<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                   FORM 10-Q

(Mark One)

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 For the quarterly period ended March 31, 1999

                                      OR

[_]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

     Commission File Number 001-11763

                              TRANSMONTAIGNE INC.

         DELAWARE                                           06-1052062
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)

                  2750 REPUBLIC PLAZA, 370 SEVENTEENTH STREET
                            DENVER, COLORADO 80202
         (Address, including zip code, of principal executive offices)
                                (303) 626-8200
                    (Telephone number, including area code)

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 report), and (2) has been subject to such filing
requirements for the past 90 days.

                                Yes [X] No [_]

As of April 30, 1999 there were 30,475,024 shares of the registrant's Common
Stock outstanding.
<PAGE>
 
                              TRANSMONTAIGNE INC.

                                     INDEX



                         PART I. FINANCIAL INFORMATION
<TABLE> 
<CAPTION> 

                                                                        PAGE NO.
<S>                                                                     <C> 
ITEM 1.           CONSOLIDATED FINANCIAL STATEMENTS                   
                                                                      
                  Consolidated Balance Sheets                         
                  March 31, 1999 and June 30, 1998 (Unaudited) .......       4 
                                                                      
                  Consolidated Statements of Operations               
                  Three Months Ended March 31, 1999 and               
                  Three Months Ended April 30, 1998 (Unaudited) ......       5 
                                                                      
                  Consolidated Statements of Operations               
                  Nine Months Ended March 31, 1999 and                
                  Nine Months Ended April 30, 1998 (Unaudited) .......       6 
                                                                      
                  Consolidated Statements of Stockholders' Equity     
                  Year Ended April 30, 1998,                          
                  Two Months Ended June 30, 1998 and                  
                  Nine Months Ended March 31, 1999 (Unaudited) .......       7 
                                                                      
                  Consolidated Statements of Cash Flows               
                  Nine Months Ended March 31, 1999 and                
                  Nine Months Ended April 30, 1998 (Unaudited) .......       8 
                                                                                
                  Notes to Consolidated Financial Statements..........       10
                                                                                
                                                                                
ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF                       
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS.......       23
                                                                                
                                                                                
                           PART II. OTHER INFORMATION                           
                                                                                
                                                                                
ITEM 2.           CHANGES IN SECURITIES...............................       55
                                                                                
ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K....................       57
                                                                                
                  SIGNATURES..........................................       59
</TABLE> 

                                       2
<PAGE>
 
PART I.  FINANCIAL INFORMATION
------------------------------

ITEM 1.   CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of TransMontaigne Inc. are included herein
beginning on the following page.

                                       3
<PAGE>
 
TRANSMONTAIGNE INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

MARCH 31, 1999 AND JUNE 30, 1998 (UNAUDITED)

<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------------------------------
ASSETS                                                                               March 31, 1999             June 30, 1998
------                                                                            ------------------         -----------------
<S>                                                                               <C>                        <C> 
Current assets:
     Cash and cash equivalents                                                    $       12,949,856                27,215,374
     Trade accounts receivable                                                           188,116,279                36,391,584
     Receivable under preferred stock purchase agreements                                110,615,000                         -
     Inventories                                                                         296,095,729                63,559,637
     Deferred tax assets, net                                                                      -                   573,000
     Prepaid expenses and other                                                            3,937,413                 2,705,905
                                                                                  ------------------         -----------------
                                                                                         611,714,277               130,445,500
                                                                                  ------------------         -----------------

Property, plant and equipment:
     Land                                                                                 12,526,364                 2,801,964
     Plant and equipment                                                                 395,334,005               191,600,521
     Accumulated depreciation                                                            (33,542,653)              (21,912,875)
                                                                                  ------------------         -----------------
                                                                                         374,317,716               172,489,610
                                                                                  ------------------         -----------------

Investments and other assets:
     Investments                                                                          46,141,488                10,180,720
     Deferred debt issuance costs, net                                                     8,733,763                 1,607,855
     Other assets                                                                          4,017,036                 3,491,813
                                                                                  ------------------         -----------------
                                                                                          58,892,287                15,280,388
                                                                                  ------------------         -----------------

                                                                                  $    1,044,924,280               318,215,498
                                                                                  ==================         =================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
     Current portion of long-term debt                                            $        2,000,000                         -
     Trade accounts payable                                                              137,842,061                28,640,766
     Inventory due under exchange agreements                                               5,885,777                 2,730,787
     Excise taxes payable                                                                 37,659,521                 7,846,657
     Other accrued liabilities                                                             6,911,977                 4,760,063
                                                                                  ------------------         -----------------
                                                                                         190,299,336                43,978,273
                                                                                  ------------------         -----------------

Long-term debt                                                                           472,479,200               128,971,400

Deferred tax liabilities, net                                                              1,638,943                         -

Stockholders' equity:
     Preferred stock, par value $.01 per share, authorized 2,000,000               
       shares, issued and outstanding 170,115 shares Series A Convertible 
       at March 31, 1999                                                                       1,701                         -
     Common  stock,  par value $.01 per  share,  authorized  80,000,000  shares,
       issued and outstanding 30,471,024 shares at
       March 31, 1999 and 25,953,324 shares at June 30, 1998                                 304,711                   259,534
     Capital in excess of par value                                                      367,150,649               136,780,000
     Unearned compensation                                                                         -                  (618,348)
     Retained earnings                                                                    13,049,740                 8,844,639
                                                                                  ------------------         -----------------
                                                                                         380,506,801               145,265,825
                                                                                  ------------------         -----------------

                                                                                  $    1,044,924,280               318,215,498
                                                                                  ==================         =================
</TABLE> 

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
 
TRANSMONTAIGNE INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE> 
<CAPTION> 
THREE MONTHS ENDED MARCH 31, 1999 AND THREE MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------------

                                                                               March 31, 1999              April 30, 1998
                                                                             --------------------        --------------------
<S>                                                                          <C>                         <C> 
Revenues:
    Product sales, pipeline tariffs, terminal
          and storage fees, marketing fees and
          natural gas gathering and processing fees                          $     769,369,253                 489,525,621

Costs and expenses:
    Product costs and direct
          operating expenses                                                       741,779,351                 479,008,869
    General and administrative                                                       7,954,177                   4,139,158
    Depreciation and amortization                                                    5,098,733                   2,450,221
                                                                             --------------------        --------------------
                                                                                   754,832,261                 485,598,248
                                                                             --------------------        --------------------

          Operating income                                                          14,536,992                   3,927,373

Other income (expenses):
    Dividend income                                                                    559,618                           -
    Interest income                                                                    144,081                     429,756
    Interest expense                                                                (9,462,401)                  (2,357,496)
    Amortization of deferred debt issuance costs                                    (1,346,997)                   (107,708)
    Other financing costs                                                             (443,326)                     (56,853)
                                                                             --------------------        --------------------
                                                                                   (10,549,025)                 (2,092,301) 
                                                                             --------------------        --------------------

          Earnings before income taxes                                               3,987,967                   1,835,072

Income tax expense                                                                   1,515,000                   1,322,500
                                                                             --------------------        --------------------

          Net earnings                                                               2,472,967                     512,572

Dividend requirement for preferred stock                                               147,681                           -
                                                                             --------------------        --------------------

          Net earnings attributable to common stockholders                   $       2,325,286                     512,572
                                                                             ====================        ====================

Weighted average common shares outstanding:
          Basic                                                                     30,470,924                  25,941,537
                                                                             ====================        ====================
          Diluted                                                                   31,189,298                  26,666,707
                                                                             ====================        ====================

Earnings per common share
          Basic                                                              $            0.08                        0.02
                                                                             ====================        ====================
          Diluted                                                            $            0.07                        0.02
                                                                             ====================        ====================
</TABLE> 

See accompanying notes to consolidated financial statements.

                                       5
<PAGE>
 
TRANSMONTAIGNE INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE> 
<CAPTION> 
NINE MONTHS ENDED MARCH 31, 1999 AND NINE MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------------

                                                                               March 31, 1999               April 30, 1998
                                                                             --------------------        --------------------
<S>                                                                          <C>                         <C> 
Revenues:
    Product sales, pipeline tariffs, terminal
          and storage fees, marketing fees and
          natural gas gathering and processing fees                          $   1,973,790,336               1,505,357,475

Costs and expenses:
    Product costs and direct
          operating expenses                                                     1,913,540,258               1,474,301,462
    General and administrative                                                      20,857,283                  11,016,075
    Depreciation and amortization                                                   12,019,270                   6,492,952
                                                                             --------------------        --------------------
                                                                                 1,946,416,811               1,491,810,489
                                                                             --------------------        --------------------

          Operating income                                                          27,373,525                  13,546,986

Other income (expenses):
    Dividend income                                                                    898,979                           -
    Interest income                                                                    903,119            
                                                                                                                 1,494,584
    Interest expense                                                               (19,112,665)                 (6,092,477)
    Amortization of deferred debt issuance costs                                    (2,404,919)                   (303,491)
    Other financing costs                                                             (875,938)           
                                                                                                                  (125,037)
                                                                             --------------------        --------------------
                                                                                   (20,591,424)                 (5,026,421) 
                                                                             --------------------        --------------------

          Earnings before income taxes                                               6,782,101                   8,520,565

Income tax expense                                                                   2,577,000                   3,892,500
                                                                             --------------------        --------------------

          Net earnings                                                               4,205,101                   4,628,065

Dividend requirement for preferred stock                                               147,681                           -
                                                                             --------------------        --------------------

          Net earnings attributable to common stockholders                   $       4,057,420                   4,628,065
                                                                             ====================        ====================

Weighted average common shares outstanding:
          Basic                                                                     28,469,902                  25,913,798
                                                                             ====================        ====================
          Diluted                                                                   29,197,274                  26,686,294
                                                                             ====================        ====================

Earnings per common share
          Basic                                                              $            0.14                        0.18
                                                                             ====================        ====================
          Diluted                                                            $            0.14                        0.17
                                                                             ====================        ====================
</TABLE> 

See accompanying notes to consolidated financial statements.

                                       6
<PAGE>
 
TRANSMONTAIGNE INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE> 
<CAPTION> 
YEAR ENDED APRIL 30, 1998, TWO MONTHS ENDED JUNE 30, 1998 AND
NINE MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
-------------------------------------------------------------------------------------------------------------------------
                                                           Capital in
                              Preferred      Common         excess of       Unearned        Retained
                                stock         stock         par value      Compensation     earnings           Total
                             ------------  ------------  ----------------  ------------   --------------   --------------
<S>                        <C>             <C>           <C>               <C>            <C>              <C> 
BALANCE AT APRIL 30, 1997  $           -       257,947      134,843,884              -        3,869,910      138,971,741

Common stock issued for                                                                    
     options exercised                 -           922          406,404              -               -           407,326
Tax benefit arising from                                                                   
     options exercised                 -             -          583,000              -               -           583,000
Costs  related to issuance                                                                 
     of common stock                   -             -          (53,863)             -               -           (53,863)
Unearned compensation
     related to restricted             -           560          938,440       (939,000)               -                -
     stock awards
Amortization of unearned
     compensation                      -             -                -        258,469                -          258,469
Net earnings                           -             -                -              -        7,637,630        7,637,630
                             ------------  ------------  ----------------  ------------   --------------   --------------

BALANCE AT APRIL 30, 1998              -       259,429      136,717,865       (680,531)      11,507,540      147,804,303

Common stock issued for                                                                    
     options exercised                 -            88           36,652              -               -            36,740
Common stock issued for                                                                    
     services rendered                 -            17           25,483              -               -            25,500
Amortization of unearned                                                                   
     compensation                      -             -                -         62,183               -            62,183
Net (loss)                             -             -                -              -       (2,662,901)      (2,662,901)
                             ------------  ------------  ----------------  ------------   --------------   --------------

BALANCE AT JUNE 30, 1998               -       259,534      136,780,000       (618,348)       8,844,639      145,265,825

Preferred stock issued in 
     connection with stock 
     purchase agreements           1,701             -      170,113,299              -               -       170,115,000 
Costs related to issuance                                                                 
     of preferred stock                -             -         (300,000)             -               -          (300,000)
Common stock issued for                                                                    
     options exercised                 -            74           35,425              -               -            35,499
Common stock issued for                                                                    
     services rendered                 -            65           93,373              -               -            93,438
Unearned compensation                                                                                                    
     related to 
     restricted stock                                                                 
     awards                            -           120          161,880       (162,000)              -                 - 
Amortization of unearned                                                                   
     compensation                      -             -                -        780,348               -           780,348
Common stock issued in
     acquisition of  Louis
     Dreyfus Energy Corp.              -        45,000       60,390,000              -                -       60,435,000
Common stock repurchased
     and retired                       -           (82)        (123,328)             -                -         (123,410)
Net earnings                           -             -                -              -        4,205,101        4,205,101
                             ------------  ------------  ----------------  ------------   --------------   --------------

BALANCE AT  MARCH 31, 1999 $       1,701       304,711      367,150,649              -       13,049,740      380,506,801
                             ============  ============  ================  ============   ==============   ==============
</TABLE> 

See accompanying notes to consolidated financial statements.

