retirement obligation                  |   |   | (8,500 | ) |   | (109,500 | ) |   | 25,700 |   |
| NET                  CASH USED IN OPERATING ACTIVITIES                  |   |   | (15,600 | ) |   | (129,900 | ) |   | (198,600 | ) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |
| CASH                  FLOWS FROM INVESTING ACTIVITIES:                  |   |   |   |   |   |   |   |   |   |   |
| Proceeds                  from sale of marketable securities            |   |   | 2,991,000 |   |   | 2,177,900 |   |   | -- |   |
| Proceeds                  from the sale of Pinnacle Gas                 |   |   | 4,830,000 |   |   | -- |   |   | -- |   |
| Investment                  in affiliate                                |   |   | (1,350,000 | ) |   | (2,795,900 | ) |   | (43,500 | ) |
| NET                  CASH PROVIDED BY (USED IN)                         |   |   |   |   |   |   |   |   |   |   |
| INVESTING                  ACTIVITIES                                   |   |   | 6,471,000 |   |   | (618,000 | ) |   | (43,500 | ) |
|                                                                    |   |   |   |   |   |   |   |   |   |   |
| CASH                  FLOWS FROM FINANCING ACTIVATES:                   |   |   |   |   |   |   |   |   |   |   |
| Net                  activity on debt to affiliate                      |   |   | (3,313,900 | ) |   | 839,200 |   |   | 242,600 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |
| NET                  INCREASE IN                                        |   |   |   |   |   |   |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS                              |   |   | 3,141,500 |   |   | 91,300 |   |   | 500 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS AT                           |   |   |   |   |   |   |   |   |   |   |
| BEGINNING                  OF PERIOD                                    |   |   | 95,100 |   |   | 3,800 |   |   | 3,300 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |
| CASH                  AND CASH EQUIVALENTS AT                           |   |   |   |   |   |   |   |   |   |   |
| END                  OF PERIOD                                          |   | $ | 3,236,600 |   | $ | 95,100 |   | $ | 3,800 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |

----

| **CRESTED                  CORP.**                           |   |
|--------------------------------------------------------------|--------|
| **STATEMENTS                  OF CASH FLOWS**                |   |
| **(continued)**                                              |   |
|                                                         |   | Year                  ended December 31, |   |
|                                                         |   | 2006 |   | 2005 |   | 2004 |   |
| SUPPLEMENTAL                  DISCLOSURES:                   |   |   |   |   |   |   |   |   |   |   |
| Interest                  paid                               |   | $ | -- |   | $ | -- |   | $ | -- |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |
| Income                  tax (refund) paid                    |   | $ | (100,000 | ) | $ | 100,000 |   | $ | -- |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |
| NONCASH                  INVESTING AND FINANCING ACTIVITIES: |   |   |   |   |   |   |   |   |   |   |
| Exchange                  of Enterra Acquisition Shares for  |   |   |   |   |   |   |   |   |   |   |
| Enterra                  Trust Units                         |   | $ | 3,315,300 |   | $ | -- |   | $ | -- |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of stock to outside directors      |   | $ | 30,000 |   | $ | 4,800 |   | $ | 4,800 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |
| Investment                  in Non-affiliated companies      |   | $ | -- |   | $ | 917,600 |   | $ | -- |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |
| Investment                  in affiliate                     |   | $ | -- |   | $ | 717,100 |   | $ | -- |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |
| Net                  activity on debt to parent              |   | $ | -- |   | $ | 200,400 |   | $ | -- |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |

----

**CRESTED          CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND          2004**

**A.**
**BUSINESS      ORGANIZATION AND OPERATIONS:**

**Management      Plan**

----

**CRESTED          CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004          (Continued)**

**B.**
**SUMMARY      OF SIGNIFICANT ACCOUNTING POLICIES:**

**Investments**

**Cash      Equivalents**

**Marketable      Securities**

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

**Properties      and Equipment**

**Long-Lived      Assets**

**Fair      Value of Financial Instruments**

**Stock      Based Compensation**

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

|                                     | Year                  Ended December 31, |
|------------------------------------------|------------------------------------------|
|                                     | 2005                                     |   | 2004 |
| Risk-free                  interest rate | 4.38%                                    |   | 4.82% |
| Expected                  lives (years)  | 9.44                                     |   | -- |
| Expected                  volatility     | 107.20%                                  |   | -- |
| Expected                  dividend yield | --                                       |   | -- |

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

|                                            |   | Year                  Ended   |       |
|-------------------------------------------------|--------|-------------------------------|------------|
|                                            |   | December                  31, |       |
|                                            |   | 2005                          |       | 2004 |   |
| Net                  gain (loss) to common      |   | $                             | 4,541,400  |   | $ | (1,767,500 | ) |
| shareholder                  as reported        |   |                          |       |   |   |   |   |
| Deduct:                  Total stock based      |   |                          |       |   |   |   |   |
| employee                  expense               |   |                          |       |   |   |   |   |
| determined                  under fair          |   |                          |       |   |   |   |   |
| value                  based method             |   |                          | (1,013,500 | ) |   | -- |   |
| Pro                  forma net gain (loss)      |   | $                             | 3,527,900  |   | $ | (1,767,500 | ) |
|                                            |   |                          |       |   |   |   |   |
|                                            |   |                          |       |   |   |   |   |
| As                  reported, Basic and Diluted |   | $                             | 0.26       |   | $ | (0.10 | ) |
| Pro                  forma, Basic and Diluted   |   | $                             | 0.21       |   | $ | (0.10 | ) |

**Asset      Retirement Obligations**

**Liabilities      Held for Sale**

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

| The                  following is a reconciliation of the total liability for asset                  retirement                  obligations |   |   |       |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|
|                                                                                                                                         |   |   |       |
| Balance                  December 31, 2005                                                                                                   |   | $      | 1,151,400  |   |
| Addition                  to Liability                                                                                                       |   |   | 44,100     |   |
| Revaluation                  of liability                                                                                                    |   |   | (52,600    | ) |
| Accretion                  Expense                                                                                                           |   |   | 113,000    |   |
| Reclassification                  to liabilities held for sale                                                                               |   |   | (1,204,900 | ) |
| Balance                  December 31, 2006                                                                                                   |   | $      | 51,000     |   |
|                                                                                                                                         |   |   |       |   |

**Income      Taxes**

**Net      Income (Loss) Per Share**

| Diluted                  Earnings Per Share     |   |
|-------------------------------------------------|--------|
|                                            |   |   |   |   |   |   |   |
|                                            |   | 2006 |   |
|                                            |   | Income |   | Shares |   | Per                  Share |   |
|                                            |   |   |   |   |   |   |   |
| Basic                  earning per share        |   | $ | 3,850,900 |   |   | 17,153,282 |   | $ | 0.22 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |
| Effect                  of dilutive securities: |   |   |   |   |   |   |   |   |   |   |
| Forfeitable                  shares             |   |   |   |   |   | 15,000 |   |   |   |   |
| Outstanding                  options            |   |   |   |   |   | 543,560 |   |   |   |   |
|                                            |   |   |   |   |   | 558,560 |   |   |   |   |
|                                            |   |   |   |   |   |   |   |   |   |   |
| Diluted                  earning per share:     |   | $ | 3,850,900 |   |   | 17,711,842 |   | $ | 0.22 |   |
|                                            |   |   |   |   |   |   |   |   |   |   |

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

|                                            |   | 2005   |      |
|-------------------------------------------------|--------|--------|-----------|
|                                            |   | Income |      | Shares |   | Per                  Share |   |
|                                            |   |   |      |   |   |   |   |
| Basic                  earning per share        |   | $      | 4,541,400 |   |   | 17,146,306 |   | $ | 0.26 |   |
|                                            |   |   |      |   |   |   |   |   |   |   |
| Effect                  of dilutive securities: |   |   |      |   |   |   |   |   |   |   |
| Forfeitable                  shares             |   |   |      |   |   | 15,000 |   |   |   |   |
| Outstanding                  options            |   |   |      |   |   | -- |   |   |   |   |
|                                            |   |   |      |   |   | 15,000 |   |   |   |   |
|                                            |   |   |      |   |   |   |   |   |   |   |
| Diluted                  earning per share:     |   | $      | 4,541,400 |   |   | 17,161,306 |   | $ | 0.26 |   |
|                                            |   |   |      |   |   |   |   |   |   |   |

**Use      of Estimates**

**Recent      Accounting Pronouncements**

**FIN      48 **

**FAS      157**

*Considering      the Effects of Prior Year Misstatements when Quantifying Misstatements in      Current Year Financial Statements *

