bsin20260613

bsin20260613_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the Quarterly Period Ended June 30, 2026

or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from _____________ to _____________________

Commission File Number 000-06814

(Exact Name of Registrant as Specified in its Charter)

Delaware		83-0205516
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

1616 S. Voss Road, Suite 725, Houston, Texas		77057
(Address of principal executive offices)		(Zip Code)

(346) 509-8734

(Registrant’s telephone number, including area code)

U.S. Energy Corp

(Former name, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol(s)		Name of each exchange on which registered
Common stock, par value $0.01		BSIN		NASDAQ Stock Market LLC (Nasdaq Capital Market)

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 52,493,428 shares of its common stock, par value $0.01 per share, outstanding as of August 4, 2026.

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TABLE OF CONTENTS

		Page
Cautionary Note About Forward-Looking Statements		3

Part I.	FINANCIAL INFORMATION	5

Item 1.	Financial Statements	5
	Condensed Consolidated Balance Sheets (unaudited)	5
	Condensed Consolidated Statements of Operations (unaudited)	6
	Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited)	7
	Condensed Consolidated Statements of Cash Flows (unaudited)	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

Part II.	OTHER INFORMATION	31

Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34

Signatures		35

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report” or “Form 10-Q”), including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are forward-looking statements.

Examples of forward-looking statements in this Report include:

●	planned capital expenditures for industrial gas, oil and natural gas exploration, development and environmental compliance;

●	potential drilling locations and available spacing units, and possible changes in spacing rules;

●	cash expected to be available for capital expenditures and to satisfy other obligations;

●	recovered volumes and values of industrial gas, oil and natural gas approximating third-party estimates;

●	anticipated changes in oil and natural gas production and future industrial gas production;

●	drilling and completion activities and opportunities;

●	timing of drilling additional wells and performing other exploration and development projects;

●	expected spacing and the number of wells to be drilled with our industry partners;

●	when payout-based milestones or similar thresholds will be reached for the purposes of our agreements with our partners;

●	expected working and net revenue interests, and costs of wells, relating to the drilling programs with our partners;

●	actual decline rates for producing wells;

●	future cash flows, expenses and borrowings;

●	pursuit of potential acquisition opportunities;

●	economic downturns, wars and increased inflation and interest rates, and possible recessions caused thereby;

●	the effects of global pandemics on our operations, properties, the market for industrial gas, oil and natural gas, and the demand for industrial gas, oil and natural gas;

●	our expected financial position;

●	our expected future overhead reductions;

●	our ability to become an operator of industrial gas, oil and natural gas properties;

●	our ability to raise additional financing and acquire attractive industrial gas, oil and natural gas properties; and

●	other plans and objectives for future operations, including industrial gas exploration and development.

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These forward-looking statements are identified by their use of terms and phrases such as “may,” “expect,” “estimate,” “project,” “plan,” “believe,” “intend,” “achievable,” “anticipate,” “will,” “continue,” “potential,” “should,” “could,” “up to,” and similar terms and phrases. Though we believe that the expectations reflected in these statements are reasonable, they involve certain assumptions, risks and uncertainties. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, and in particular, under and incorporated by reference in, “Risk Factors”, below, the risks discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and those discussed in other documents we file with the Securities and Exchange Commission (the “SEC” or the “Commission”). Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements above.

All forward-looking statements speak only at the date of the filing of this Report. We do not undertake any obligation to update or revise publicly any forward-looking statements except as required by law, including the securities laws of the United States and the rules and regulations of the SEC.

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Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

BIG SKY INDUSTRIAL INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	*June 30, 2026*			*December 31, 2025*

ASSETS
Current assets:
Cash and equivalents	$	5,987		$	429
Oil and natural gas sales receivables		629			454
Marketable equity securities		116			146
Commodity derivative		147			-
Other current assets		1,030			956

Total current assets		7,909			1,985

Oil and natural gas properties under full cost method and industrial gas properties:
Evaluated oil and natural gas properties		132,654			132,459
Less accumulated depreciation, depletion and amortization		(117,904	)		(117,237	)

Net oil and natural gas properties		14,750			15,222

Unproved industrial gas properties, not subject to amortization		32,353			22,479

Other Assets:
Property and equipment, net		320			318
Right-of-use asset		266			356
Commodity derivative		20			-
Other assets		329			270

Total other assets		935			944

Total assets	$	55,947		$	40,630

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	1,876		$	1,592
Revenue and royalties payable		3,954			3,921
Asset retirement obligations		476			300
Current lease obligation		217			210

Total current liabilities		6,523			6,023

Noncurrent liabilities:
Credit facility		4,500			2,500
Asset retirement obligations		7,790			7,706
Long-term lease obligation, net of current portion		95			206

Total noncurrent liabilities		12,385			10,412

Total liabilities		18,908			16,435

Commitments and contingencies (Note 8)

Shareholders’ equity:
Common stock, $0.01 par value; 245,000,000 shares authorized; 52,487,506 and 34,405,143 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively		525			345
Additional paid-in capital		253,891			235,762
Accumulated deficit		(217,377	)		(211,912	)

Total shareholders’ equity		37,039			24,195

Total liabilities and shareholders’ equity	$	55,947		$	40,630

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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BIG SKY INDUSTRIAL INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE three and six months ended June 30, 2026 and 2025

(In thousands, except share and per share amounts)

	*Three Months Ended June 30,*						*Six Months Ended June 30,*
	*2026*			*2025*			*2026*			*2025*

Revenue:
Oil	$	2,034		$	1,844		$	3,411		$	3,615
Natural gas and liquids		100			184			328			607
Total revenue		2,134			2,028			3,739			4,222

Operating expenses:
Lease operating expenses		995			1,520			1,906			3,145
Production taxes		165			148			295			296
Depreciation, depletion, accretion and amortization		591			1,118			1,151			2,237
Impairment of oil and natural gas properties		-			2,760			-			2,760
Exploration expense		121			51			222			51
General and administrative expenses		2,647			2,246			5,694			4,635
Loss on sale of assets		-			424			-			424
Total operating expenses		4,519			8,267			9,268			13,548

Operating loss		(2,385	)		(6,239	)		(5,529	)		(9,326	)

Other income (expense):
Commodity derivative gain, net		167			-			167			-
Interest expense, net		(10	)		(47	)		(74	)		(95	)
Other income, net		(51	)		228			(29	)		252
Total other (expense)		106			181			64			157

Net loss before income taxes	$	(2,279	)	$	(6,058	)	$	(5,465	)	$	(9,169	)
Income tax expense		-			-			-			-
Net loss