                                       7
<PAGE>
 
TRANSMONTAIGNE INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE> 
<CAPTION> 
NINE MONTHS ENDED MARCH 31, 1999 AND NINE MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
-------------------------------------------------------------------------------------------------------------------------------
                                                                                March 31, 1999               April 30, 1998
                                                                              --------------------        ---------------------
<S>                                                                           <C>                         <C>   
Cash flows from operating activities:
     Net earnings                                                             $       4,205,101                 4,628,065
     Adjustments to reconcile net earnings to net
       cash (used) by operating activities:
               Depreciation and amortization                                         12,019,270                 6,492,952
               Deferred tax expense                                                   2,211,943                 3,673,000
               Loss (gain) on disposition of assets                                      14,320                   (31,688)
               Amortization of unearned compensation                                    780,348                   258,469
               Amortization of deferred debt issuance costs                           2,404,919                   303,491
               Changes in operating assets and liabilities, net of 
               noncash items and acquisitions:
                 Trade accounts receivable                                          (26,706,134)              (19,766,639)
                 Inventories                                                        (61,577,972)               20,076,546
                 Prepaid expenses and other                                          (1,218,666)               (1,215,530)
                 Trade accounts payable                                              29,773,597                (9,648,675)
                 Inventory due under exchange agreements                              3,154,990                (4,864,980)
                 Excise taxes payable and other
                    accrued liabilities                                               7,594,492                   (65,402)
                                                                              --------------------        ---------------------
                           Net cash (used) by
                              operating activities                                  (27,343,792)                 (160,391)
                                                                              --------------------        ---------------------
Cash flows from investing activities:
     Purchases of property, plant and equipment                                     (52,696,429)              (61,760,694)
     Acquisition of Louis Dreyfus Energy Corp.                                     (293,056,539)                        -
     Investment in West Shore Pipe Line Company                                     (35,960,768)                        -
     Proceeds from sale of assets                                                             -                    78,070
     Cash received in connection with acquisition                                             -                 1,222,360
     Costs related to acquisition                                                             -                  (130,755)
     Increase in other assets, net                                                     (597,052)                 (643,318)
                                                                              --------------------        ---------------------
                           Net cash (used) by
                              investing activities                                 (382,310,788)              (61,234,337)
                                                                              --------------------        ---------------------
Cash flows from financing activities:
     Borrowings of long-term debt, net                                              345,507,800                50,007,800
     Deferred debt issuance costs                                                    (9,530,827)                 (364,523)
     Preferred stock issued, net of receivable under 
       preferred stock purchase agreements                                           59,500,000                         -
     Common stock issued for cash                                                             -                   319,426
     Common stock repurchased and retired                                              (123,410)                        -
     Common stock issued for options exercised                                           35,499                         -
     Costs related to issuance of common stock                                                -                   (26,500)
                                                                              --------------------        ---------------------
                           Net cash provided by
                              financing activities                                  395,389,062                49,936,203
                                                                              --------------------        ---------------------
                           Decrease in cash 
                              and cash equivalents                                  (14,265,518)              (11,458,525)

Cash and cash equivalents at beginning of period                                     27,215,374                41,265,879
                                                                              --------------------        ---------------------

Cash and cash equivalents at end of period                                    $      12,949,856                29,807,354
                                                                              ====================        =====================
</TABLE> 

See accompanying notes to consolidated financial statements.

                                       8
<PAGE>
 
TRANSMONTAIGNE INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE> 
<CAPTION> 
NINE MONTHS ENDED MARCH 31, 1999 AND NINE MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
-------------------------------------------------------------------------------------------------------------------------------
                                                                                March 31, 1999               April 30, 1998
                                                                              --------------------        ---------------------
<S>                                                                      <C>                              <C>     
Supplemental disclosures of cash flow information:

Acquisition of Louis Dreyfus Energy Corp.

Fair value of assets acquired                                            $          456,989,523                         -
Fair value of liabilities assumed                                                  (103,497,984)                        -
                                                                              --------------------        ---------------------
                                                                                    353,491,539                         -

Fair value of common stock issued                                                   (60,435,000)                        -
                                                                              --------------------        ---------------------

Cash paid in acquisition                                                 $          293,056,539                         -
                                                                              ====================        =====================

Cash received in connection with acquisition
     included in assets acquired                                         $                    -                         -
                                                                              ====================        =====================
</TABLE> 


See accompanying notes to consolidated financial statements.

                                       9
<PAGE>
 
TRANSMONTAIGNE INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 1999
--------------------------------------------------------------------------------

(1)  BASIS OF PRESENTATION

     The consolidated financial statements included in this Form 10-Q have been
     prepared by TransMontaigne Inc. ("TransMontaigne") without audit pursuant
     to the rules and regulations of the Securities and Exchange Commission.
     Accordingly, these statements reflect adjustments (consisting only of
     normal recurring entries) which are, in the opinion of TransMontaigne
     management, necessary for a fair statement of the financial results for the
     interim periods. Certain information and notes normally included in
     financial statements prepared in accordance with generally accepted
     accounting principles have been condensed or omitted pursuant to such rules
     and regulations, although TransMontaigne believes that the disclosures are
     adequate to make the information presented not misleading. These
     consolidated financial statements should be read in conjunction with the
     financial statements and related notes, together with management's
     discussion and analysis of financial condition and results of operations,
     included in TransMontaigne's Annual Report on Form 10-K for the year ended
     April 30, 1998.

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires TransMontaigne management to make
     estimates and assumptions that affect the reported amounts of assets and
     liabilities at the date of the financial statements and the reported
     amounts of revenues and expenses during the reporting period. Changes in
     these estimates and assumptions will occur as a result of the passage of
     time and the occurrence of future events, and actual results will differ
     from the estimates.

     "TransMontaigne" is used as a collective reference to TransMontaigne Inc.
     and its subsidiaries and affiliates. The businesses of TransMontaigne are
     conducted by the subsidiaries and affiliates whose operations are managed
     by their respective officers.

                                       10
<PAGE>
 
        In August 1998, the Board of Directors of TransMontaigne voted to change
        TransMontaigne's fiscal year end from April 30 to June 30, to be
        effective June 30, 1998. This new fiscal year end will allow
        TransMontaigne to conform to the predominant calendar quarterly
        reporting periods used in its industry. TransMontaigne did not recast
        the historical financial information, accordingly, TransMontaigne
        financial statements include comparative information as of April 30,
        1998.

(2)     Acquisitions

        On December 3, 1998, TransMontaigne, through a wholly-owned subsidiary,
        TransMontaigne Terminaling Inc. ("TTI"), purchased the SUNOCO, Inc.
        petroleum products terminal located on the Hudson River at Renssalaer,
        outside of Albany, New York for approximately $5,200,000 cash. The
        Renssalaer terminal facilities include 510,000 barrels of storage
        capacity, 3 truck loading racks and a recently rebuilt dock capable of
        handling both barges and ocean going tankers.

        On October 30, 1998, TransMontaigne, through a wholly-owned subsidiary,
        TransMontaigne Product Services Inc. ("TPSI"), acquired all of the
        common stock of Louis Dreyfus Energy Corp. ("LDEC") for approximately
        $161,000,000, including $100,565,000 cash and 4.5 million shares of
        TransMontaigne common stock valued at $60,435,000, plus working capital
        of $192,492,000. The LDEC acquisition included 24 refined petroleum
        products terminal and storage facilities, of which 7 are wholly owned
        and 17 are owned jointly with BP Oil Company, together with its supply,
        distribution and marketing business. These facilities are located in 9
        states in the Southern and Eastern regions of the United States; have
        approximately 4.2 million barrels of TransMontaigne owned storage
        capacity; and are supplied primarily by the Colonial and Plantation
        pipeline systems. LDEC's supply, distribution and marketing business
        includes over 350 services supply/exchange points nationwide and handles
        annually in excess of 85 million barrels of refined petroleum products.
        The purchase price was established in arms-length negotiation between
        the managements of TransMontaigne and LDEC. The cash component of the
        purchase price and the net working capital acquired were funded by an
        advance from TransMontaigne's $500,000,000 credit facility. The
        transaction was accounted for 
                
                                      11
<PAGE>
 
        as a purchase. As of March 31, 1999, the consolidated financial
        statements include preliminary allocations of the aggregate purchase
        price to the assets acquired and liabilities assumed based on their
        estimated fair values as determined by TransMontaigne. Adjustments to
        the preliminary purchase price allocations may be necessary based upon
        completion of an independent appraisal of the assets acquired, which is
        in process. Subsequent to closing the acquisition, the LDEC name was
        changed to TransMontaigne Product Services East Inc.

        On September 18, 1998, TransMontaigne, through a wholly-owned
        subsidiary, TransMontaigne Pipeline Inc. ("TPI"), acquired for
        $29,219,000 cash the 15.38% common stock interest in West Shore Pipe
        Line Company ("West Shore") owned by Atlantic Richfield Company.
        Effective December 31, 1998, TransMontaigne acquired for $5,488,000 cash
        an additional 4.11% common stock interest in West Shore owned by Equilon
        Pipeline Company, LLC and for $1,186,000 cash an additional .89% common
        stock interest in West Shore owned by Texaco Transportation and Trading
        Inc., both of which transactions closed on January 7, 1999. West Shore
        owns a 600-mile common carrier petroleum products pipeline system which
        operates between the Chicago refining corridor locations of East
        Chicago, Indiana; Blue Island, Joliet and Lemont, Illinois; north
        through metropolitan Chicago; along the western edge of Lake Michigan to
        Milwaukee and Green Bay, Wisconsin; and west to Rockford and Peru,
        Illinois, and Madison, Wisconsin. The pipeline serves approximately 55
        locations, including 4 refineries, the Chicago-O'Hare and Milwaukee
        airports, and 49 refined petroleum products terminals in the Chicago,
        Illinois area and the upper Mid-West region of the United States. West
        Shore ownership as of March 31, 1999 includes TransMontaigne, Citgo,
        Marathon, Equilon, Texaco, BP Amoco, Midwest (Union Oil), Mobil and
        Exxon.

        On July 29, 1998, TransMontaigne, through a wholly-owned subsidiary,
        TTI, acquired all of the common stock of Statia Terminals Southwest,
        Inc. ("Southwest Terminal") for $6,500,000 cash. The acquisition
        included terminaling, storage and loading facilities for petroleum
        products, chemicals and other bulk liquids at the Port of Brownsville,
        Texas with over 1.6 million barrels of tank storage, 12 truck rack
        loading bays, connections to barge and tanker loading facilities and the
        exclusive use of 5 railroad spur lines with a total of 32 railroad car
        loading spots. Southwest Terminal was merged into TTI effective
        September 30, 1998. The cost of this 

                                      12
<PAGE>
 
        acquisition has been allocated to the terminal facilities and other
        related assets acquired and liabilities assumed based on their estimated
        fair market value as determined by TransMontaigne. The transaction was
        accounted for as a purchase.

        On November 25, 1997, TransMontaigne, through a wholly-owned subsidiary,
        TTI, acquired for $32,000,000 ($31,458,000 cash plus assumption of
        outstanding bank debt of approximately $542,000) the common stock of 17
        corporations, known as the "ITAPCO Terminal Corporations", and certain
        related property and property interests. The acquisition included 17
        storage and distribution terminals located in 8 states having total
        tankage capacity in excess of 3.3 million barrels, handling primarily
        refined petroleum products, chemicals and other bulk liquids together
        with the related operations of the terminals and certain other assets.
        The ITAPCO Terminal Corporations were merged into TTI effective December
        1, 1997. The cost of the ITAPCO Terminal Corporations has been allocated
        to the terminal facilities acquired and to the other related assets
        acquired and liabilities assumed based on their estimated fair market
        value as determined by TransMontaigne. The transaction was accounted for
        as a purchase.

        On December 18, 1996, TransMontaigne, through a wholly-owned subsidiary,
        Bear Paw Energy Inc. ("BPEI"), acquired the Grasslands natural gas
        gathering, processing, treating and fractionation system (the
        "Grasslands Facilities") for approximately $71,000,000 cash. The
        Grasslands Facilities are strategically located between TransMontaigne's
        Marmarth facility in southwestern North Dakota, its Baker facility in
        eastern Montana and its Lignite facility in northern North Dakota.
        TransMontaigne has natural gas gathering facilities covering the eastern
        corridor of Montana and the western quarter of North Dakota, from the
        Canadian border to the South Dakota border, which enables TransMontaigne
        to provide a complete service package to North Dakota and Montana
        producers as well as to end-users of natural gas liquids ("NGL") and
        natural gas.

                                      13
<PAGE>
 
        The following summarized unaudited pro forma results of operations
        assumes that the acquisition of the ITAPCO Terminal Corporations and of
        LDEC occurred as of August 1, 1997 and combines the historical results
        of operations of TransMontaigne for the three months and nine months
        ended March 31, 1999 and April 30, 1998 with the historical results of
        operations of the ITAPCO Terminal Corporations and of LDEC for the three
        months and nine months ended March 31, 1999 and April 30, 1998. The
        unaudited pro forma results of operations are not necessarily indicative
        of the results of operations which would actually have occurred if the
        ITAPCO Terminal Corporations and LDEC had been acquired as of August 1,
        1997, or which will be attained in the future.