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

*The      Fair Value Option for Financial Assets and Financial Liabilities*

**C.**
**RELATED-PARTY      TRANSACTIONS:**

***Proposed      merger with USE***

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

**D.**
**INVESTMENTS      IN AFFILIATES:**

| The                  Company's investments in affiliates are as follows: |   |   |    |                          |   |      |   |
|--------------------------------------------------------------------------|--------|--------|---------|-------------------------------|--------|-----------|--------|
|                                                                     |   |   |    | December                  31, |   |
|                                                                     |   |   |    | 2006                          |   | 2005      |   |
| USECC                                                                    |   |   | 50.0%   |                          | $      | 4,274,900 |   | $ | 3,342,100 |   |
| Others                                                                   |   |   | various |                          |   | 5,500     |   |   | 6,700 |   |
|                                                                     |   |   |    |                          | $      | 4,280,400 |   | $ | 3,348,800 |   |
|                                                                     |   |   |    |                          |   |      |   |   |   |   |
| SGMI                                                                     |   |   | 0.9%    |                          | $      | (85,500   | )      | $ | (85,500 | ) |
| Yellow                  Stone Fuels Corp. ("YSFC")                       |   |   | 13.2%   |                          |   | (130,100  | )      |   | (130,100 | ) |
|                                                                     |   |   |    |                          | $      | (215,600  | )      | $ | (215,600 | ) |
|                                                                     |   |   |    |                          |   |      |   |   |   |   |

| Equity                loss from investments accounted for by the equity method is as                follows: |   |                                   |       |   |   |       |   |
|--------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|------------|--------|--------|------------|--------|
|                                                                                                         |   | Year                ended December 31, |       |
|                                                                                                         |   | 2006                                   |       | 2005   |   | 2004       |   |
|                                                                                                         |   |                                   |       |   |   |       |   |   |   |   |
| USECC                                                                                                        |   | $                                      | (3,625,600 | )      | $      | (1,699,800 | )      | $ | (1,447,500 | ) |
|                                                                                                         |   | $                                      | (3,625,600 | )      | $      | (1,699,800 | )      | $ | (1,447,500 | ) |
|                                                                                                         |   |                                   |       |   |   |       |   |   |   |   |

----

**CRESTED          CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004          (Continued)**

| **CONDENSED                  COMBINED BALANCE SHEETS:**  |   |
|----------------------------------------------------------|--------|
| **EQUITY                  INVESTEES**                    |   |
|                                                     |   |   |   |   |   |
|                                                     |   | December                  31, |   |
|                                                     |   | 2006 |   | 2005 |   |
| Current                  assets                     |   | $ | 9,032,900 |   | $ | 22,495,000 |   |
| Non-current                  assets                 |   |   | 9,816,900 |   |   | 16,665,000 |   |
|                                                     |   | $ | 18,849,800 |   | $ | 39,160,000 |   |
|                                                     |   |   |   |   |   |   |   |
| Current                  liabilities                |   | $ | 6,175,200 |   | $ | 4,355,000 |   |
| Reclamation                  and other liabilities  |   |   | 7,474,000 |   |   | 10,589,700 |   |
| Excess                  in assets                   |   |   | 5,200,600 |   |   | 24,215,300 |   |
|                                                     |   | $ | 18,849,800 |   | $ | 39,160,000 |   |
|                                                     |   |   |   |   |   |   |   |

| **CONDENSED                  COMBINED STATEMENTS OF OPERATIONS:** |   |
|-------------------------------------------------------------------|--------|
| **EQUITY                  INVESTEES**                             |   |
|                                                              |   |   |   |   |   |   |   |
|                                                              |   | Year                  ended December 31, |   |
|                                                              |   | 2006 |   | 2005 |   | 2004 |   |
| Revenues                                                     |   | $ | 912,000 |   | $ | 911,900 |   | $ | 4,951,700 |   |
| Costs                  and expenses                          |   | $ | (13,240,900 | ) | $ | (8,630,200 | ) | $ | (10,921,400 | ) |
| Other                  Income & Expenses                 |   | $ | 2,967,700 |   | $ | 7,313,800 |   | $ | (759,700 | ) |
| Net                  gain (loss)                             |   | $ | (9,361,200 | ) | $ | (404,500 | ) | $ | (6,729,400 | ) |
|                                                              |   |   |   |   |   |   |   |   |   |   |

**E.**
**MINERAL      TRANSACTIONS AND MINING PROPERTIES:**

**Lucky      Jack Molybdenum Properties**

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

| Date                or                 |   | Option  |              |         |   |
|----------------------------------------|--------|---------|-------------------|--------------|--------|
| Anniversary(1)                         |   | Payment |              | Expenditures |   |
|                                   |   |    |              |         |   |
| 10                business days        |   |    |              |         |   |
| after                Effective Date(2) |   | $       | 750,000           |         | $      | -0- |   |
|                                   |   |    |              |         |   |   |   |
| By                first anniversary(3) |   | $       | 500,000/1,200,000 |         | $      | 3,500,000/4,200,000 |   |
|                                   |   |    |              |         |   |   |   |
| By                second anniversary   |   | $       | 500,000           |         | $      | 5,000,000 |   |
|                                   |   |    |              |         |   |   |   |
| By                third anniversary    |   | $       | 500,000           |         | $      | 5,000,000 |   |
|                                   |   |    |              |         |   |   |   |
| By                fourth anniversary   |   | $       | 500,000           |         | $      | 2,500,000 |   |
|                                   |   |    |              |         |   |   |   |
| By                fifth anniversary    |   | $       | 500,000           |         |   |   |   |
|                                   |   |    |              |         | $      | 30,000,000 | (4) |
|                                   |   | $       | 3,950,000         |         | $      | 46,000,000 |   |

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

| (1) | Anniversary                of Effective Date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | If                paid in KBX stock, 10 business days after Canadian regulatory and                stock                exchange approval which has not yet occurred.                                                                                                                                                                                                                                                                                                                                                                           |
| (3) | Of                this amount, $700,000 is payable by the first anniversary of the                Effective                Date, either by KBX paying an additional like amount in Expenditures,                in                the first year; or increasing the first anniversary option payment                by a                like amount (payable in cash or KBX common stock); or a combination                of the                preceding.                                                                                     |
| (4) | Delivery                of a bankable feasibility study (“BFS”) on the Property. If the total                Option Payments and Expenditures and costs to prepare the BFS are                less                than $50 million, KBX will pay the Company and USE the difference                in cash.                If the total is more than $50 million before the BFS is completed,                The                Company and USE and KBX each will pay 50% of the balance needed to                complete the BFS. |

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

*Contract      to Sell Uranium Assets to Uranium One - Uranium*

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

** **

**Plateau      Resources Limited**

**Sutter      Gold Mining, Inc.**

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

**ROCKY      MOUNTAIN GAS, INC.**

**PINNACLE**

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

**F.**
**DEBT:**

|                                            |   | December                  31, |       |
|-------------------------------------------------|--------|-------------------------------|------------|
|                                            |   | 2006                          |       | 2005 |   |
| Advances                  payable - U.S. Energy |   |                          |       |   |   |   |   |
| balance                  payable in full on     |   |                          |       |   |   |   |   |
| demand                  (see Note A)            |   | $                             | 13,277,200 |   | $ | 10,821,800 |   |
|                                            |   |                          |       |   |   |   |   |

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

**G.**
**INCOME      TAXES:**

|                                                               |   | December                  31, |      |
|--------------------------------------------------------------------|--------|-------------------------------|-----------|
|                                                               |   | 2006                          |      | 2005 |   |
| Deferred                  tax assets:                              |   |                          |      |   |   |   |   |
| Deferred                  compensation                             |   | $                             | 81,000    |   | $ | 10,800 |   |
| Accrued                  reclamation                               |   |                          | 439,600   |   |   | 391,500 |   |
| Tax                  basis in excess of book                       |   |                          | -         |   |   | 629,800 |   |
| Net                  operating loss carry forwards                 |   |                          | 6,976,600 |   |   | 4,179,500 |   |
| Tax                  credits (AMT credit carryover)                |   |                          | 44,200    |   |   | 144,100 |   |
| Total                  deferred tax assets                         |   |                          | 7,541,400 |   |   | 5,355,700 |   |
|                                                               |   |                          |      |   |   |   |   |
| Deferred                  tax liabilities:                         |   |                          |      |   |   |   |   |
| Book                  basis in excess of tax basis - Enterra Units |   |                          | --        |   |   | (76,000 | ) |
| Non-deductible                  reserves and other                 |   |                          | (7,600    | ) |   | -- |   |
| Total                  deferred tax assets                         |   |                          | (7,600    | ) |   | (76,000 | ) |
|                                                               |   |                          |      |   |   |   |   |
| Net                  deferred tax assets                           |   |                          | 7,533,800 |   |   | 5,279,700 |   |
| Valuation                  allowance                               |   |                          | --        |   |   | (5,279,700 | ) |
| Deferred                  tax assets net of valuation allowance    |   | $                             | 7,533,800 |   | $ | -- |   |
|                                                               |   |                          |      |   |   |   |   |

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

|                                                           |   | December                  31, |       |
|----------------------------------------------------------------|--------|-------------------------------|------------|
|                                                           |   | 2006                          |       | 2005 |   | 2004 |   |
|                                                           |   |                          |       |   |   |   |   |
| Expected                  federal income tax expense (benefit) |   | $                             | (1,324,000 | ) | $ | 1,544,100 |   | $ | (600,900 | ) |
| Dividends                  received deduction                  |   |                          | --         |   |   | (595,000 | ) |   | -- |   |
| Net                  operating loss utilized                   |   |                          | --         |   |   | -- |   |   | 237,800 |   |
| Permanent                  differences                         |   |                          | (609,300   | ) |   | -- |   |   | -- |   |
| Prior                  year true-up & rate change          |   |                          | (420,800   | ) |   | -- |   |   | -- |   |
| Increase                  (decrease) in valuation allowance    |   |                          | (5,279,700 | ) |   | (849,100 | ) |   | 363,100 |   |
|                                                           |   | $                             | (7,633,800 | ) | $ | 100,000 |   | $ | -- |   |
|                                                           |   |                          |       |   |   |   |   |   |   |   |

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

**H.**
**SHAREHOLDERS’      EQUITY:**

| Issue                                                |   | Number                   |    | Issue  |   | Total        |   |
|------------------------------------------------------|--------|--------------------------|---------|--------|--------|--------------|--------|
| Date                                                 |   | of                Shares |    | Price  |   | Compensation |   |
| June                1990                             |   |                     | 25,000  |   | $      | 1.06         |   | $ | 26,500 |   |
| December                1990                         |   |                     | 7,500   |   |   | .50          |   |   | 3,800 |   |
| January                1993                          |   |                     | 6,500   |   |   | .22          |   |   | 1,400 |   |
| January                1994                          |   |                     | 6,500   |   |   | .28          |   |   | 1,800 |   |
| January                1995                          |   |                     | 6,500   |   |   | .19          |   |   | 1,200 |   |
| January                1996                          |   |                     | 5,000   |   |   | .3125        |   |   | 1,600 |   |
| January                1997                          |   |                     | 8,000   |   |   | .9375        |   |   | 7,500 |   |
| Release                of Earned Shares; August 2000 |   |                     | (50,000 | )      |   |         |   |   | (33,700 | ) |
| Balance                at December 31, 2005          |   |                     | 15,000  |   |   |         |   | $ | 10,100 |   |

|                                 |   |  Year                  ended December 31, |   |
|--------------------------------------|--------|------------------------------------------------|--------|
|                                 |   |  2006                                     |   | 2005 |   | 2004 |   |
| Grants                               |   |                                           |   |   |   |   |   |   |   |   |
| Qualified                            |   |                                           | --     |   |   | 809,353 |   |   | -- |   |
| Non-Qualified                        |   |                                           | --     |   |   | 890,647 |   |   | -- |   |
|                                 |   |                                           | --     |   |   | 1,700,000 |   |   | -- |   |
|                                 |   |                                           |   |   |   |   |   |   |   |   |
| Price                  ofGrants      |   |                                           |   |   |   |   |   |   |   |   |
| High                                 |   | $                                              | --     |   | $ | 1.71 |   | $ | -- |   |
| Low                                  |   | $                                              | --     |   | $ | 1.71 |   | $ | -- |   |
|                                 |   |                                           |   |   |   |   |   |   |   |   |
| Exercised                            |   |                                           |   |   |   |   |   |   |   |   |
| Qualified                            |   |                                           | --     |   |   | -- |   |   | -- |   |
| Non-Qualified                        |   |                                           | --     |   |   | -- |   |   | -- |   |
|                                      |   |                                           | --     |   |   | -- |   |   | -- |   |
| Total                  Cash Received |   | $                                              | --     |   | $ | -- |   | $ | -- |   |
|                                 |   |                                           |   |   |   |   |   |   |   |   |
| Forfeitures/Cancellations            |   |                                           |   |   |   |   |   |   |   |   |
| Qualified                            |   |                                           | --     |   |   | -- |   |   | -- |   |
| Non-Qualified                        |   |                                           | --     |   |   | -- |   |   | -- |   |
|                                 |   |                                           | --     |   |   | -- |   |   | -- |   |
|                                 |   |                                           |   |   |   |   |   |   |   |   |

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

|                                       |   | Year                  ended December 31, |      |
|--------------------------------------------|--------|------------------------------------------|-----------|
|                                       |   | 2006                                     |      | 2005 |   | 2004 |   |
|                                       |   |                                     |      | Weighted |   |   |   | Weighted |   |   |   | Weighted |   |
|                                       |   |                                     |      | Average |   |   |   | Average |   |   |   | Average |   |
|                                       |   |                                     |      | Exercise |   |   |   | Exercise |   |   |   | Exercise |   |
|                                       |   | Options                                  |      | Price |   | Options |   | Price |   | Options |   | Price |   |
| Outstanding                  at beginning  |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                  the period        |   |                                     | 1,700,000 |   | $ | 1.71 |   |   | -- |   | $ | -- |   |   | -- |   | $ | -- |   |
| Granted                                    |   |                                     | --        |   | $ | -- |   |   | 1,700,000 |   | $ | 1.71 |   |   | -- |   | $ | -- |   |
| Forfeited                                  |   |                                     | --        |   | $ | -- |   |   | -- |   | $ | -- |   |   | -- |   | $ | -- |   |
| Expired                                    |   |                                     | --        |   | $ | -- |   |   | -- |   | $ | -- |   |   | -- |   | $ | -- |   |
| Exercised                                  |   |                                     | --        |   | $ | -- |   |   | -- |   | $ | -- |   |   | -- |   | $ | -- |   |
| Outstanding                  at period end |   |                                     | 1,700,000 |   | $ | 1.71 |   |   | 1,700,000 |   | $ | 1.71 |   |   | -- |   | $ | -- |   |
| Exercisable                  at period end |   |                                     | 1,700,000 |   | $ | 1.71 |   |   | 1,700,000 |   | $ | 1.71 |   |   | -- |   | $ | -- |   |
|                                       |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average fair     |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| value                  of options     |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| granted                  during       |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| the                  period           |   |                                     |      |   | $ | -- |   |   |   |   | $ | 1.54 |   |   |   |   | $ | -- |   |
|                                       |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                         |   |                          |   | Weighted                       |   |     |   |                          |   |     |   |
|------------------------------|--------|-------------------------------|--------|--------------------------------|--------|----------|--------|-------------------------------|--------|----------|--------|
|                         |   | Options                       |   | Weighted                       |   |     |   | Options                       |   |     |   |
|                         |   | outstanding                   |   | average                        |   | Weighted |   | exercisable                   |   | Weighted |   |
|                         |   | at                            |   | remaining                      |   | average  |   | at                            |   | average  |   |
| Grant                  Price |   | December                  31, |   | contractual                    |   | exercise |   | December                  31, |   | exercise |   |
| Range                        |   | 2006                          |   | Life                  in years |   | price    |   | 2006                          |   | price    |   |
| $                            | 1.71   |                          |   | 1,700,000                      |   |     | 8.44   |                          | $      | 1.71     |   |   | 1,700,000 |   | $ | 1.71 |   |
|                         |   |                          |   |                           |   |     |   |                          |   |     |   |   |   |   |   |   |   |
|                         |   |                          |   | 1,700,000                      |   |     | 8.44   |                          | $      | 1.71     |   |   | 1,700,000 |   | $ | 1.71 |   |
|                         |   |                          |   |                           |   |     |   |                          |   |     |   |   |   |   |   |   |   |