<TABLE> 
<CAPTION> 
                                              Three Months Ended                           Nine Months Ended
                                    -----------------------------------------    -----------------------------------------
                                         March 31,             April 30,             March 31,             April 30,
                                            1999                  1998                 1999                   1998
                                    -------------------    ------------------    -----------------    --------------------
                                          (Actual)            (Pro forma)           (Pro forma)           (Pro forma)
                                    -------------------    ------------------    -----------------    --------------------
<S>                                 <C>                    <C>                   <C>                  <C>  
 Revenues                          $       769,369,000        1,168,085,000         2,823,922,000          3,229,005,000
                                    ===================    ==================    =================    ====================
                                   
 Net earnings                                2,473,000            2,653,000             6,078,000              8,292,000
 Dividend requirement for          
     preferred stock                           148,000                    -               148,000                      -
                                    -------------------    ------------------    -----------------    --------------------
 Net earnings attributable         
     to common stockholders                  2,325,000            2,653,000             5,930,000              8,292,000
                                    ===================    ==================    =================    ====================
 Earnings per common share:        
           Basic                   $              0.08                 0.09                  0.19                   0.27
                                    ===================    ==================    =================    ====================  
           Diluted                 $              0.07                 0.09                  0.19                   0.27
                                    ===================    ==================    =================    ====================
</TABLE> 

                                      14
<PAGE>
 
(3)     Inventory Risk Management

        TransMontaigne manages inventory to maximize its value and minimize risk
        by utilizing risk and portfolio management disciplines including certain
        hedging strategies, forward purchases and sales, swaps and other
        financial instruments to manage market exposure.

        TransMontaigne's refined petroleum products inventory consists primarily
        of gasoline and distillates, the majority of which is held for sale or
        trade in the ordinary course of business. A portion of this inventory
        represents line fill and tank bottoms; is required to be held for
        operating balances in the conduct of TransMontaigne's daily supply,
        distribution and marketing activities; and is maintained both in tanks
        and pipelines owned by TransMontaigne and pipelines owned by third
        parties. NGL and natural gas inventories are not significant.

        TransMontaigne regularly engages in the trading of futures contracts in
        the cash markets and on the New York Mercantile Exchange ("NYMEX"). The
        change in market value of NYMEX-traded futures contracts requires daily
        cash settlements in margin accounts with brokers. NYMEX-traded future
        contracts are guaranteed by the NYMEX and have nominal credit risk.
        TransMontaigne is exposed to credit risk in the event the counterparties
        to other third party agreements are not able to perform their
        contractual obligations.

        Following the acquisition of LDEC on October 30, 1998, TransMontaigne
        has generally continued the separate inventory accounting methods,
        procedures and policies, and the related management of the risks
        associated with fluctuations in the price of refined petroleum products
        and purchase and sales commitments, which had been previously utilized
        by TPSI (renamed TPSI - Midwest) and by LDEC (renamed TPSI - East).

        TPSI - Midwest inventory is recorded at the lower of last-in, first-out
        ("LIFO") cost or market. TPSI - Midwest selectively enters into futures
        contracts which may be designated by management as hedges of the
        products purchased or sold. Hedging gains and losses are recognized and
        recorded in operations when the related inventory is sold.

                                      15
<PAGE>
 
        TPSI - Midwest, at December 31, 1998, recorded an $8.6 million non-cash
        lower of cost or market inventory write down adjustment to reduce the
        LIFO carrying cost of its inventory. Subsequent to December 31, 1998 
        product prices increased and accordingly under the LIFO method of
        accounting for inventory, the $8.6 million was recorded as a reduction
        of product costs in the quarter ended March 31, 1999. The market value
        of TPSI - Midwest's inventory at March 31, 1999 approximated its LIFO
        carrying cost.

        TPSI - East inventory price risk is managed on an aggregate portfolio
        basis. The net of physical inventory, forward sales commitments and
        forward purchase commitments are generally hedged with NYMEX traded
        futures contracts. TPSI - East values the aggregate portfolio using the
        mark to market inventory accounting method with all changes in market
        values recognized and recorded in operations. The discounted present
        value of net unrealized gains on forward contracts of $30,584,000 at
        March 31, 1999 is recorded as a component of inventory.

        Contractual commitments are subject to risks including market value
        fluctuations as well as counterparty credit and liquidity risk.
        TransMontaigne has established procedures to continually monitor these
        contracts in order to minimize credit risk, including the establishment
        and review of credit limits, margin requirements, master netting
        arrangements, letters of credit and other guarantees.

(4)     Income Taxes

        TransMontaigne utilizes the asset and liability method of accounting for
        income taxes, as prescribed by Statement of Financial Accounting
        Standards No. 109. Under this method, deferred tax assets and
        liabilities are recognized for the future tax consequences attributable
        to differences between the financial statement carrying amounts of
        existing assets and liabilities and their respective tax bases. Deferred
        tax assets and liabilities are measured using enacted tax rates expected
        to apply in the years in which these temporary differences are expected
        to be recovered or settled. Changes in tax rates are recognized in
        income in the period that includes the enactment date.

                                      16
<PAGE>
 
(5)     Bank Credit Facility

        In October 1998, TransMontaigne closed a $500,000,000 credit facility
        with BankBoston, N.A. The credit facility includes a $350,000,000
        revolving component due December 31, 2003 and a $150,000,000 term
        component due June 30, 2000. Borrowings under this credit facility bear
        interest at an annual rate equal to the lender's Alternate Base Rate
        plus a margin subject to a Eurodollar Rate pricing option. The credit
        facility includes a $20,000,000 same day revolving swing line under
        which advances may be drawn at an interest rate comparable to the
        Eurodollar Rate. The credit facility also contains a negative pledge
        covenant and financial tests similar to the previous credit facility.
        The proceeds from the credit facility were used to fund the LDEC
        acquisition as well as to refinance existing bank debt and provide funds
        for future acquisitions and other general corporate purposes. The
        average interest rate at March 31, 1999 was 6.80%.

        At March 31, 1999, TransMontaigne had advances of $305,000,000
        outstanding under the revolving component and $90,500,000 under the term
        component of the credit facility. Subsequent to March 31, 1999, the
        remaining outstanding balance of the term component was repaid with
        proceeds from the private placement of preferred stock.

(6)     Master Shelf Agreement

        In April 1997, TransMontaigne entered into a Master Shelf Agreement with
        an institutional lender which provides that the lender will agree to
        quote an interest rate at which the lender would be willing to purchase,
        on an uncommitted basis, up to $100,000,000 of TransMontaigne senior
        promissory notes which will mature in no more than 12 years, with an
        average life not in excess of 10 years.

        TransMontaigne sold to the lender, under the Master Shelf Agreement,
        $50,000,000 of 7.85% Senior Notes due April 17, 2003 in April 1997 and
        $25,000,000 of 7.22% Senior Notes due October 17, 2004 in December 1997,
        all of which were outstanding at March 31, 1999.

                                      17
<PAGE>
 
(7)     Senior Subordinated Debentures

        In March 1991, TransMontaigne issued $4,000,000 of 12.75% senior
        subordinated debentures which are guaranteed by certain subsidiaries;
        are due December 15, 2000; are subject to a required redemption of
        $2,000,000 on December 15, 1999 and December 15, 2000, respectively; and
        may be prepaid prior to maturity at a premium. In connection with the
        issuance of these debentures, TransMontaigne issued warrants to purchase
        248,686 shares of common stock at $3.60 per share, exercisable through
        December 15, 2000.

(8)     Preferred Stock

        On March 25, 1999 and March 30, 1999 TransMontaigne closed a private
        placement of $170,115,000 of $1,000 Series A Convertible Preferred Stock
        Units. Each unit consists of one share of 5% convertible preferred
        stock, convertible into common stock at $15 per share, and 66.67
        warrants, each warrant exercisable to purchase six-tenths of a share of
        common stock at $14 per share. Dividends are cumulative and payable
        quarterly. The dividend rate increases to an annual rate of 16% for any
        convertible preferred stock outstanding after December 31,
        2003. The convertible preferred stock is convertible any time and may be
        called for redemption by TransMontaigne after the second year if the
        market price of the common stock is greater than 175% of the conversion
        price at the date of the call. The convertible preferred stock has a
        liquidation preference of $1,000 per share plus accrued but unpaid
        dividends. Proceeds will be used to reduce bank debt and for general
        corporate purposes. As of March 31, 1999, $59,500,000 from the private
        placement had been received and the remaining $110,615,000 was received
        by April 20, 1999.

(9)     Restricted Stock

        TransMontaigne has a restricted stock plan that provides for awards of
        common stock to certain key employees, subject to forfeiture if
        employment terminates prior to the vesting dates. The market value of
        shares awarded under the plan is recorded in stockholders' equity as
        unearned compensation. During the fiscal year ended April 30, 1998, the
        TransMontaigne Board of 
        
                               
        
<PAGE>

        Directors awarded 56,000 shares to certain key employees and during the
        nine months ended March 31, 1999, an additional 12,000 shares were
        awarded. At March 31, 1999 the vesting of the 62,400 shares not then
        vested was accelerated due to an ownership change resulting from the
        private placement of the Series A Convertible Preferred Stock and the
        unamortized balance of the unearned compensation was fully amortized.
        Amortization of unearned compensation of $589,442 and $780,348 is
        included in general and administrative expense for the three months and
        nine months ended March 31, 1999, respectively.

(10)    New Project

        On February 17, 1999, TransMontaigne and Colonial Pipeline Company
        ("Colonial") signed a definitive agreement whereby TransMontaigne, in an
        alliance with Colonial, will construct, own and operate a marine loading
        and unloading facility on the Mississippi River near Baton Rouge,
        Louisiana which is designed to handle multiple barge deliveries of all
        grades of petroleum products transported within Colonial's pipeline
        system at rates in excess of 14,000 barrels per hour and inbound and
        outbound volumes exceeding 50,000 barrels per day. Colonial will
        construct three pipelines to feed the TransMontaigne marine facility and
        waterway deliveries along the Mississippi and Ohio Rivers, as well to
        receive barge deliveries for long haul Colonial system shipments, and
        will also construct a related pump station between its Baton Rouge tank
        farm and the TransMontaigne marine facility. TransMontaigne's estimated
        cost for the marine facility, which is anticipated to be operational in
        the first calendar quarter of 2000, is $8,500,000.

(11)    Subsequent Event

        On May 3, 1999, TransMontainge and Amerada Hess Corporation signed a
        definitive agreement whereby a TransMontainge unit will acquire the Hess
        Southeastern Pipeline Network of refined petroleum product facilities
        for $66.2 million, plus refined products inventory. This network, which
        is strategically interconnected to the Colonial and Plantation pipeline
        systems, includes approximately 5.3 million barrels of tankage at 11
        storage and terminal facilities located in Collins (2) and Purvis,
        Mississippi; Doraville, Georgia; Belton and Spartanburg, 

                                      19
<PAGE>

        South Carolina; Charlotte, Selma (2) and Greensboro, North Carolina; and
        Montvale, Virginia; as well as 36 miles of proprietary pipelines.
        TransMontainge anticipates closing this transaction on or about June 30,
        1999.
 
(12)    OPERATING BUSINESS SEGMENTS

        TransMontaigne's logistical petroleum services operating business
        segment relates to pipelining, terminaling and storing, supply and
        distribution and marketing of refined petroleum products, including the
        investment in West Shore. TransMontaigne's natural gas services
        operating business segment relates to gathering, processing, treating
        and marketing of NGL and natural gas. Corporate services relates to all
        of TransMontaigne's activities and assets which are not specifically
        identified with logistical petroleum and natural gas services, including
        cash and cash equivalents, the investment in Lion Oil Company and other
        assets.

        The refined petroleum products, chemicals and other bulk liquids
        operations related to the acquisitions of LDEC in October 1998,
        Southwest Terminal in July 1998 and the ITAPCO Terminal Corporations in
        November 1997 are included in the logistical petroleum services
        operating business segment.

                                      20
<PAGE>
 
Information regarding TransMontaigne's operating business segments for the nine
months ended March 31, 1999 and for the nine months ended April 30, 1998 is
summarized below:

<TABLE> 
<CAPTION> 
                                                         March 31, 1999                April 30, 1998  
                                                       ------------------            ------------------    
<S>                                                    <C>                           <C>                   
   Revenues                                                                                                
     Logistical petroleum services                     $   1,934,628,161               1,459,110,163       
     Natural gas services                                     39,162,175                  46,247,312       
                                                       ------------------            ------------------    
                                                       $   1,973,790,336               1,505,357,475         
                                                       ==================            ==================    
   Operating income (loss)                                                                                 
     Logistical petroleum services                     $      29,149,287                  10,715,034         
     Natural gas services                                      1,074,238                   3,731,952         
     Corporate services                                       (2,850,000)                   (900,000)        
                                                       ------------------            ------------------    
                                                       $      27,373,525                  13,546,986         
                                                       ==================            ==================    
   Identifiable assets at the end of the period (net                                                       
     of accumulated depreciation)                                                                          
     Logistical petroleum services                     $     792,136,851                 177,707,215         
     Natural gas services                                     95,026,716                  94,089,703         
     Corporate services                                      157,760,713 (1)              51,507,912         
                                                       ------------------            ------------------    
                                                       $   1,044,924,280                 323,304,830         
                                                       ==================            ==================    
   Depreciation and amortization                                                                           
     Logistical petroleum services                     $       6,755,023                   2,115,565         
     Natural gas services                                      4,420,217                   3,898,877         
     Corporate services                                          844,030                     478,510         
                                                       ------------------            ------------------    
                                                       $      12,019,270                   6,492,952         
                                                       ==================            ==================    
   Capital expenditures                                                                                    
     Logistical petroleum services                     $     242,056,743 (2)              45,855,930         
     Natural gas services                                      4,505,720                  12,672,056         
     Corporate services                                        3,026,966                   3,232,708         
                                                       ------------------            ------------------    
                                                       $     249,589,429                  61,760,694         
                                                       ==================            ==================    
</TABLE> 

 (1)  Includes $110,615,000 receivable under preferred stock purchase
 agreements.