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

|                                                              |   | 2006   |      | 2005   |   | 2004      |   |
|-------------------------------------------------------------------|--------|--------|-----------|--------|--------|-----------|--------|
| Available                  for future grant                       |   |   | 300,000   |   |   | 300,000   |   |   | 2,000,000 |   |
| Intrinsic                  value of option exercised              |   | $      | -         |   | $      | -         |   | $ | - |   |
| Aggregate                  intrinsic value of options outstanding |   | $      | 1,292,000 |   | $      | 1,428,000 |   | $ | - |   |
| Aggregate                  intrinsic value of options exercisable |   | $      | 1,292,000 |   | $      | 1,428,000 |   | $ | - |   |

**I.**
**COMMITMENTS,      CONTINGENCIES AND QUARTERLY FINANCIAL DATA:**

***Phelps      Dodge - Lucky Jack Molybdenum Property***

***Patent      Claims Litigation - Lucky Jack Molybdenum Property***

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

**Asset      Retirement Obligations**

**Sheep      Mountain Properties**

**Plateau      Resources, Limited**

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

**Sutter      Gold Mining Inc.**

**Lucky      Jack**

**401(K)      Plan**

**Executive      Compensation**

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

**J.**
**SELECTED      QUARTERLY FINANCIAL DATA (Unaudited)**

| **CRESTED                  CORP**                                  |   |
|--------------------------------------------------------------------|--------|
| **SELECTED                  QUARTERLY FINANCIAL DATA (Unaudited)** |   |
|                                                               |   |   |   |   |   |   |   |   |   |
|                                                               |   | Three                  Months Ended |   |
|                                                               |   | March                  31 |   | June                  30, |   | September                  30, |   | December                  31, |   |
|                                                               |   | 2006 |   | 2006 |   | 2006 |   | 2006 |   |
|                                                               |   |   |   |   |   |   |   |   |   |
| Operating                  revenues                                |   | $ | -- |   | $ | -- |   | $ | -- |   | $ | -- |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain                  (loss) before investment                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and                  property transactions                    |   | $ | (366,000 | ) | $ | (1,513,600 | ) | $ | (185,800 | ) | $ | 1,908,100 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity                  in (loss) gain from affiliate              |   | $ | 289,300 |   | $ | (633,600 | ) | $ | (2,311,900 | ) | $ | (969,400 | ) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Benefit                  from income taxes                         |   | $ | -- |   | $ | -- |   | $ | -- |   | $ | 7,633,800 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss)                                 |   | $ | (76,700 | ) | $ | (2,147,200 | ) | $ | (2,497,700 | ) | $ | 8,572,500 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) per Share, basic                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  gain (loss)                        |   | $ | (0.02 | ) | $ | (0.09 | ) | $ | (0.01 | ) | $ | 0.56 |   |
| Equity                  in gain (loss)                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  from                  affiliate                              |   |   | 0.02 |   |   | (0.04 | ) |   | (0.14 | ) |   | (0.06 | ) |
|                                                                    |   | $ | -- |   | $ | (0.13 | ) | $ | (0.15 | ) | $ | 0.50 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                  Weighted Average                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                  Outstanding                           |   |   | 17,149,298 |   |   | 17,149,298 |   |   | 17,149,298 |   |   | 17,165,103 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) per Share, diluted                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  gain (loss)                        |   | $ | (0.02 | ) | $ | (0.09 | ) | $ | (0.01 | ) | $ | 0.55 |   |
| Equity                  in (loss) gain                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  from                  affiliate                              |   | $ | 0.02 |   | $ | (0.04 | ) | $ | (0.14 | ) | $ | (0.06 | ) |
|                                                                    |   | $ | -- |   | $ | (0.13 | ) | $ | (0.15 | ) | $ | 0.49 |   |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                  Weighted Average                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                  Outstanding                           |   |   | 17,149,298 |   |   | 17,149,298 |   |   | 17,149,298 |   |   | 17,518,565 |   |

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

| **CRESTED                  CORP**                                          |   |
|----------------------------------------------------------------------------|--------|
| **SELECTED                  QUARTERLY FINANCIAL DATA (Unaudited)**         |   |
|                                                                       |   |   |   |   |   |   |   |   |   |
|                                                                       |   | Three                  Months Ended |   |
|                                                                       |   | March                  31 |   | June                  30, |   | September                  30, |   | December                  31, |   |
|                                                                       |   | 2005 |   | 2005 |   | 2005 |   | 2005 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |
| Operating                  revenues                                        |   | $ | -- |   | $ | -- |   | $ | -- |   | $ | -- |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  income (loss)                                   |   | $ | (51,600 | ) | $ | 7,006,700 |   | $ | 580,300 |   | $ | (1,194,200 | ) |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity                  in income (loss) from affiliate                    |   | $ | 372,900 |   | $ | (717,400 | ) | $ | 187,600 |   | $ | (797,100 | ) |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss)                                         |   | $ | (424,500 | ) | $ | 6,189,300 |   | $ | 767,900 |   | $ | (1,991,300 | ) |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain                  (loss) per Share, basic                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  gain (loss)                                |   | $ | (0.00 | ) | $ | 0.41 |   | $ | 0.03 |   | $ | (0.07 | ) |
| Equity                  in gain (loss)                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  from                  affiliate                                      |   | $ | (0.02 | ) | $ | (0.04 | ) | $ | 0.01 |   | $ | (0.06 | ) |
|                                                                       |   | $ | (0.02 | ) | $ | 0.37 |   | $ | 0.04 |   | $ | (0.13 | ) |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                  Weighted Average                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                  Outstanding                                   |   |   | 17,137,298 |   |   | 17,137,298 |   |   | 17,149,298 |   |   | 17,149,298 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain                  (loss) per Share, diluted                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  gain (loss)                                |   | $ | (0.00 | ) | $ | 0.41 |   | $ | 0.03 |   | $ | (0.07 | ) |
| Equity                  in gain (loss)                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  from                  affiliate                                      |   | $ | (0.02 | ) | $ | (0.04 | ) | $ | 0.01 |   | $ | (0.06 | ) |
|                                                                       |   | $ | (0.02 | ) | $ | 0.37 |   | $ | 0.04 |   | $ | (0.13 | ) |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                  Weighted Average                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                  Outstanding                                   |   |   | 17,137,298 |   |   | 17,152,298 |   |   | 17,164,298 |   |   | 17,149,298 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                       |
|                                                                            |   |  Three                  Months Ended |   |
|                                                                            |   |   | March                  31,  |   |   | June                  30, |   |   | September                  30, |   |   | December                  31, |   |
|                                                                       |   |   | 2004 |   |   | 2004 |   |   | 2004 |   |   | 2004 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  revenues                                        |   | $ | -- |   | $ | -- |   | $ | -- |   | $ | -- |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  loss                                            |   | $ | (57,500 | ) | $ | (146,600 | ) | $ | (73,400 | ) | $ | (42,500 | ) |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity                  in loss from affiliate                             |   | $ | (469,900 | ) | $ | (318,800 | ) | $ | (300,600 | ) | $ | (358,200 | ) |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss                                                  |   | $ | (527,400 | ) | $ | (465,400 | ) | $ | (374,000 | ) | $ | (400,700 | ) |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss                  per share, basic and diluted                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  loss                                       |   | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.00 | ) |
| Equity                  in loss                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  from                  affiliate                                      |   | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.02 | ) |
|                                                                       |   | $ | (0.03 | ) | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.02 | ) |
|  Basic                and diluted weighted average Shares Outstanding |   |   | 17,118,098 |   |   | 17,118,098 |   |   | 17,124,639 |   |   | 17,137,298 |   |