 (2)  Includes $161,000,000 for the LDEC acquisition and $35,893,000 for the
 West Shore common stock acquisition.

                                       21
<PAGE>
 
(13)    EARNINGS PER SHARE

        Earnings per share ("EPS") has been calculated based on the weighted
        average number of common shares outstanding for the period in accordance
        with the Statement of Financial Accounting Standards No. 128. The
        following tables reconcile the computation of basic EPS and diluted EPS
        for the three months and nine months ended March 31, 1999 and three
        months and nine months ended April 30, 1998.

<TABLE> 
<CAPTION> 
                               FOR THE THREE MONTHS ENDED MARCH 31, 1999           FOR THE THREE MONTHS ENDED APRIL 30, 1998
                            -----------------------------------------------   ------------------------------------------------

                              EARNINGS            SHARES            PER          EARNINGS           SHARES           PER 
                             (NUMERATOR)       (DENOMINATOR)       SHARE       (NUMERATOR)       (DENOMINATOR)      SHARE
                            --------------   -----------------   ----------   --------------     -------------   ------------- 
<S>                         <C>              <C>                 <C>          <C>                <C>             <C>       
Basic EPS - Net earnings
 available to
 common stockholders        $   2,325,286        30,470,924      $     0.08   $     512,572        25,941,537    $        0.02
                                                                 ==========                                      =============

Effect of Dilutive
 Securities:
   Convertible preferred
     stock                              -                 -                               -                 -
     Stock options                      -           541,694                               -           542,055
     Stock warrants                     -           176,680                               -           183,115
                            --------------   -----------------                --------------     -------------                 

Diluted EPS - Net earnings  
 available to
 common stockholders
 and assumed conversions    $   2,325,286        31,189,298      $     0.07   $     512,572        26,666,707    $        0.02
                            ==============   =================   ==========   ==============     =============   ============= 
</TABLE> 

<TABLE> 
<CAPTION> 
                                FOR THE NINE MONTHS ENDED MARCH 31, 1999             FOR THE NINE MONTHS ENDED APRIL 30, 1998
                            -----------------------------------------------      -----------------------------------------------
                               EARNINGS           SHARES           PER               EARNINGS            SHARES           PER
                             (NUMERATOR)      (DENOMINATOR)       SHARE            (NUMERATOR)       (DENOMINATOR)       SHARE
                            --------------   ---------------   ------------      ---------------   ----------------    ---------  
<S>                         <C>              <C>               <C>               <C>               <C>                 <C> 
Basic EPS - Net earnings
 available to common
 stockholders               $  4,057,420         28,469,902    $     0.14         $   4,628,065         25,913,798     $   0.18
                                                               ============                                            ========= 

Effect of Dilutive
 Securities:
   Convertible preferred
     stock                             -                  -                                   -                  -
     Stock options                     -            545,915                                   -            582,195
     Stock warrants                    -            181,457                                   -            190,301
                            --------------   ---------------                     ---------------   ----------------               

Diluted EPS - Net
 earnings available to
 common stockholders
 and assumed conversions    $  4,057,420         29,197,274    $     0.14         $   4,628,065         26,686,294     $   0.17
                            ==============   ===============   ============      ===============   ================    =========  
</TABLE> 

        Note:  Options to purchase 497,600, 156,000 and 382,000 shares of common
               stock at $17.25, $15.00 and $13.50 per share, respectively, were
               outstanding at March 31, 1999, but were not included in the
               computation of diluted EPS because the options' exercise price
               was greater than the average market price of the common shares
               during the three months and nine months ended March 31, 1999 and
               the effect was anti-dilutive. The assumed conversion of the
               Series A Convertible Preferred Stock at $15 per share into
               11,341,000 shares of common stock and the assumed exercise of
               warrants to purchase 6,804,940 shares of common stock at $14 per
               share, issued in connection with the Series A Convertible
               Preferred Stock during the quarter ended March 31, 1999, both of
               which were outstanding at March 31, 1999, were not included in
               the computation of diluted EPS because the effects were anti-
               dilutive.

                                       22

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

GENERAL

         TransMontaigne provides a broad range of integrated transportation,
terminaling, supply, distribution, gathering, processing and marketing services
to producers, refiners, distributors, marketers and industrial end-users of
petroleum products, chemicals, other bulk liquids, natural gas and crude oil in
the downstream sector of the petroleum and chemical industries. TransMontaigne
is a holding company which conducts its operations through subsidiaries
primarily in the Mid-Continent, Gulf Coast, Southeast, Mid-Atlantic and Rocky
Mountain regions of the United States. TransMontaigne does not explore for, or
produce, crude oil or natural gas; does not own crude oil or natural gas
reserves; and does not own chemicals or other bulk liquids inventory.

         TransMontaigne owns and operates refined petroleum products, chemicals,
other bulk liquids, crude oil and natural gas assets. TransMontaigne's refined
petroleum products, chemicals, other bulk liquids and crude oil assets consist
primarily of 3 pipeline systems with approximately 790 miles of pipeline and 59
terminal, storage and delivery facilities located in 19 states with a combined
tank storage capacity of approximately 15,000,000 barrels. TransMontaigne's
natural gas gathering and processing assets consist of 5 gathering and
processing systems in 3 states with combined throughput capacity of
approximately 94 million cubic feet per day and over 2,800 miles of pipelines.
TransMontaigne also extensively utilizes refined petroleum products common
carrier pipelines and terminals owned by third parties in order to increase
product volumes shipped, marketed and sold to and exchanged with customers in
other locations. Management believes that the use of all these facilities should
allow TransMontaigne to significantly expand its geographic service area and the
integrated logistical services it provides.

         The principal predecessor of TransMontaigne was formed in 1977. In
April 1995, present management and certain institutional stockholders of
TransMontaigne acquired control of the predecessor through a merger in which the
name was changed to TransMontaigne Oil Company. 

                                       23
<PAGE>
 
         In June 1996, TransMontaigne and a publicly held corporation merged,
with the stockholders of TransMontaigne receiving approximately 93% of the stock
of the merged corporation. In August 1998, upon receiving shareholder approval,
the name TransMontaigne Oil Company was changed to TransMontaigne Inc.

         Since TransMontaigne's present management assumed control in April
1995, TransMontaigne has raised approximately $287,000,000 in equity capital
($30,000,000 private placement in May 1995; $25,000,000 private placement in
March 1996; $62,000,000 public offering in February 1997 and $170,000,000
private placement in March 1999); established an initial $130,000,000 working
capital and acquisition revolving bank credit facility in December 1996, which
in October 1998 was increased to a $500,000,000 bank credit facility due
December 31, 2003; and issued $50,000,000 of 7.85% Senior Notes due April 17,
2003 in April 1997 and $25,000,000 of 7.22% Senior Notes due October 17, 2004 in
December 1997 to an institutional lender under a $100,000,000 Master Shelf
Agreement.

         On March 25, 1999 and March 30, 1999 TransMontaigne closed a private
placement of $170,115,000 of $1,000 Series A Convertible Preferred Stock Units.
Each unit consists of one share of 5% convertible preferred stock, convertible
into common stock at $15 per share, and 66.67 warrants, each warrant exercisable
to purchase six-tenths of a share of common stock at $14 per share. Dividends
are cumulative and payable quarterly. The dividend rate increases to an annual
rate of 16% for any convertible preferred stock outstanding after December 31,
2003. The convertible preferred stock is convertible any time and may be called
for redemption by TransMontaigne after the second year if the market price of
the common stock is greater than 175% of the conversion price at the date of the
call. Proceeds will be used to reduce bank debt and for general corporate
purposes. As of March 31, 1999, $59,500,000 from the private placement had been
received and the remaining $110,615,000 was received by April 20, 1999.

         In October 1998, TransMontaigne closed a $500,000,000 credit facility
with BankBoston, N.A. The credit facility includes a $350,000,000 revolving
component due December 31, 2003 and a $150,000,000 term component due June 30,
2000. Borrowings under this credit facility bear interest at an annual rate
equal to the lender's Alternate Base Rate, plus a margin subject to a Eurodollar
Rate pricing option. The credit facility includes a $20,000,000 same day
revolving swing line under which 

                                      24
<PAGE>

advances may be drawn at an interest rate comparable to the Eurodollar Rate. The
credit facility also contains a negative pledge covenant and financial
compliance tests similar to the previous credit facility. Credit facility
proceeds were used to fund the LDEC acquisition as well as to refinance existing
bank debt and provide funds for future acquisitions and other general corporate
purposes. Subsequent to March 31, 1999, the $150,000,000 term component was
repaid with proceeds from the private placement of Series A Convertible
Preferred Stock.

ACQUISITIONS

         In December 1996, TransMontaigne acquired the Grasslands Facilities
natural gas gathering, processing, treating and fractionation system for
approximately $71,000,000 in cash and through March 31, 1999 has additionally
invested approximately $27,000,000 in improvements and expansion of the
Grasslands Facilities and other assets in its natural gas services business
segment. The Grasslands Facilities are strategically located between
TransMontaigne's Marmarth facility in southwestern North Dakota, its Baker
facility in eastern Montana and its Lignite facility in northern North Dakota.
TransMontaigne has natural gas gathering facilities covering the eastern
corridor of Montana and the western quarter of North Dakota, from the Canadian
border to the South Dakota border, which enables TransMontaigne to provide a
complete service package to North Dakota and Montana producers as well as to
end-users of NGL and natural gas. The Grasslands Facilities contributed
approximately 87% and 92% of the total net operating margins of TransMontaigne's
natural gas gathering and processing operations during the nine months ended
March 31, 1999 and April 30, 1998, respectively.

         In November 1997, TransMontaigne acquired the common stock of the 17
ITAPCO Terminal Corporations and certain related property and property
interests. The acquisition included 17 bulk liquid storage and distribution
terminals located in 8 states having total tankage capacity in excess of 3.3
million barrels, handling primarily refined petroleum products, chemicals and
other bulk liquids together with the related operations of the terminals; and
certain other assets. The ITAPCO Terminal Corporations purchase price was
$32,000,000 and was funded by an advance of $22,000,000 from the TransMontaigne
bank credit facility with the balance from TransMontaigne cash reserves. Through
March 31, 1999, TransMontaigne has additionally invested approximately
$8,000,000 in 

                                      25
<PAGE>

improvements and expansion of the ITAPCO Terminal Corporations facilities. The
ITAPCO Terminal Corporations contributed approximately 25% and 36% of the total
net operating margins of the TransMontaigne terminal operations during the three
months and nine months ended March 31, 1999, respectively.

     In July 1998, TransMontaigne acquired the Southwest Terminal for $6,500,000
cash. The acquisition included terminaling, storage and loading facilities for
petroleum products, chemicals and other bulk liquids at the Port of Brownsville,
Texas with over 1.65 million barrels of tank storage, 12 truck rack loading
bays, connections to barge and tanker loading facilities and the exclusive use
of 5 railroad spur lines with a total of 32 railroad car loading spots. Through
March 31, 1999, TransMontaigne has additionally invested approximately
$1,100,000 in improvements and expansion to the Southwest Terminal facilities.

     In September 1998, TransMontaigne acquired for $29,219,000 cash the 15.38%
common stock interest in West Shore owned by Atlantic Richfield Company.
Effective December 31, 1998, TransMontaigne acquired for $5,488,000 cash an
additional 4.11% common stock interest in West Shore owned by Equilon Pipeline
Company, LLC and for $1,186,000 cash an additional .89% common stock interest in
West Shore owned by Texaco Transportation and Trading Inc., both of which
transactions closed in January 1999. West Shore owns a 600-mile common carrier
petroleum products pipeline system which operates between the Chicago refining
corridor locations of East Chicago, Indiana; Blue Island, Joliet and Lemont,
Illinois; north through metropolitan Chicago, Illinois; along the western edge
of Lake Michigan to Milwaukee and Green Bay, Wisconsin; and west to Rockford and
Peru, Illinois, and Madison, Wisconsin. The pipeline serves approximately 55
locations, including 4 refineries, the Chicago-O'Hare and Milwaukee airports,
and 49 refined petroleum products terminals in the Chicago, Illinois area and
the upper Mid-West region of the United States. West Shore ownership as of March
31, 1999 includes TransMontaigne, Citgo, Marathon, Equilon, Texaco, BP Amoco,
Midwest (Union Oil), Mobil and Exxon.