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

**K.**
**SUBSEQUENT      EVENTS**

**Entry      into a Material Definitive Agreement - Plan and Agreement of Merger for Crested      Corp**

**Entry      into a Material Definitive Agreement - For Sale of Uranium Assets to sxr Uranium      One Inc.**

| ·   | $750,000                cash (paid in advance on July 13, 2006 after the parties signed the                Exclusivity Agreement). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 6,607,605                Uranium One common shares, at                closing. |
|--------------------|--------------------------------------------------------------------------------|

| ·   | Approximately                $5,000,000 at closing, as a UPC-Related payment. On January 31, 2007,                the                Company, USE, and Uranium Power Corp. (“UPC), amended their purchase and                sale agreement for UPC to buy a 50% interest in certain of the Company’s                and USE’s mining properties (as well as the mining venture agreement                between the Company and USE, and UPC, to acquire and develop additional                properties, and other agreements), to grant the Company and USE the                right                to transfer several UPC agreements, including the right to receive                all                future payments there under from UPC ($4,100,000 cash plus 1,500,000                UPC                common shares), to Uranium One. For information about the agreements                with                UPC, see below. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

| ·   | Approximately                $1,400,000, at closing, to reimburse the Company and USE for uranium                property exploration and acquisition expenditures from July 10, 2006                to                the closing of the APA. These reimbursable costs relate to the Company’s                and USE’s expenditures on the properties being sold to Uranium One since                the signing of the Exclusivity                Agreement. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Additional                consideration, if and when certain events occur as                follows: |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | $20,000,000                cash when commercial production occurs at the Shootaring Canyon Mill                (when                the Shootaring Canyon Mill has been operating at 60% or more of its                design                capacity of 750 short tons per day for 60 consecutive                days). |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $7,500,000                cash on the first delivery (after commercial production has occurred)                of                mineralized material from any of the properties being sold to Uranium                One                under the APA (excluding existing ore stockpiles on the                properties). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | From                and after commercial production occurs at the Shootaring Canyon Mill,                a                production royalty (up to but not more than $12,500,000) equal to                five                percent of (i) the gross value of uranium and vanadium products produced                at and sold from the mill; or (ii) mill fees received by Uranium                One from                third parties for custom milling or tolling arrangements, as applicable.                If production is sold to a Uranium One affiliate, partner, or joint                venturer, gross value shall be determined by reference to mining                industry                publications or data. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Assumption                of assumed liabilities: Uranium One will assume certain specific                liabilities associated with the assets to be sold, including (but                not                limited to) those future reclamation liabilities associated with                the                Shootaring Canyon Mill in Utah, and the Sheep Mountain properties                in                Wyoming. Subject to regulatory approval of replacement bonds issued                by a                Uranium One subsidiary as the responsible party, cash bonds in the                approximate amount of $6,883,300 on the Shootaring Canyon Mill and                other                reclamation cash bonds in the approximate amount of $413,400 will                be                released and the cash will be returned to the Company and USE by                the                regulatory authorities. Receipt of these amounts is expected to follow                closing of the APA. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

**InterWest**

**SGMI      Contingent Stock Purchase Warrant**

----

**CRESTED            CORP. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 AND 2004            (Continued)**

**ITEM      9. Changes in and Disagreements with Accountants and Accounting Financial      Disclosure**

**Changes      in Registrant’s Certifying Accountant**

**ITEM      9A. Controls and Procedures**

**ITEM      9B. Other Information**

----

**Report      of Independent Registered Public Accounting Firm**

----

**Report      of Independent Registered Public Accounting Firm**

----

| **USECB                  JOINT VENTURE**                        |   |
|-----------------------------------------------------------------|--------|
| **BALANCE                  SHEETS**                             |   |
| **ASSETS**                                                      |   |
|                                                            |   |   |   |   |   |
|                                                            |   | **December                  31,** |   | **December                  31,** |   |
|                                                            |   | **2006** |   | **2005** |   |
| CURRENT                  ASSETS:                                |   |   |   |   |   |   |   |
| Cash                                                       |   | $ | 1,448,100 |   | $ | 398,200 |   |
| Marketable                  securities                     |   |   | 1,148,500 |   |   | 251,600 |   |
| Accounts                  receivable                       |   |   |   |   |   |   |   |
|  Trade,                  net of allowance for doubtful     |   |   |   |   |   |   |   |
|  accounts                  of $0 and $15,900, respectfully |   |   | 238,400 |   |   | 231,600 |   |
| Inventory                                                  |   |   | 33,700 |   |   | 32,700 |   |
| Note                  receivable                           |   |   | 560,500 |   |   | -- |   |
| Assets                  held for sale                      |   |   | 2,022,200 |   |   | -- |   |
| Prepaid                  insurance                         |   |   | 107,300 |   |   | -- |   |
|                                                            |   |   | 5,558,700 |   |   | 914,100 |   |
|                                                            |   |   |   |   |   |   |   |
| PROPERTIES                  AND EQUIPMENT                       |   |   |   |   |   |   |   |
| Acquired                  mining claims                    |   |   | -- |   |   | 630,900 |   |
| Land                  and improvements                     |   |   | 561,200 |   |   | 561,200 |   |
| Buildings                  and improvements                |   |   | 4,862,600 |   |   | 4,498,200 |   |
| Equipment                                                  |   |   | 3,473,700 |   |   | 3,423,700 |   |
| Other                                                      |   |   | 62,000 |   |   | 35,900 |   |
|                                                            |   |   | 8,959,500 |   |   | 9,149,900 |   |
| Less                  accumulated depreciation             |   |   | (4,364,000 | ) |   | (4,243,500 | ) |
|                                                            |   |   | 4,595,500 |   |   | 4,906,400 |   |
|                                                            |   |   |   |   |   |   |   |
| OTHER                  ASSETS                                   |   |   |   |   |   |   |   |
| Notes                  receivable                          |   |   |   |   |   |   |   |
|  Trade                                                     |   |   | 10,000 |   |   | 20,800 |   |
|  Related                  parties                          |   |   | 4,232,900 |   |   | 3,315,600 |   |
| Deposits                  and other                        |   |   | -- |   |   | 443,900 |   |
|                                                            |   |   | 4,242,900 |   |   | 3,780,300 |   |
|                                                            |   | $ | 14,397,100 |   | $ | 9,600,800 |   |
|                                                            |   |   |   |   |   |   |   |

----

| **USECB                  JOINT VENTURE**                    |   |
|-------------------------------------------------------------|--------|
| **BALANCE                  SHEETS**                         |   |
| **LIABILITIES                  AND CAPITAL**                |   |
|                                                        |   |   |   |   |   |
|                                                        |   | **December                  31,** |   | **December                  31,** |   |
|                                                        |   | **2006** |   | **2005** |   |
| CURRENT                  LIABILITIES:                       |   |   |   |   |   |   |   |
| Accounts                  payable                      |   | $ | 702,200 |   | $ | 369,700 |   |
| Accrued                  compensation expenses         |   |   | 1,234,700 |   |   | 213,200 |   |
| Current                  portion of long-term debt     |   |   | 933,000 |   |   | 121,400 |   |
| Refundable                  deposits                   |   |   | 800,000 |   |   | -- |   |
| Other                  current liabilities             |   |   | 75,100 |   |   | 114,200 |   |
|                                                        |   |   | 3,745,000 |   |   | 818,500 |   |
|                                                        |   |   |   |   |   |   |   |
| LONG                  TERM DEBT                             |   |   | 294,900 |   |   | 847,600 |   |
|                                                        |   |   |   |   |   |   |   |
| CAPITAL                                                     |   |   |   |   |   |   |   |
| U.                  S. Energy                          |   |   | 4,943,200 |   |   | 4,010,400 |   |
| Crested                  Corp                          |   |   | 4,943,200 |   |   | 4,010,400 |   |
| Unrealized                  gain/(loss) on investment  |   |   | 470,800 |   |   | (86,100 | ) |
|                                                        |   |   | 10,357,200 |   |   | 7,934,700 |   |
|                                                        |   | $ | 14,397,100 |   | $ | 9,600,800 |   |
|                                                        |   |   |   |   |   |   |   |