     In October 1998, TransMontaigne acquired all of the common stock of LDEC
for approximately $161,000,000, including $100,565,000 cash and 4.5 million
shares of TransMontaigne common stock valued at $60,435,000, plus working
capital of $192,492,000. The LDEC acquisition included 24

                                      26
<PAGE>

refined petroleum products terminal and storage facilities, of which 7 are
wholly owned and 17 are owned jointly with BP Oil Company, together with its
supply, distribution and marketing business. These facilities are located in 9
states in the Southern and Eastern regions of the United States; have
approximately 4.2 million barrels of TransMontaigne owned storage capacity; and
are supplied primarily by the Colonial and Plantation pipeline systems. LDEC's
supply, distribution and marketing business includes over 350 service
supply/exchange points nationwide and handles annually in excess of 85 million
barrels of refined petroleum products. Subsequent to closing, the name LDEC was
changed to TransMontaigne Product Services East Inc. LDEC is a major shipper on
the Colonial pipeline which connects the Houston ship channel and associated
major refining complexes to the New York Harbor which is the New York Mercantile
Exchange ("NYMEX") petroleum products delivery point. The cash component of the
purchase price and the net working capital acquired were funded by an advance
from TransMontaigne's $500,000,000 credit facility with BankBoston, N.A.

       In December 1998, TransMontaigne, through a wholly-owned subsidiary,
TransMontaigne Terminaling Inc. ("TTI"), purchased the SUNOCO, Inc. petroleum
products terminal located on the Hudson River at Renssalaer, outside of Albany,
New York for approximately $5,200,000 cash. The Renssalaer terminal facilities
include 510,000 barrels of storage capacity, 3 truck loading racks and a
recently rebuilt dock capable of handling both barges and ocean going tankers.

         On February 17, 1999, TransMontaigne and Colonial Pipeline Company
("Colonial") signed a definitive agreement whereby TransMontaigne, in an
alliance with Colonial, will construct, own and operate a marine loading and
unloading facility on the Mississippi River near Baton Rouge, Louisiana which is
designed to handle multiple barge deliveries of all grades of petroleum products
transported within Colonial's pipeline system at rates in excess of 14,000
barrels per hour and inbound and outbound volumes exceeding 50,000 barrels per
day. Colonial will construct three pipelines to feed the TransMontaigne marine
facility and waterway deliveries along the Mississippi and Ohio Rivers, as well
to receive barge deliveries for long haul Colonial system shipments, and will
also construct a related pump station between its Baton Rouge tank farm and the
TransMontaigne marine facility. TransMontaigne's estimated cost for the marine
facility, which is anticipated to be operational in the first calendar quarter
of 2000, is $8,500,000.


                                      27
<PAGE>
 
         On May 3, 1999, TransMontainge and Amerada Hess Corporation signed a
definitive agreement whereby a TransMontainge unit will acquire the Hess
Southeastern Pipeline Network of refined petroleum product facilities for $66.2
million, plus refined products inventory. This network, which is strategically
interconnected to the Colonial and Plantation pipeline systems, includes
approximately 5.3 million barrels of tankage at 11 storage and terminal
facilities located in Collins (2) and Purvis, Mississippi; Doraville, Georgia;
Belton and Spartanburg, South Carolina; Charlotte, Selma (2) and Greensboro,
North Carolina; and Montvale, Virginia; as well as 36 miles of proprietary
pipelines. TransMontainge anticipates closing this transaction on or about 
June 30, 1999.

         TransMontaigne intends to continue to make strategic additions to and
expansions of its existing facilities in order to achieve greater regional
geographical presence, extend customer service opportunities, improve operating
efficiencies, increase cash flow, generate incremental net earnings and enhance
its competitive market position.

INVENTORY RISK MANAGEMENT

         TransMontaigne manages inventory to maximize its value and minimize
risk by utilizing risk and portfolio management disciplines including certain
hedging strategies, forward purchases and sales, swaps and other financial
instruments to manage market exposure.

         TransMontaigne's refined petroleum products inventory consists
primarily of gasoline and distillates, the majority of which is held for sale or
trade in the ordinary course of business. A portion of this inventory represents
line fill and tank bottoms; is required to be held for operating balances in the
conduct of TransMontaigne's daily supply, distribution and marketing activities;
and is maintained both in tanks and pipelines owned by TransMontaigne and
pipelines owned by third parties. NGL and natural gas inventories are not
significant.

         TransMontaigne regularly engages in the trading of futures contracts in
the cash markets and on the NYMEX. The change in market value of NYMEX-traded
futures contracts requires daily cash settlements in margin accounts with
brokers. NYMEX-traded future contracts are guaranteed by the 


                                      28
<PAGE>
 
NYMEX and have nominal credit risk. TransMontaigne is exposed to credit risk in
the event the counterparties to other third party agreements are not able to
perform their contractual obligations.

         Following the acquisition of LDEC on October 30, 1998, TransMontaigne
has generally continued the separate inventory accounting methods, procedures
and policies, and the related management of the risks associated with
fluctuations in the price of refined petroleum products and purchase and sales
commitments, which had been previously utilized by TPSI (renamed TPSI - Midwest)
and by LDEC (renamed TPSI - East).

         TPSI - Midwest inventory is recorded at the lower of last-in, first-out
("LIFO") cost or market. TPSI - Midwest selectively enters into futures
contracts which may be designated by management as hedges of the products
purchased or sold. Hedging gains and losses are recognized and recorded in
operations when the related inventory is sold.

         TPSI - Midwest, at December 31, 1998, recorded an $8.6 million non-cash
lower of cost or market inventory write down adjustment to reduce the LIFO
carrying cost of its inventory. Subsequent to December 31, 1998 the product
prices increased and accordingly under the LIFO method of accounting for
inventory, the $8.6 million was recorded as a reduction of product costs in the
quarter ended March 31, 1999. The market value of TPSI - Midwest's inventory at
March 31, 1999 approximated its LIFO carrying cost.

          At December 31, 1998, TransMontaigne deferred the recognition of a 
$12.2 million  lower of cost or market adjustment to inventory, since it 
believed that price declines at that date were temporary. Based on management's 
evaluation of current and future market conditions, TPSI - Midwest subsequently 
entered into certain forward sales transactions at prices which were in excess 
of December 31, 1998 market prices in order that an additional lower of cost or 
market adjustment would not be required in the event that product prices 
remained relatively unchanged or continued to decline through June 30, 1999. 
Product prices, however, sharply increased during the latter part of the quarter
ending March 31, 1999, resulting in an increase in the market value of TPSI - 
Midwest inventory of approximately $21 million. As a result, the previously 
recognized inventory valuation allowance of $8.6 million increased earnings. 
Further, TransMontaigne recognized a loss of approximately $11 million in 
connection with the forward sales transactions.

<PAGE>

     TPSI - East inventory price risk is managed on an aggregate portfolio
basis. The net of physical inventory, forward sales commitments and forward
purchase commitments are generally hedged with NYMEX traded futures contracts.
TPSI - East values the aggregate portfolio using the mark to market inventory
accounting method with all changes in market values recognized and recorded in
operations.

     Contractual commitments are subject to risks including market value
fluctuations as well as counterparty credit and liquidity risk. TransMontaigne
has established procedures to continually monitor these contracts in order to
minimize credit risk, including the establishment and review of credit limits,
margin requirements, master netting arrangements, letters of credit and other
guarantees.

                                      30
<PAGE>
 
INFORMATION REGARDING FORWARD LOOKING STATEMENTS

     This Quarterly Report on Form 10-Q includes forward looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Although TransMontaigne believes that
its expectations are based on reasonable assumptions, it can give no assurance
that its goals will be achieved. Important factors which could cause actual
results to differ materially from those in the forward looking statements
include:

     .    that TransMontaigne will continue to expand its business
     
     .    that TransMontaigne will generate net operating margins from high
          sales volumes

     .    that TransMontaigne will generate net operating margins affected by
          price volatility of products purchased and sold 

     .    that TransMontaigne will enter into transactions with counterparties
          having the ability to meet their financial commitments to
          TransMontaigne

     .    that TransMontaigne will selectively and effectively hedge certain
          inventory positions 

     .    that TransMontaigne will be required to recognize lower-of-cost or
          market write-downs of its inventories

     .    that TransMontaigne will incur unanticipated costs in complying with
          current and future environmental regulations 

     .    that TransMontaigne will capitalize on the trend by other companies in
          the oil and gas industry to divest assets and outsource certain
          services

     .    that TransMontaigne will continue to acquire strategically located
          operating facilities from third parties 

     .    that TransMontaigne will replace the supply of dedicated natural gas
          reserves gathered and processed by its facilities

     .    that TransMontaigne will generate working capital internally, or have
          the ability to access debt and equity resources, to meet its future
          capital requirements

     .    that TransMontaigne will achieve Year 2000 compliance without
          incurring material costs adversely impacting its operating results.

                                       31
<PAGE>
 
RESULTS OF OPERATIONS

<TABLE> 
<CAPTION> 
                                                Three Months          Three Months           Nine Months           Nine Months    
                                                   Ended                  Ended                 Ended                 Ended       
                                               March 31, 1999        April 30, 1998         March 31, 1999       April 30, 1998   
                                            ---------------------  --------------------  ---------------------  ------------------
<S>                                         <C>                    <C>                   <C>                    <C>         
PIPELINE OPERATIONS
     Volume (1)                                             4,886                5,458                 17,250              14,551
     Revenues (2)                           $               3,289                3,664                 11,155              10,038
     Net Operating Margin (2)               $               1,470                2,314                  6,077               5,739
     Margin per Gallon                      $              0.0072               0.0101                 0.0084              0.0094

TERMINAL AND STORAGE OPERATIONS
     Volume (1)
          Refined petroleum products                    1,460,000              477,000              3,177,000           1,206,000
          Chemicals and other bulk liquids                  1,000                7,000                  7,000              17,000
     Revenues (2)
          Refined petroleum products        $              10,221                3,820                 21,168               9,163
          Chemicals and other bulk liquids  $               1,656                1,559                  6,088               2,585  
     Net Operating Margin (2)               $               7,042                3,435                 16,758               7,535   

     Margin per Gallon                      $              0.0048               0.0071                 0.0053              0.0062

PRODUCTS SUPPLY, DISTRIBUTION
AND MARKETING OPERATIONS
     Volume (1)                                         1,700,211            1,077,000              4,287,000           2,794,000
     Revenues (2)                           $             742,265              467,312              1,896,217           1,437,324
     Net Operating Margin (2)               $              16,334                2,025                 27,778               6,874
     Margin per Gallon                      $              0.0096               0.0019                 0.0065              0.0025

NATURAL GAS SERVICES OPERATIONS
     Inlet Volume (3)                                       4,959                5,076                 15,659              15,936
     NGL Production (3)                                    25,941               24,512                 79,819              74,653
     Residue Production (3)                             3,904,407            3,958,634             12,557,973          13,262,928
     Revenues (2)                           $              11,938               13,171                 39,162              46,247
     Net Operating Margin (2)               $               2,744                2,743                  9,637              10,908

TOTAL OPERATIONS
     Revenues (2)                           $             769,369              489,526              1,973,790           1,505,357
     Net Operating Margin (2)               $              27,590               10,517                 60,250              31,056
     Net Earnings (2)                       $               2,473                  513                  4,205               4,628
</TABLE> 

(1)      Pipeline volumes are expressed in thousands of barrels (42 gallons per
         barrel). Terminal and storage and products supply and distribution
         volumes are expressed in thousands of gallons.
(2)      Revenues, net operating margins, and net earnings are expressed in
         thousands of dollars. Net operating margin represents (a) revenues less
         direct operating expenses for pipeline and terminal and storage
         operations; (b) revenues less cost of refined petroleum products
         purchased for products supply and distribution operations, and (c)
         revenues less cost of natural gas gathered, processed and sold and
         direct operating expenses for natural gas services operations.
(3)      Natural gas inlet volumes are expressed in million cubic feet; NGL
         production is expressed in thousands of gallons; and residue natural
         gas production is expressed in million British Thermal Units.

                                       32
<PAGE>
 
     Prior to the acquisition of the ITAPCO Terminal Corporations facilities in
November 1997 and the Grasslands Facilities in December 1996, TransMontaigne's
revenues were derived from the logistical petroleum services operating business
segment consisting primarily of transporting refined petroleum products (and to
a lesser extent crude oil) in pipelines; the storage and terminaling of refined
petroleum products; and the supply, distribution and marketing of refined
petroleum products. The storage and terminaling of chemicals and other bulk
liquids became a component of the logistical petroleum operating business
segment following the ITAPCO Terminal Corporations acquisition. Natural gas
services became a separate operating business segment with the acquisition of
the Grasslands Facilities.

     Pipeline revenues are based on the volume of refined petroleum products or
crude oil transported and the distance from the origin point to the delivery
point. TransMontaigne's interstate pipeline systems transport refined petroleum
products and their tariffs are regulated by the Federal Energy Regulatory
Commission (the "FERC"). TransMontaigne's intrastate pipeline transports crude
oil and its tariffs are not regulated by the FERC, but are regulated by the
Texas Railroad Commission.

     Terminal revenues are based on the volume of refined petroleum products
handled at TransMontaigne terminal loading racks, generally at a standard per
gallon rate. Terminal fees are not regulated. Storage fees are generally based
on a per barrel rate or tankage capacity committed and will vary with the
duration of the arrangement, the product stored and special handling
requirements, particularly when certain types of chemicals and other bulk
liquids are involved. Storage fees are not regulated.

     Direct operating expenses of pipeline and terminal and storage operations
include wages and employee benefits, utilities, communications, maintenance and
repairs, property taxes, rent, insurance, vehicle expenses, environmental
compliance costs, materials and supplies.

     Products supply, distribution and marketing logistical services revenues
and fees are generated from (a) significant volumes of bulk sales and exchanges
of refined petroleum products to major and large independent energy companies;
(b) wholesale distribution of refined petroleum products to jobbers and
retailers; (c) regional and national industrial end-user and commercial
wholesale storage

                                       33
<PAGE>
 
and forward sales marketing contracts of refined petroleum products; and (d)
tailored short and long-term fuel margin and risk management logistical services
arrangements to wholesale, retail and industrial end-users. Bulk purchase and
sale transactions in quantities of 25,000 barrels to 50,000 barrels or more are
common and are generally made at small margins. Wholesale distribution of
refined petroleum products is conducted from 59 proprietary and 150 non-
proprietary truck loading terminal, storage and delivery locations. Refined
petroleum products storage and forward sales transactions enable TransMontaigne
to purchase refined petroleum products inventory, utilize proprietary and leased
tankage as well as line space controlled by TransMontaigne in major common
carrier pipelines to store the inventory and, depending upon market conditions,
to lock-in margins through sales in the futures cash market or NYMEX contracts.
Margin and risk management logistical services provide both TransMontaigne's
large and small volume customers an assured, ratable and cost effective short or
long-term delivered source of refined petroleum product supply through
proprietary pipelines and terminals as well as non-proprietary pipeline,
terminal, truck, rail and barge distribution channels.

     Direct operating expenses of products supply, distribution and marketing
operations are primarily the cost of products sold and also include
transportation, storage, terminaling, wages and employee benefits and sales
commission expenses.

     Natural gas gathering and processing revenues are based on the inlet volume
of natural gas purchased from producers under both percentage of proceeds and
fee based arrangements. Natural gas is gathered and processed into NGL products,
principally propane, butane and natural gasoline. These products are transported
by truck or pipeline to storage facilities from which they are further
transported and marketed by TransMontaigne to wholesalers and end-users. Residue
natural gas is delivered to and marketed through connections with third-party
interstate natural gas pipelines.

     Direct operating expenses of natural gas gathering and processing
operations include wages and employee benefits, utilities, maintenance and
repairs, property taxes, rent, insurance, vehicle expenses, environmental
compliance costs, materials and supplies.

                                       34
<PAGE>
 
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO

THREE MONTHS ENDED APRIL 30, 1998

     In August 1998, TransMontaigne elected to change its fiscal year end to
June 30. The management discussion which follows compares the three months ended
March 31, 1999 to the three months ended April 30, 1998. TransMontaigne did not
recast historical financial information to present the three months ended March
31, 1998 since the financial reporting systems in place at that time included
certain procedures which were completed only on a quarterly basis. Accordingly,
it is impractical to recast this financial information.

     The net operating margin from pipeline operations for the three months
ended March 31, 1999 was $1,470,000 compared to $2,314,000 for the three months
ended April 30, 1998, a decrease of 36%, or $844,000. The margin per gallon for
the three months ended March 31, 1999 of $.0072 decreased 29%, or $.0029.
Pipeline volumes decreased 10% and revenues decreased 10% primarily due to
reduced shipments by a major refiner. In addition operating costs increased 35%
primarily due to increased maintenance and right of way clearing costs.

     The net operating margin from terminal and storage operations for the three
months ended March 31, 1999 was $7,042,000 compared to $3,435,000 for the three
months ended April 30, 1998, an increase of 105%, or $3,607,000. The margin per
gallon for the three months ended March 31, 1999 of $.0048 decreased 32%, or
$.0023. The increase in net operating margin resulted from a significant
increase in refined petroleum products volumes and revenues due to the addition
of the LDEC and Renssalaer terminals acquired in October and December 1998,
respectively, notwithstanding a decrease in the small volumes of chemicals and
other bulk liquids handled at a terminal which had been temporarily taken out of
service. These revenue increases were partially offset by a 149% increase in
terminal operating costs primarily attributable to the LDEC terminals, Southwest
Terminal, Renssalaer Terminal and expanded East Chicago and Mt. Vernon terminal
operations.

     The net operating margin from products supply, distribution and marketing
operations for the three months ended March 31, 1999 was $16,334,000 compared to
$2,025,000 for the three months

                                       35

<PAGE>
 
ended April 30, 1998, an increase of 707%, or $14,309,000. Revenues were
$742,265,000 for the three months ended March 31, 1999 compared to $467,312,000
for the three months ended April 30, 1998, an increase of 59%, or $274,953,000.
These increases were due to the inclusion of LDEC operations for the entire 
quarter.

     TPSI - Midwest, at December 31, 1998, recorded an $8.6 million non-cash
lower of cost or market inventory write down adjustment to reduce the LIFO
carrying cost of its inventory. Subsequent to December 31, 1998 the product 
prices increased and accordingly under the LIFO method of accounting for
inventory, the $8.6 million was recorded as a reduction of product costs in the
quarter ended March 31, 1999. The market value of TPSI - Midwest's inventory at
March 31, 1999 approximated its LIFO carrying cost.
     
     At December 31, 1998, TransMontaigne deferred the recognition of a $12.2
million lower of cost or market adjustment to inventory, since it believed that
price declines at that date were temporary. Based on management's evaluation of
current and future market conditions, TPSI - Midwest subsequently entered into
certain forward sales transactions at prices which were in excess of December
31, 1998 market prices in order that an additional lower of cost or market
adjustment would not be required in the event that product prices remained
relatively unchanged or continued to decline through June 30, 1999. Product 
prices, however, sharply increased during the latter part of the quarter ending 
March 31, 1999, resulting in an increase in the market value of TPSI - Midwest
inventory of approximately $21 million. As a result, the previously recognized
inventory valuation allowance of $8.6 million increased earnings. Furthermore,
TransMontaigne recognized a loss of approximately $11 million in connection with
the forward sales transactions.

     Overall, the increased products supply, distribution and marketing volume
contributed directly to the increases in terminal and storage volumes. By
providing seamless integrated logistical services to customers through the
effective utilization of its proprietary pipeline, terminal and storage
facilities, and the facilities owned and operated by third parties, as well as
its significantly expanded product supply, distribution and marketing
capabilities, TransMontaigne's aggregate net operating margin from the
logistical petroleum services operating business segment was $24,846,000 for the
three 

                                   
                                   
<PAGE>

months ended March 31, 1999 compared to $ 7,774,000 for the three months ended
April 30, 1998, an increase of 220%, or $17,072,000.

     The net operating margin from natural gas services operations for the three
months ended March 31, 1999 was $2,744,000 compared to $2,743,000 for the three
months ended April 30, 1998. Revenues for the three months ended March 31, 1999
were $11,938,000 compared to $13,171,000 for the three months ended April 30,
1998 a decrease of 9%, or $1,233,000. Net operating margin and revenues during
the three months ended March 31, 1999 continued to be negatively impacted by low
NGL prices, primarily propane, notwithstanding an approximate 6% increase in NGL
production.

     General and administrative expenses for the three months ended March 31,
1999 were $7,954,000 compared to $4,139,000 for the three months ended April 30,
1998, an increase of 92%, or $3,815,000. The increase was due primarily to
additional personnel costs, related employee benefits, increased office lease
rentals and increased communication expenses. These increases were directly
attributable to the continued expansion of TransMontaigne's integrated
logistical petroleum services and to the acquisition and operations of LDEC,
including the relocation of certain personnel and operational functions to the
Atlanta, Georgia office. In addition, the increase includes amortization of 
unearned compensation of $483,000.

     Other income for the three months ended March 31, 1999 included dividends
from West Shore of $560,000. Interest income for the three months ended March
31, 1999 was $144,000 compared to $430,000 for the three months ended April 30,
1998, a decrease of 67%, or $286,000. The decrease in interest income was due
primarily to the decrease in interest bearing cash balances held for future
investments.

     Interest expense represents interest on the TransMontaigne credit facility
borrowings and senior promissory notes which were used primarily to finance the
acquisitions of LDEC, West Shore, the Southwest Terminal, the Renssalaer
Terminal, the ITAPCO Terminal Corporations and the Grasslands Facilities, other
continuing capital expenditures and working capital to carry inventory and
accounts receivable. Also included is interest on the TransMontaigne senior
subordinated debentures. Amortization of deferred debt issuance costs includes
the amortization of costs paid in connection with 

                                       37
<PAGE>

the bank credit facility and Master Shelf Agreement. Other financing costs
includes commitment fees paid in connection with the credit facility. Interest
expense, amortization of deferred debt issuance costs, and other financing costs
during the three months ended March 31, 1999 was $11,253,000 compared to
$2,522,000 during the three months ended April 30, 1998, an increase of 346%, or
$8,731,000. The increase in interest expense of $7,105,000 was due to an
increase in average outstanding debt, primarily to fund acquisitions and
increased working capital requirements. Amortization of deferred debt issuance
costs increased $1,239,000 largely due to increased amortization of costs
incurred in securing the new BankBoston, N.A. $500,000,000 credit facility and
additional costs associated with amending the Master Shelf Agreement.

     Earnings before income taxes for the three months ended March 31, 1999 was
$3,988,000, compared to $1,835,000 for the three months ended April 30, 1998, an
increase of 117%, or $2,153,000. The increase in earnings before income taxes
resulted from increased net operating margin contributions from products supply,
distribution and marketing operations, primarily from the LDEC acquisition, and
from terminal and storage operations primarily from the LDEC and the ITAPCO
Terminal Corporations acquisitions, offset by reduced net operating margins from
pipeline operations and natural gas services operations. In addition, increased
general and administrative expenses; additional depreciation attributable to the
LDEC acquisition and expansion of natural gas services assets; and interest
expense primarily attributable to the financing of the LDEC, West Shore,
Southwest Terminal and Renssalaer Terminal acquisitions reduced earnings before
income taxes.

     Income tax expense was $1,515,000 for the three months ended March 31, 1999
based upon an effective combined federal and state income tax rate of 38%.
Income tax expense was $1,323,000 for the three months ended April 30, 1998
based upon an effective combined federal and state income tax rate of 72% which
includes an adjustment to increase the effective tax rate for the year ended
April 30, 1998.

     Dividend requirement for the Series A Convertible Preferred Stock was
$148,000 for the short period from the issuance dates to March 31, 1999.



                                       38
<PAGE>

     Net earnings were $2,473,000 for the three months ended March 31, 1999
compared to $513,000 for the three months ended April 30, 1998, an increase of
382%, or $1,960,000. After providing for the dividend requirement for preferred
stockholders, net earnings attributable to common stockholders were $2,325,000
and $512,000 for the three months ended March 31, 1999 and April 30, 1998,
respectively. Earnings per common share for the three months ended March 31,
1999 were $.08 basic and $.07 diluted based on 30,470,924 weighted average basic
shares outstanding and 31,184,298 weighted average diluted shares outstanding,
respectively. This compares to earnings per share of $.02 basic and $.02 diluted
for the three months ended April 30, 1998.

NINE MONTHS ENDED MARCH 31, 1999 COMPARED TO

NINE MONTHS ENDED APRIL 30, 1998

     In August 1998, TransMontaigne elected to change its fiscal year end to
June 30. The management discussion that follows compares the nine months ended
March 31, 1999 to the nine months ended April 30, 1998. TransMontaigne did not
recast historical financial information to present the nine months ended March
31, 1998 because the financial reporting systems in place at that time included
certain procedures which were completed only on a quarterly basis. Accordingly,
it is impractical to recast this financial information.

     The net operating margin from pipeline operations for the nine months ended
March 31, 1999 was $6,077,000 compared to $5,739,000 for the nine months ended
April 30, 1998, an increase of 6%, or $338,000. The margin per gallon for the
nine months ended March 31, 1999 of $.0084 decreased 11%, or $.0010. Pipeline
volumes increased 19% and revenues increased 11% primarily due to increased
shipments from Chicago to Toledo during the first quarter of the fiscal year
attributable to reductions in local refinery outputs, which were partially
offset by a 19% increase in operating costs primarily due to incremental power
costs attributable to additional thruput volumes and increased maintenance and
right of way clearing costs.

     The net operating margin from terminal and storage operations for the nine
months ended March 31, 1999 was $16,758,000 compared to $7,535,000 for the nine
months ended April 30, 1998, 

                                       39
<PAGE>

an increase of 122%, or $9,223,000. The margin per gallon for the nine months
ended March 31, 1999 of $.0053 decreased 15%, or $.0009. The increase in net
operating margin resulted from a significant increase in refined petroleum
products volumes handled and revenues due to the addition of the LDEC and
Renssalaer terminals acquired in October 1998 and December 1998, respectively,
notwithstanding a decrease in the small volumes of chemicals and other bulk
liquids handled at a terminal which had been temporarily taken out of service.
These revenue increases were partially offset by a 149% increase in terminal
operating costs primarily attributable to the LDEC terminals, Southwest
Terminal, Renssalaer Terminal, the ITAPCO Terminal Corporations terminals and
expanded East Chicago and Mt. Vernon terminal operations.