----

| **USECB                  JOINT VENTURE**             |   |
|------------------------------------------------------|--------|
| **STATEMENTS                  OF OPERATIONS**        |   |
|                                                 |   |   |   |   |   |   |   |
|                                                 |   | **For                  the Years Ended December 31,** |   |
|                                                 |   | **2006** |   | **2005** |   | **2004** |   |
| OPERATING                  REVENUES:                 |   |   |   |   |   |   |   |   |   |   |
| Commercial                  operations          |   | $ | 96,900 |   | $ | 92,300 |   | $ | 91,300 |   |
| Management                  fees                |   |   | 369,200 |   |   | 367,800 |   |   | 341,000 |   |
|                                                 |   |   | 466,100 |   |   | 460,100 |   |   | 432,300 |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |
| OPERATING                  COSTS AND EXPENSES:       |   |   |   |   |   |   |   |   |   |   |
| Commercial                  operations          |   |   | 362,700 |   |   | 238,100 |   |   | 236,100 |   |
| Mine                  holding costs             |   |   | 1,811,300 |   |   | 1,068,200 |   |   | 996,800 |   |
| General                  and administrative     |   |   | 8,612,900 |   |   | 3,752,500 |   |   | 2,263,400 |   |
|                                                 |   |   | 10,786,900 |   |   | 5,058,800 |   |   | 3,496,300 |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |
| LOSS                  BEFORE INVESTMENT AND          |   |   |   |   |   |   |   |   |   |   |
| PROPERTY                  TRANSACTIONS          |   | $ | (10,320,800 | ) | $ | (4,598,700 | ) | $ | (3,064,000 | ) |
|                                                 |   |   |   |   |   |   |   |   |   |   |
| OTHER                  INCOME & EXPENSES         |   |   |   |   |   |   |   |   |   |   |
| Sale                  of assets                 |   |   | 2,838,500 |   |   | 1,312,000 |   |   | 2,500 |   |
| Sale                  of marketable securities  |   |   | 60,300 |   |   | - |   |   | - |   |
| Interest                  income                |   |   | 68,800 |   |   | 14,000 |   |   | 9,800 |   |
| Interest                  expense               |   |   | (107,100 | ) |   | (89,800 | ) |   | (76,500 | ) |
|                                                 |   |   | 2,860,500 |   |   | 1,236,200 |   |   | (64,200 | ) |
|                                                 |   |   |   |   |   |   |   |   |   |   |
| NET                  LOSS FROM                       |   |   |   |   |   |   |   |   |   |   |
| CONTINUING                  OPERATIONS          |   | $ | (7,460,300 | ) | $ | (3,362,500 | ) | $ | (3,128,200 | ) |
|                                                 |   |   |   |   |   |   |   |   |   |   |
| PROVISION                  FOR                       |   |   |   |   |   |   |   |   |   |   |
| INCOME                  TAXES                   |   |   | -- |   |   | -- |   |   | -- |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |
| NET                  LOSS                            |   | $ | (7,460,300 | ) | $ | (3,362,500 | ) | $ | (3,128,200 | ) |
|                                                 |   |   |   |   |   |   |   |   |   |   |

----

| **USECB                  JOINT VENTURE**                                            |   |
|-----------------------------------------------------------------------------------------------|--------|
| **STATEMENTS                  OF CHANGES IN PARTNERS' CAPITAL**                     |   |
| **FROM                  DECEMBER 31, 2003 TO DECEMBER 31,                  2006**   |   |
|                                                                                          |   |   |   |   |   |    |   |   |   |
|                                                                                          |   | U.S.                  Energy |   | Crested |   |  Unrealized |   |   |   |
|                                                                                          |   | Corp. |   | Corp. |   |  Gain/(loss) |   | Total |   |
| BALANCE,                  December 31, 2003                                                   |   | $ | 4,618,700 |   | $ | 4,618,700 |   |   |   |   | $ | 9,237,400 |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss                                                                     |   |   | (1,564,100 | ) |   | (1,564,100 | ) |   |   |   |   | (3,128,200 | ) |
| Additional                  capital contributions                                             |   |   | 576,800 |   |   | 576,800 |   |   |   |   |   | 1,153,600 |   |
| BALANCE,                  December 31, 2004                                                   |   | $ | 3,631,400 |   | $ | 3,631,400 |   |   |   |   | $ | 7,262,800 |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss                                                                     |   |   | (1,681,300 | ) |   | (1,681,200 | ) |   |   |   |   | (3,362,500 | ) |
| Unrealized                  loss on securities                                                |   |   |   |   |   |   |   |   | (86,100 | ) |   | (86,100 | ) |
|    Comprehensive                loss                                           |   |   |   |   |   |   |   |   |   |   |   | (3,448,600 | ) |
| Additional                  capital contributions                                             |   |   | 2,060,300 |   |   | 2,060,200 |   |   |   |   |   | 4,120,500 |   |
| BALANCE,                  December 31, 2005                                                   |   | $ | 4,010,400 |   | $ | 4,010,400 |   | $ | (86,100 | ) | $ | 7,934,700 |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss                                                                     |   |   | (3,730,200 | ) |   | (3,730,100 | ) |   |   |   |   | (7,460,300 | ) |
| Unrealized                  gain on securities                                                |   |   |   |   |   |   |   |   | 556,900 |   |   | 556,900 |   |
| Comprehensive                  loss                                                           |   |   |   |   |   |   |   |   |   |   |   | (6,903,400 | ) |
| Additional                  capital contributions                                             |   |   | 4,663,000 |   |   | 4,662,900 |   |   |   |   |   | 9,325,900 |   |
| BALANCE,                  December 31, 2006                                                   |   | $ | 4,943,200 |   | $ | 4,943,200 |   | $ | 470,800 |   | $ | 10,357,200 |   |
|                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| **USECB                  JOINT VENTURE**                          |   |
|-------------------------------------------------------------------|--------|
| **STATEMENTS                  OF CASH FLOWS**                     |   |
|                                                              |   |   |   |   |   |   |   |
|                                                              |   | **Year                  Ended December 31,** |   |
|                                                              |   | **2006** |   | **2005** |   | **2004** |   |
| CASH                  FLOWS FROM OPERATING ACTIVITIES             |   |   |   |   |   |   |   |   |   |   |
| Net                  loss                                         |   | $ | (7,460,300 | ) | $ | (3,362,500 | ) | $ | (3,128,200 | ) |
| Adjustments                  to reconcile net loss                |   |   |   |   |   |   |   |   |   |   |
| to                  net cash used in operating activities:        |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                      |   |   | 414,300 |   |   | 297,600 |   |   | 300,300 |   |
| Gain                  on sale of assets                           |   |   | (2,838,500 | ) |   | (1,312,000 | ) |   | (2,500 | ) |
| Gain                  on sale of marketable securities            |   |   | (60,300 | ) |   | -- |   |   | -- |   |
| Net                  changes in components                        |   |   |   |   |   |   |   |   |   |   |
| of                  assets and liabilities                   |   |   |   |   |   |   |   |   |   |   |
| Accounts                  receivable                         |   |   | (6,800 | ) |   | (150,200 | ) |   | (71,500 | ) |
| Inventory                                                    |   |   | (1,000 | ) |   | (8,700 | ) |   | (2,200 | ) |
| Deposits                  and other                          |   |   | (131,200 | ) |   | (84,600 | ) |   | (4,000 | ) |
| Prepaid                  insurance                           |   |   | (107,300 | ) |   | 111,900 |   |   | (13,400 | ) |
| Accounts                  payable                            |   |   | 332,500 |   |   | 267,900 |   |   | (221,600 | ) |
| Accrued                  compensation expenses               |   |   | 1,021,500 |   |   | 700 |   |   | 1,700 |   |
| Health                  insurance obligation                 |   |   | (41,200 | ) |   | (196,700 | ) |   | 50,400 |   |
| Refundable                  deposits                         |   |   | 800,000 |   |   | -- |   |   | -- |   |
| Other                  current liabilities                   |   |   | 2,100 |   |   | (1,000 | ) |   | 9,000 |   |
| NET                  CASH USED IN                                 |   |   |   |   |   |   |   |   |   |   |
| OPERATING                  ACTIVITIES                             |   |   | (8,076,200 | ) |   | (4,437,600 | ) |   | (3,082,000 | ) |
|                                                              |   |   |   |   |   |   |   |   |   |   |
| CASH                  FLOWS FROM INVESTING ACTIVITIES             |   |   |   |   |   |   |   |   |   |   |
| Acquisition                  of mining claims                     |   |   | (816,100 | ) |   | (630,900 | ) |   | -- |   |
| Proceeds                  from sale of property and equipment     |   |   | 2,254,600 |   |   | 1,079,700 |   |   | 2,500 |   |
| Purchase                  of property and equipment               |   |   | (472,500 | ) |   | (191,900 | ) |   | (84,900 | ) |
| Proceeds                  from sale of marketable securities      |   |   | 398,000 |   |   | -- |   |   | -- |   |
| Net                  activity on notes receivable related parties |   |   | (917,300 | ) |   | 149,900 |   |   | 2,290,600 |   |
| Investment                  in note receivable                    |   |   | (560,500 | ) |   | -- |   |   | -- |   |
| Net                  activity on notes receivable                 |   |   | 10,800 |   |   | 900 |   |   | 42,900 |   |
| NET                  CASH (USED IN) PROVIDED                      |   |   |   |   |   |   |   |   |   |   |
| BY                  INVESTING ACTIVITIES                          |   |   | (103,000 | ) |   | 407,700 |   |   | 2,251,100 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |
| CASH                  FLOWS FROM FINANCING ACTIVITES              |   |   |   |   |   |   |   |   |   |   |
| Contributions                  from partners                      |   |   | 9,325,900 |   |   | 4,120,500 |   |   | 1,153,600 |   |
| Proceeds                  from third party debt                   |   |   | 184,400 |   |   | 128,300 |   |   | 234,900 |   |
| Repayments                  of debt                               |   |   | (281,200 | ) |   | (351,600 | ) |   | (450,500 | ) |
| NET                  CASH PROVIDED BY                             |   |   |   |   |   |   |   |   |   |   |
| FINANCING                  ACTIVITIES                             |   |   | 9,229,100 |   |   | 3,897,200 |   |   | 938,000 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |
| NET                  INCREASE (DECREASE) IN CASH                  |   |   | 1,049,900 |   |   | (132,700 | ) |   | 107,100 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |
| CASH                  AT BEGINNING OF PERIOD                      |   | $ | 398,200 |   | $ | 530,900 |   | $ | 423,800 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |
| CASH                  AT END OF PERIOD                            |   | $ | 1,448,100 |   | $ | 398,200 |   | $ | 530,900 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |

----

| **USECB                  JOINT VENTURE**                      |   |
|---------------------------------------------------------------|--------|
| **STATEMENTS                  OF CASH FLOWS**                 |   |
| **(continued)**                                               |   |
|                                                          |   |   |   |   |   |   |   |
|                                                          |   | **Year                  Ended December 31,** |   |
|                                                          |   | **2006** |   | **2005** |   | **2004** |   |
| SUPPLEMENTAL                  DISCLOSURES:                    |   |   |   |   |   |   |   |   |   |   |
| Income                  tax paid                              |   | $ | -- |   | $ | -- |   | $ | -- |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |
| Interest                  paid                                |   | $ | 107,100 |   | $ | 89,800 |   | $ | 76,500 |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |
| NON-CASH                  INVESTING AND FINANCING ACTIVITIES: |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |
| Investment                  in marketable securities          |   | $ | 677,700 |   | $ | 337,700 |   | $ | -- |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |
| Unrealized                  gain/(loss) in investment         |   |   |   |   |   |   |   |   |   |   |
| in                  marketable securities                     |   |   | 556,900 |   | $ | (86,100 | ) | $ | -- |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |
| Debt                  issued to purchase assets               |   | $ | 355,800 |   | $ | -- |   | $ | -- |   |
|                                                          |   |   |   |   |   |   |   |   |   |   |

----

**USECB          JOINT VENTURE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 and          2004**

**A.**
**BUSINESS      ORGANIZATION AND OPERATIONS:**

**B.**
**SUMMARY      OF SIGNIFICANT ACCOUNTING POLICIES:**

**Cash      Equivalents**

**Marketable      Securities**

----

**USECB            JOINT VENTURE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 and            2004            (Continued)**

|                              |   |   |    | Gross       |   |    |   |
|-----------------------------------|--------|--------|---------|-------------|--------|---------|--------|
|                              |   |   |    | Unrealized  |   | Market  |   |
|                              |   | Cost   |    | Gain/(Loss) |   | Value   |   |
| 2006                              |   |   |    |        |   |    |   |   |   |   |
| UPC                  shares  |   | $      | 677,700 |        | $      | 470,800 |   | $ | 1,148,500 |   |
|                              |   | $      | 677,700 |        | $      | 470,800 |   | $ | 1,148,500 |   |
|                              |   |   |    |        |   |    |   |   |   |   |
| 2005                              |   |   |    |        |   |    |   |   |   |   |
| UPC                  shares  |   | $      | 337,700 |        | $      | (86,100 | )      | $ | 251,600 |   |
|                              |   | $      | 337,700 |        | $      | (86,100 | )      | $ | 251,600 |   |
|                              |   |   |    |        |   |    |   |   |   |   |

**Accounts      Receivable**

**Notes      Receivable**

**Inventories**

----

**USECB            JOINT VENTURE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 and            2004            (Continued)**

**Properties      and Equipment**

| Equipment |                                            |
|-----------|-------------------------------------------------|
|      | Office                Equipment                 | 3                to 5 years |
|      | Planes                                          | 10                years |
|      | Field                Tools and Hand Equipment   | 5                to 7 years |
|      | Vehicles                and Trucks              | 3                to 7 years |
|      | Heavy                Equipment                  | 7                to 10 years |
| Building  |                                            |
|      | Service                Buildings                | 20                years |
|      | Corporate                Headquarters' Building | 45                years |

**Mineral      Properties**

**Long-Lived      Assets**

----

**USECB            JOINT VENTURE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 and            2004            (Continued)**

**Fair      Value of Financial Instruments**

**Revenue      Recognition**

**Income      Taxes**

**Use      of Estimates**

**Recent      Accounting Pronouncements**

**C.**
**RELATED      PARTY TRANSACTIONS:**

----

**USECB            JOINT VENTURE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 and            2004            (Continued)**

**D.**
**DEBT:**

**Lines      of Credit**

| The                  components of long-term debt as of December 31, 2006, and 2005                  are as                  follows:                                                                                                                     |   |                          |      |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|-----------|--------|--------|
|                                                                                                                                                                                                                                                      |   |                          |      |   |   |
|                                                                                                                                                                                                                                                      |   | December                  31, |      |
|                                                                                                                                                                                                                                                      |   | 2006                          |      | 2005   |   |
| Installment                  notes to financial institutions                                                                                                                                                                                              |   |                          |      |   |   |   |   |
| collateralized                  by equipment; interest                                                                                                                                                                                               |   |                          |      |   |   |   |   |
| at                  5.25% to 9.0%, matures in 2007-2011                                                                                                                                                                                              |   | $                             | 1,227,900 |   | $      | 969,000 |   |
| Less                  current portion                                                                                                                                                                                                                     |   |                          | (933,000  | )      |   | (121,400 | ) |
|                                                                                                                                                                                                                                                      |   | $                             | 294,900   |   | $      | 847,600 |   |
|                                                                                                                                                                                                                                                      |   |                          |      |   |   |   |   |
| Principal                  requirements on long-term debt are $933,000, $88,700, $87,400,                  $89,000 and                  $29,800 for                  the years ended December 31, 2007 through 2011,                  respectively.  |   |

**E.**
**OPERATING      LEASES**

| Years                Ending |   |    |
|-----------------------------|--------|---------|
| December                31, |   | Amount  |
| 2007                        |   | $50,700 |
| 2008                        |   | $20,400 |

----

**USECB            JOINT VENTURE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2006, 2005 and            2004            (Continued)**

**F.**
**RECLASSIFICATION**

| **Assets                  held for sale**     |   |   |      |
|-----------------------------------------------|--------|--------|-----------|
| Acquired                  Mining Claims  |   | $      | 1,447,100 |   |
| Other                  Assets            |   |   | 575,100   |   |
|                                          |   | $      | 2,022,200 |   |
|                                          |   |   |      |   |

----

**PART      III**

**ITEM      10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.**

**INFORMATION      CONCERNING EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS.**

**Steven      R. Youngbauer,**

**ITEM      11. EXECUTIVE COMPENSATION.**

**ITEM      12. SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT AND RELATED      MATTERS.**

**ITEM      13. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS**

----

**ITEM      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

|                                                 |   | Year                  Ending December 31 |   |
|------------------------------------------------------|--------|------------------------------------------|--------|
|                                                 |   | 2006                                     |   | 2005 |   |
| Audit                  fees (1)                      |   | $                                        | 30,100 |   | $ | 21,600 |   |
| Audit                  related fees (2)              |   |                                     | 3,000  |   |   | -- |   |
| Tax                  fees (3)                        |   |                                     | --     |   |   | -- |   |
| All                  other fees                  (4) |   |                                     | --     |   |   | -- |   |
|                                                 |   | $                                        | 33,100 |   | $ | 21,600 |   |
|                                                 |   |                                     |   |   |   |   |   |