     The net operating margin from products supply, distribution and marketing
operations for the nine months ended March 31, 1999 was $27,778,000 compared to
$6,874,000 for the nine months ended April 30, 1998, an increase of 304%, or
$20,904,000. Revenues were $1,896,217,000 for the nine months ended March 31,
1999 compared to $1,437,324,000 for the nine months ended April 30, 1998, an
increase of 32%, or $458,893,000. These increases were due to the inclusion of
the LDEC operations for the five months ended March 31, 1999.

     TPSI - Midwest, at December 31, 1998, recorded an $8.6 million non-cash
lower of cost or market inventory write down adjustment to reduce the LIFO
carrying cost of its inventory. Subsequent to December 31, 1998 product 
prices increased and accordingly under the LIFO method of accounting for
inventory, the $8.6 million was recorded as a reduction of product costs in the
quarter ended March 31, 1999. The market value of TPSI - Midwest's inventory at
March 31, 1999 approximated its LIFO carrying cost.

     At December 31, 1998, TransMontaigne deferred the recognition of a $2.2
million lower of cost or market adjustment to inventory, since it believed that
price declines at that date were temporary. Based on management's evaluation of
current and future market conditions, TPSI - Midwest subsequently entered into
certain forward sales transactions at prices which were in excess of December
31, 1998 market prices in order that an additional lower of cost or market
adjustment would not be required in the event that product prices remained
relatively unchanged or continued to decline through June 30, 1999. Product
prices, however, sharply increased during the latter part of the quarter ending
March 31, 1999, resulting in an increase in the market value of TPSI - Midwest
inventory of approximately $21 million. As a result, the previously recognized
inventory valuation allowance of $8.6 million increased earnings. Further,
TransMontaigne recognized a loss of approximately $11 million in connection with
the forward sales transactions.























                                       40
<PAGE>

     Overall, the increased products supply, distribution and marketing volume
contributed directly to the increases in pipeline, terminal and storage volumes.
By providing seamless integrated logistical services to customers through the
effective utilization of its proprietary pipeline, terminal and storage
facilities, and the facilities owned and operated by third parties, as well as
its significantly expanded product supply, distribution and marketing
capabilities, TransMontaigne's aggregate net operating margin from the
logistical petroleum services operating business segment was $50,613,000 for the
nine months ended March 31, 1999 compared to $20,148,000 for the nine months
ended April 30, 1998, an increase of 151%, or $30,465,000.

     The net operating margin from natural gas services operations for the nine
months ended March 31, 1999 was $9,637,000 compared to $10,908,000 for the nine
months ended April 30, 1998, a decrease of 12%, or $1,271,000. Revenues for the
nine months ended March 31, 1999 were $39,162,000 compared to $46,247,000 for
the nine months ended April 30, 1998, a decrease of 15%, or $7,085,000. The net
operating margin and revenues were attributable primarily to the business
activities of the Grasslands Facilities. Net operating margin and revenues
during the nine months ended March 31, 1999 continued to be negatively impacted
by low NGL prices, primarily propane, and the adverse effect of weak crude oil
prices during the last six months of 1998, notwithstanding an approximate 7%
increase in NGL production.

     General and administrative expenses for the nine months ended March 31,
1999 were $20,857,000 compared to $11,016,000 for the nine months ended April
30, 1998, an increase of 89%, or $9,841,000. The increase was due primarily to
additional personnel costs, related employee benefits, increased office lease
rentals, increased communication expenses and expenses related to the
relocation of TransMontaigne employees to the Atlanta, Georgia office. These
increases were directly attributable to the continued expansion of
TransMontaigne's integrated logistical petroleum services 

                                       41

<PAGE>

and to the acquisition and operations of LDEC and the ITAPCO Terminal
Corporations. In addition, the increase includes amortization of unearned
compensation of $522,000.

     Other income for the nine months ended March 31, 1999 included dividends
from West Shore of $899,000. Interest income for the nine months ended March 31,
1999 was $903,000 compared to $1,495,000 for the nine months ended
 
April 30, 1998, a decrease of 40%, or $592,000. The decrease in interest income
was due primarily to the decrease in interest bearing cash balances held for
future investments.

     Interest expense represents interest on the TransMontaigne credit facility
borrowings and senior promissory notes which were used primarily to finance the
acquisitions of LDEC, West Shore, the Southwest Terminal, the Renssalaer
Terminal, the ITAPCO Terminal Corporations and the Grasslands Facilities, other
continuing capital expenditures and working capital to carry inventory and
accounts receivable. Also included is interest on the TransMontaigne senior
subordinated debentures. Amortization of deferred debt issuance costs includes
the amortization of costs paid in connection with the bank credit facility and
Master Shelf Agreement. Other financing costs includes commitment fees paid in
connection with the credit facility. Interest expense, amortization of deferred
debt issuance costs, and other financing costs during the nine months ended
March 31, 1999 was $22,394,000 compared to $6,521,000 during the nine months
ended April 30, 1998, an increase of 243%, or $15,873,000. The increase in
interest expense of $13,020,000 was due to an increase in average outstanding
debt, primarily to fund acquisitions and increased working capital requirements.
Amortization of deferred debt issuance costs increased $2,101,000 largely due to
amortization of costs incurred in securing the new BankBoston, N.A. credit
facility and additional costs associated with amending the Master Shelf
Agreement.

     Earnings before income taxes for the nine months ended March 31, 1999 was
$6,782,000, compared to $8,521,000 for the nine months ended April 30, 1998, a
decrease of 20%, or $1,739,000. The decrease in earnings before income taxes
resulted from increased net operating margin contributions from products supply,
distribution and marketing operations primarily from the LDEC acquisition; and
from terminal and storage operations primarily from the LDEC acquisition and
ITAPCO Terminal Corporations acquisitions; offset by increased general and
administrative expenses; 

                                       42
<PAGE>

additional depreciation attributable to the acquisitions of LDEC and the ITAPCO
Terminal Corporations and expansion of natural gas services assets; and interest
expense, primarily attributable to the financing of the LDEC, West Shore,
Southwest Terminal, Renssalaer Terminal and ITAPCO Terminal Corporations
acquisitions.

      Income tax expense was $2,577,000 for the nine months ended March 31, 1999
based upon an effective combined federal and state income tax rate of 38%.
Income tax expense was $3,893,000 for the nine months ended April 30, 1998 based
upon an effective combined federal and state income tax rate of 46% which 
includes an adjustment to increase the effective tax rate for the year ended
April 30, 1998.

     Dividend requirement for the Series A Convertible Preferred Stock was
$148,000 for the short period from the issuance dates to March 31, 1999.

     Net earnings were $4,205,000 for the nine months ended March 31, 1999,
compared to $4,628,000 for the nine months ended April 30, 1998, a decrease of
9%, or $423,000. After providing for the dividend requirement for preferred
stockholders, net earnings attributable to common stockholders were $4,057,000
and $4,628,000 for the nine months ended March 31, 1999 and April 30, 1998,
respectively. Earnings per common share for the nine months ended March 31, 1999
were $.14 basic and $.14 diluted based on 28,469,902 weighted average basic
shares outstanding and 29,197,274 weighted average diluted shares outstanding,
respectively. This compares to earnings per share of $.18 basic and $.17 diluted
for the nine months ended April 30, 1998.


                                       43
<PAGE>
 
LIQUIDITY AND CAPITAL RESOURCES

     The following summary reflects TransMontaigne's comparative net cash flows
for the nine months ended March 31, 1999 and the nine months ended April 30,
1998.

<TABLE> 
<CAPTION> 
                                                                  Nine Months Ended              Nine Months Ended     
                                                                    March 31, 1999                 April 30, 1998      
                                                                  -----------------              -----------------     
<S>                                                               <C>                            <C>    
     Net cash (used) by operating activities                      $      (27,344,000)                     (160,000)     
     Net cash (used) by investing activities                      $     (382,311,000)                  (61,234,000)     
     Net cash provided by financing activities                    $      395,389,000                    49,936,000      
</TABLE> 

     Net cash used by operating activities of $27,344,000 for the nine months
ended March 31, 1999 was attributable primarily to increased inventories and
trade accounts receivable reduced by increased trade accounts payable and other
current liabilities, net earnings before income taxes and depreciation and
amortization. TransMontaigne's current ratio (current assets divided by current
liabilities) was 3.2 to 1.0 at March 31, 1999 compared to 3.1 to 1.0 at April
30, 1998.

     Net cash used by investing activities was $382,311,000 during the nine
months ended March 31, 1999 as TransMontaigne continued its growth through
construction and improvements to existing operating facilities and the
acquisitions of LDEC ($293,057,000 cash), a 20.38% common stock interest in West
Shore ($35,893,000 cash), Southwest Terminal ($6,500,000 cash) and Renssalaer
Terminal ($5,200,000). Capital expenditures included enhancements to the
East Chicago facility and to several of the acquired LDEC and ITAPCO Terminal
Corporations terminals; construction costs related to the new North Peoria,
Illinois terminal; improvements to the NORCO Pipeline facilities; expansion of
natural gas services assets; and additions to TransMontaigne's corporate
facilities, communications and data processing infrastructure. Net cash used by
investing activities was $61,234,000 during the nine months ended April 30, 1998
which included approximately $32,000,000 for the ITAPCO Terminal Corporations
acquisition, $3,174,000 of improvements to the Grasslands Facilities and other
natural gas assets; and enhancements to the pipeline and terminal facilities.

                                       44
<PAGE>
 
     Net cash provided by financing activities for the nine months ended March
31, 1999 of $395,389,000 primarily represented borrowings under TransMontaigne's
credit facility and proceeds from the issuance of Series A Convertible Preferred
Stock which were used to fund the LDEC and West Shore common stock acquisitions,
as well as to finance other acquisitions and capital expenditures. Net cash
provided by financing activities for the nine months ended April 30, 1998 of
$49,936,000 represented borrowings under TransMontaigne's credit facility
primarily used to finance operations and capital expenditures. At March 31,
1999, TransMontaigne had $544,500,000 of borrowing capacity with availability of
$70,000,000 under its credit agreements.

     EBITDA represents earnings before income taxes plus interest expense and
other financing costs and depreciation and amortization. EBITDA is used by
management as part of its overall assessment of TransMontaigne's performance by
analyzing and comparing EBITDA between reporting periods. Management believes
that, in addition to cash flow from operations as well as operating income and
net earnings (determined in accordance with generally accepted accounting
principles) as indicators of operating performance, EBITDA is used by the
financial community to measure operating effectiveness and as a method to
evaluate the market value of companies like TransMontaigne. EBITDA is also used
to evaluate TransMontaigne's ability to incur and service debt and to fund
capital expenditures, although it is not considered in isolation or a substitute
for the other measurements of performance and liquidity.

     EBITDA was $20,339,000 and $41,195,000 for the three months and nine months
ended March 31, 1999, respectively.

     Working capital required to support TransMontaigne's business operations,
principally to carry accounts receivable and inventory, is provided by advances
from its credit facility. Interest expense related to working capital advances
is not included in the determination of EBITDA. For the three months and nine
months ended March 31, 1999, the interest expense attributable to working
capital advances was approximately $5,963,000 and $10,109,000, respectively.

                                       45
<PAGE>
 
     Achieving continued EBITDA growth through strategic acquisitions, further
internal expansion of existing facilities and by providing value-added, products
supply, distribution and marketing logistical services is a primary objective of
TransMontaigne management.

     Capital expenditures anticipated in the year ending June 30, 1999 are
estimated to be $330,000,000 for pipeline, terminal, storage and natural gas
gathering and processing facilities, and assets to support these facilities,
including $161,000,000 in cash and common stock for LDEC; $35,893,000 cash for
the 20.38% common stock interest in West Shore; $6,500,000 cash for the
Southwest Terminal; and $5,200,000 for the Renssalaer, New York terminal. In
addition, other major anticipated capital expenditures through June 30, 1999
include $66,200,000 for the pending Amerada Hess terminals acquisition;
$8,000,000 for enhancements to the ITAPCO Terminal Corporations terminals;
$7,000,000 for the North Peoria, Illinois terminal; $6,500,000 for additional
tankage at the East Chicago storage complex; and $8,200,000 for natural gas
gathering system expansion. Future capital expenditures will depend on numerous
factors, including the availability, economics and cost of appropriate
acquisitions which TransMontaigne identifies and evaluates; the economics, cost
and required regulatory approvals with respect to the expansion and enhancement
of existing systems and facilities; the demand for the services TransMontaigne
provides; local, state and federal governmental regulations; environmental
compliance requirements; fuel conservation efforts; and the availability of debt
financing and equity capital on acceptable terms.

     On March 25, 1999 and March 30, 1999 TransMontaigne closed a private
placement of $170,115,000 of $1,000 Series A Convertible Preferred Stock Units.
Each unit consists of one share of 5% convertible preferred stock, convertible
into common stock at $15 per share, and 66.67 warrants, each warrant exercisable
to purchase six-tenths of a share of common stock at $14 per share. Dividends
are cumulative and payable quarterly. The dividend rate increases to an annual
rate of 16% for any convertible preferred stock outstanding after
December 31, 2003. The convertible preferred stock is convertible any time
and may be called for redemption by TransMontaigne after the second year if the
market price of the common stock is greater than 175% of the conversion price at
the date of the call. Proceeds will be used to reduce bank debt and for general
corporate purposes. As of March 31, 1999, $59,500,000 from the private placement
had been received and the remaining $110,615,000 was received by April 20, 1999.