----

**PART      IV**

| **ITEM                15. Exhibits, Financial Statements, Financial Statement Schedules,                Reports****and                Form 8-K.**                                                        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                     |   |
| (a)                Financial Statements and Exhibits:                                                                                                                                                    |   |
|                                                                                                                                                                                                     |   |
| (1)                The following financial statements are filed as a part of this Report                as                Item 8:                                                                        |   |
|                                                                                                                                                                                                     | Page |
|                                                                                                                                                                                                     | No. |
|                                                                                                                                                                                                     |   |
| Financial                Statements Crested Corp.                                                                                                                                                        | 44 |
|                                                                                                                                                                                                     |   |
| Report                of Independent Registered Public Accounting Firm Moss Adams LLP                                                                                                                    | 45 |
|                                                                                                                                                                                                     |   |
| Report                of (former) Independent Registered Public Accounting Firm Epstein,                Weber                & Conover                                                               | 46 |
|                                                                                                                                                                                                     |   |
| Balance                Sheets - December 31, 2006 and 2005                                                                                                                                               | 47-48 |
|                                                                                                                                                                                                     |   |
| Statements                of Operations for the Years ended December 31, 2006, 2005 and 2004                                                                                                             | 49 |
|                                                                                                                                                                                                     |   |
| Statements                of Shareholders’ Deficit for the Years ended December 31, 2006, 2005 and                2004                                                                             | 50 |
|                                                                                                                                                                                                     |   |
| Statements                of Cash Flows For the Years ended December 31, 2006, 2005 and                2004                                                                                              | 51-52 |
|                                                                                                                                                                                                     |   |
| Notes                to Financial Statements                                                                                                                                                             | 53-80 |
|                                                                                                                                                                                                     |   |
| Report                of Independent Registered Public Accounting Firm Epstein, Weber &                Conover                                                                                       | 81 |
|                                                                                                                                                                                                     |   |
| Report                of (former) Independent Registered Public Accounting Firm Grant Thornton                LLP                                                                                        | 82 |
|                                                                                                                                                                                                     |   |
| USECB                Joint Venture Balance Sheets December 31, 2006 and 2005                                                                                                                             | 83-84 |
|                                                                                                                                                                                                     |   |
| USECB                Joint Venture Statements of Operations for the Years ended December                31,                2006, 2005 and 2004                                                           | 85 |
|                                                                                                                                                                                                     |   |
| USECB                Joint Venture Statements of Changes in Partners' Capital from December                31,                2004 to December 31, 2006                                                  | 86 |
|                                                                                                                                                                                                     |   |
| USECB                Joint Venture Statements of Cash Flows for the Years ended December                31,                2006, 2005 and 2004                                                           | 87-88 |
|                                                                                                                                                                                                     |   |
| USECB                Joint Venture Notes to Financial Statements                                                                                                                                         | 89-94 |
|                                                                                                                                                                                                     |   |
| (2)                All other schedules have been omitted because the required information                is                inapplicable or is shown in the notes to financial                statements. |

----

| (3)                  Exhibits Required to be Filed. |
|-----------------------------------------------------|
|                                                |
| ExhibitNo.                                          |   | Title                  of Exhibit |   | SequentialPage                  No. |
|                                                |   |   |   |   |
| 3.1                                                 |   | Restated                  Articles of Incorporation |   | [1] |
|                                                |   |   |   |   |
| 3.1(a)                                              |   | Amendment                  to Articles of Incorporation |   | [2] |
|                                                |   |   |   |   |
| 3.2                  - 3.3                          |   | [intentionally                  left blank] |   |   |
|                                                |   |   |   |   |
| 3.4                                                 |   | By-Laws |   | [2] |
|                                                |   |   |   |   |
| 10.1                                                |   | [intentionally                  left blank] |   |   |
|                                                |   |   |   |   |
| 10.2                                                |   | [Intentionally                  left blank] |   |   |
|                                                |   |   |   |   |
| 10.3                                                |   | Joint                  Venture Agreement - Registrant and USE |   | [2] |
|                                                |   |   |   |   |
| 10.3(a)                                             |   | Plan                  and Agreement of Merger between U.S. Energy Corp. and Crested                  Corp. |   | * |
|                                                |   |   |   |   |
| 10.3(b)                                             |   | Voting                  Agreement between Crested Corp., U.S. Energy Corp., and certain                  other                  shareholders of Crested Corp. |   | * |
|                                                |   |   |   |   |
| 10.3(c)                                             |   | Amendment                  to Agreements with UPC (Amendment dated effective January 31,                  2007) |   | * |
|                                                |   |   |   |   |
| 10.4                                                |   | Purchase                  and Sale Agreement (without exhibits)- Bell Coast Capital Corp.,                  n/k/a                  Uranium Power Corp. |   | [5] |
|                                                |   |   |   |   |
| 10.4(a)                                             |   | Amendment                  to Purchase and Sale Agreement |   | [6] |
|                                                |   |   |   |   |
| 10.5                                                |   | Mining                  Venture Agreement (without exhibits) - Uranium Power Corp. (April                  2005) |   | [7] |
|                                                |   |   |   |   |
| 14.0                                                |   | Code                  of Ethics |   | [4] |
|                                                |   |   |   |   |
| 16                                                  |   | Concurrence                  letter of former accountants |   | [8] |
|                                                |   |   |   |   |
| 31.1                                                |   | Certification                  under Rule 13a-14(a) Harold F. Herron |   | * |
|                                                |   |   |   |   |
| 31.2                                                |   | Certification                  under Rule 13a-14(a) Robert Scott Lorimer |   | * |
|                                                |   |   |   |   |
| 32.1                                                |   | Certification                  under Rule 13a-14(b) Harold F. Herron |   | * |
|                                                |   |   |   |   |
| 32.2                                                |   | Certification                  under Rule 13a-14(b) Robert Scott Lorimer |   | * |
|                                                |   |   |   |   |
| * Filed                  herewith              |

----

| By                Reference |
|-----------------------------|
|                        |   |
| [1]                         | Incorporated                by reference from the like-numbered exhibits to the Registrant's                Form 10-K                for the year ended May 31, 1990. |
|                        |   |
| [2]                         | Incorporated                by reference from the like-numbered exhibit to the Registrant's Form                10-K                for the year ended December 31, 2005 |
| [3]                         | Intentionally                left blank. |
|                        |   |
| [4]                         | Incorporated                by reference from the exhibit to the Registrant's Form 10-K, filed                March                30, 2004. |
|                        |   |
| [5]                         | Incorporated                by reference from exhibit 10.4 to the Registrant’s Form 10-K, for year                ended December 31, 2004 |
|                        |   |
| [6]                         | Incorporated                by reference from the exhibit filed to the Registrant’s Form 8-K (January                17, 2006) |
|                        |   |
| [7]                         | Incorporated                by reference from exhibit 10.5 to the Registrant’s Form 10-K for year                ended December 31, 2004 |
|                        |   |
| [8]                         | Incorporated                by reference from the Registrant's Form 8-K filed February 1,                2007. |
|                        |   |

| (b)    | Reports                filed on Form 8-K                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | During                the fourth quarter ended December 31, 2006, the Registrant filed                6 reports                on Form 8-K as follows: 1. October 10, 2006 for an Item 1.01 event,                2.                October 19, 2006 for an Item 8.01 event, 3. November 2, 2006 for                an Item                5.02 event, 4. November 9, 2006 for an Item 8.01 event, 5. December                8,                2006 for and Item 1.01 event, 6. December 26, 2006 for an Item 8.01                event. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (c)    | Required                exhibits follow the signature page and are listed above under Item                15(a)(3).                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

----

**SIGNATURES**

|                          |   | CRESTED                CORP.        |
|-------------------------------|--------|-------------------------------------|
|                          |   | (Registrant)                        |
|                          |   |                                |
|                          |   |                                |
|                          |   |                                |
| April                12, 2007 | By:    | /s/                Harold F. Herron |
|                          |   | HAROLD                F. HERRON     |
|                          |   | PRESIDENT                           |

|                          |   |                                           |
|-------------------------------|--------|------------------------------------------------|
|                          |   |                                           |
| April                12, 2007 | By:    | /s/                Harold F. Herron            |
|                          |   | HAROLD                F. HERRON, Director      |
|                          |   |                                           |
|                          |   |                                           |
| April                12, 2007 | By:    | /s/                Keith G. Larsen             |
|                          |   | KEITH                G. LARSEN, Director       |
|                          |   |                                           |
|                          |   |                                           |
| April                12, 2007 | By:    | /s/                Robert Scott Lorimer        |
|                          |   | ROBERT                SCOTT LORIMER, Director  |
|                          |   | Principal                Financial Officer and |
|                          |   | Chief                Accounting Officer        |
|                          |   |                                           |
|                          |   |                                           |
| April                12, 2007 | By:    | /s/                Michael D. Zwickl           |
|                          |   | MICHAEL                D ZWICKL, Director      |
|                          |   |                                           |
|                          |   |                                           |
| April                12, 2007 | By:    | /s/                Kathleen R. Martin          |
|                          |   | KATHLEEN                R. MARTIN, Director    |

----