                                       
<PAGE>
 
     In February 1997, TransMontaigne closed a public offering of 4,357,000
shares of its common stock of which 4,035,000 shares were issued and sold by
TransMontaigne and 322,000 shares were sold by certain selling stockholders. The
net proceeds to TransMontaigne, based on the public offering price of $14.25 per
share, were $53,506,000 after deducting underwriting discounts and commissions
and offering costs, of which $45,000,000 was used to repay a portion of the 
long-term debt incurred under its bank credit facility and the balance was added
to working capital. In March 1997 the underwriters' overallotment option to
purchase an additional 557,543 shares and the Merrill Lynch Growth Fund
antidilution right to purchase an additional 98,390 shares were both exercised
and TransMontaigne received additional net proceeds of $8,809,000 which was
added to working capital. The total net proceeds from the offering were
$62,315,000.

     In October 1998, TransMontaigne closed a $500,000,000 credit facility with
BankBoston, N.A. The credit facility includes a $350,000,000 revolving component
due December 31, 2003 and a $150,000,000 term component due June 30, 2000.
Borrowings under this credit facility bear interest at an annual rate equal to
the lender's Alternate Base Rate plus a margin subject to a Eurodollar Rate
pricing option. The credit facility includes a $20,000,000 same day revolving
swing line under which advances may be drawn at an interest rate comparable to
the Eurodollar Rate. The proceeds from the credit facility were used to fund the
LDEC acquisition as well as to refinance existing bank debt and provide funds
for future acquisitions and other general corporate purposes. Subsequent to
March 31, 1999, the $150,000,000 term component was repaid with proceeds from
the private placement of Series A Convertible Preferred Stock.

     At March 31, 1999, TransMontaigne had advances of $395,500,000 outstanding
under the bank credit facility utilizing the Eurodollar Rate loan pricing
option. The average interest rate at March 31, 1999 was 6.8%.

     In April 1997, TransMontaigne entered into a Master Shelf Agreement with an
institutional lender which provides that the lender will agree to quote an
interest rate at which the lender would be willing to purchase, on an
uncommitted basis, up to $100,000,000 of TransMontaigne senior
  
                                       47
<PAGE>

promissory notes which will mature in no more than 12 years, with an average 
life not in excess of 10 years.
 
     At March 31, 1999, TransMontaigne had outstanding under the Master Shelf
Agreement, $50,000,000 of 7.85% Senior Notes due April 17, 2003 and $25,000,000
of 7.22% Senior Notes due October 17, 2004. The Master Shelf Agreement was
amended as of October 30, 1998 in connection with the closing of the
$500,000,000 credit facility. Costs relating to the amendment were $1,125,000 of
which $563,000 and $938,000 are included in other financing costs for the three
months and nine months ended March 31, 1999, respectively.

     The bank credit facility agreement and the Master Shelf Agreement contain a
negative pledge covenant by TransMontaigne and its subsidiaries and are secured
by the stock of the subsidiaries. The agreements also include financial
compliance tests relating to fixed charges coverage, leverage ratio,
consolidated tangible net worth, distributions and inventory positions. As of
March 31, 1999, TransMontaigne was in compliance with all such tests.

     At March 31, 1999, TransMontaigne had working capital of $421,415,000;
availability under its bank credit facility of $45,000,000; and additional
borrowing capacity of $25,000,000 under the Master Shelf Agreement.

     TransMontaigne believes that its current working capital position; future
cash provided by operating activities; proceeds from the private placement or
public offering of debt and common stock; available borrowing capacity under the
bank credit facility agreement and the Master Shelf Agreement; additional
borrowing allowed under those agreements; and its relationship with
institutional lenders and equity investors should enable TransMontaigne to meet
its future capital requirements.

YEAR 2000 MATTERS

     Historically, certain computer software, as well as certain hardware
containing embedded technology, such as microcontrollers and microprocessors,
were designed to utilize a two-digit rather

                                      48
<PAGE>
than a four-digit date field and consequently may cause computers, computer
controlled systems and equipment with embedded software, microcontrollers and
microprocessors to malfunction or incorrectly process data in the Year 2000.
This could result in significant system failures. TransMontaigne relies on its
computer-based management information systems, as well as embedded technology,
such as microcontrollers and microprocessors, to operate instruments and
equipment in conducting its normal business activities. Certain of these
computer-based programs and embedded technology, such as microcontrollers and
microprocessors, may not have been designed to function properly with respect to
the application of dating systems relating to the Year 2000.

     In response, TransMontaigne has developed a "Year 2000" Plan.
TransMontaigne's Board of Directors has been briefed about Year 2000 concerns
generally and the possible effect on TransMontaigne. The Year 2000 Plan has been
presented to the Board and periodic progress updates regarding its
implementation have been provided. The purpose of the Year 2000 Plan is to
define and provide a continuing process for assessment, remediation planning and
plan implementation to achieve a level of readiness that will effectively deal
with the Year 2000 concerns in a timely manner. While achieving Year 2000
readiness does not mean correcting every Year 2000 limitation, critical systems
and electronic assets, as well as relationships with key third-party customers,
suppliers and local, state and federal government agencies have been, and
continue to be, evaluated and are expected to be suitable for continued use into
and beyond the Year 2000.

     Implementation of TransMontaigne's Year 2000 Plan is directly supervised by
a Senior Vice President, assisted by a Year 2000 Plan Director. The Plan
Director coordinates the implementation of the Year 2000 Plan among
TransMontaigne's individual business units. The Plan Director has established an
internal group to identify and assess potential areas of risk and to make any
required modifications to computer systems and equipment used in
TransMontaigne's business activities involving refined product and crude oil
pipeline, terminaling and storage, natural gas gathering and processing; and
products supply, distribution and marketing. The Year 2000 Plan is comprised of
several phases, including assessment, remediation planning and implementation.
These three phases are more fully described as follows:

                                       49
<PAGE>
 
     A.   Assessment - This phase involves the identification and inventory of
TransMontaigne's business assets and processes and determination of Year 2000
compliancy status of these business assets and those third-party suppliers,
customers and state and federal governmental agencies believed to be material to
TransMontaigne's business, results of operations, or financial condition
("KeyParties"). The Assessment phase of the Year 2000 Plan includes assessment
of Year 2000 compliancy of the following:

               1.   Computer systems and software ("Information Technology")

               2.   Control software, microprocessors and micro-controllers
                    embedded in equipment ("Embedded Systems")

               3.   Key Parties

          B.   Remediation Planning - This phase involves the development of
remediation plans which, when implemented, will enable business assets and
business relationships critical to TransMontaigne's business operations to be
Year 2000 ready. This phase also contemplates implementation planning and
prioritization of implementation of remediation plans.

          C.   Implementation - This phase involves the implementation of
remediation plans, including post-remediation testing and contingency planning.

After the Assessment phase has been completed and evaluated, the Remediation
Planning and Implementation phases will be implemented to ensure that the
material facilities and business activities will continue to operate safely and
reliably, and without interruption after 1999.

         TransMontaigne has also undertaken to monitor the compliance efforts of
Key Parties with whom it does business, including those with whom TransMontaigne
maintains banking and stock transfer relationships, and whose computer-based
systems and/or embedded technology equipment interface with those of
TransMontaigne, in order to ensure that operations will not be adversely
affected by the Year 2000 compliance problems of third-parties. TransMontaigne
has contacted 584 Key Parties by letter requesting detailed information to be
completed and returned to the Plan 

                                       50
<PAGE>
 
Director. Through March 31, 1999, responses had been received from 65% of those
contacted. Telephonic follow-up with non-respondents commenced in early December
1998 with each Key Party being contacted in order of importance. TransMontaigne
assesses the state of readiness of Key Parties responding to the request for
information, which procedure will continue as additional responses are received.
Each Key Party is given a risk rating based on the information and readiness
plan submitted. Failure of one or more Key Parties to address a Year 2000 issue
could result in business disruptions that could have a material adverse effect
on the operations or financial performance of TransMontaigne. While there can be
no assurance that Key Parties will successfully reprogram or replace, and test,
all of their own computer hardware, software and process control systems to
ensure such systems are Year 2000 compliant, TransMontaigne believes that the
ongoing communication with and assessment of the compliance efforts and status
of the Key Parties will minimize these risks.

         TransMontaigne believes that it can provide the resources necessary to
ensure Year 2000 compliance and expects to complete the Year 2000 Plan within a
time frame which will enable its Information Technology and Embedded Systems to
function without significant disruption in the Year 2000. The Assessment phase
of its Year 2000 Plan was substantially finalized at December 31, 1998. The
Remediation Planning phase was substantially completed at March 31, 1999 and it
is anticipated that the Implementation phase will be substantially completed by
June 30, 1999. Business acquisitions routinely involve an analysis of Year 2000
readiness and are incorporated into the overall program as necessary. In this
regard, while the proposed acquisition of eleven refined product terminal
facilities from Amerada Hess Corporation, which was announced by TransMontaigne
on May 4, 1999, may initially impact the percentage completion status of the
various Year 2000 Plan phases, TransMontaigne does not believe that any such
delays will adversely impact its ability to timely fulfill planned readiness
activities within the referenced time frames.

         At March 31, 1999, TransMontaigne had incurred third party costs of
approximately $544,000 related to Year 2000 compliance matters and estimates
that the total cumulative future third party, software and equipment costs
related to Year 2000 Assessment, Remediation Planning and Implementation phases,
based upon information developed to date, will be approximately $2,500,000,

                                      51
<PAGE>
 
which will be expensed as incurred. These costs have been and will continue to
be funded through operating cash flows and are not considered material to the
operations of TransMontaigne. The cost of the remediation activities and the
completion dates are based on TransMontaigne's best estimates and may be revised
as additional information becomes available. This estimate does not include
assessment, remediation, testing and contingency planning costs which may be
associated with TransMontaigne's proposed acquisition of certain refined product
terminaling facilities from Amerada Hess Corporation, which is expected to close
by June 30, 1999. Such costs, if incurred, are not expected to be material. The
costs incurred to date and those estimated to be incurred in the future also do
not include internal costs. TransMontaigne does not presently separately record
internal costs incurred with respect to implementation of the Year 2000 Plan.
Such costs are principally the related payroll costs for the information systems
and field operations personnel, including senior management, involved in
carrying out the Year 2000 Plan, as well as related travel and other out-of-
pocket expenses.

         Although TransMontaigne anticipates that minimal business disruption
will occur as a result of Year 2000 issues, in the event TransMontaigne's
Information Technology and Embedded Systems, or those owned and operated by Key
Parties, should fail to function properly, possible consequences include but are
not limited to, loss of communications links with pipeline control centers,
terminal automation systems and field offices; loss of electric power; and
inability to automatically process commercial transactions, or engage in similar
normal automated or computerized business activities.

         TransMontaigne believes that the most reasonably likely worst case
scenario would be small, localized interruptions of service, such as those
referenced above, which likely would be rapidly restored. Contingency plans have
been and are continuing to be developed to address the results of these
potentially isolated events to facilitate the resumption of normal operations
following disruption. However, it is also possible that the scope of Year 2000
issues involving Key Parties may result in multiple concurrent events or
disruptions, which may have a longer duration. In such event, depending upon the
number and duration of such disruptions and the number or importance of the
facilities impacted, such disruptions could have a material adverse impact on
the business, results of operations or financial condition of TransMontaigne.
Accordingly, contingency plans, as developed, will be reviewed and supplemented
as necessary by September 30, 1999 to address possible worst case 

                                       52
<PAGE>
 
scenarios in order to minimize the impact of such events. The contingency
planning process and the process of developing most reasonably likely worst case
scenarios will be ongoing processes, requiring continuing development,
modification and refinement as additional information is obtained regarding the
status of TransMontaigne's Information Technology and Embedded Systems during
theImplementation phase of the Year 2000 Plan, as well as the status, and the
impact on TransMontaigne, of the Year 2000 readiness of Key Parties.

         Contingency plans under development include performing certain
processes manually, changing suppliers and reducing or suspending certain
noncritical aspects of TransMontaigne's operations. The contingency planning
effort will focus on potential internal risks, as well as potential risks
associated with Key Parties. TransMontaigne believes that its Assessment,
Remediation Planning and Implementation phases will be effective in achieving
Year 2000 readiness in a timely manner.

         Based upon assessments completed to date and compliance plans in
process, including contingency planning, TransMontaigne does not anticipate that
Year 2000 issues, including the cost of compliance and testing, will have a
material adverse effect on the business, results of operations or financial
condition of TransMontaigne. However, while TransMontaigne believes the
possibility is remote, if TransMontaigne Information Technology or Embedded
Systems, or those of Key Parties, fail to achieve Year 2000 readiness in a
timely manner, it could have a material adverse impact on the business, results
of operations or financial condition of TransMontaigne.

         The preceding "Year 2000 Matters" discussion contains various forward-
looking statements that represent TransMontaigne's beliefs or expectations
regarding future events. When used in the "Year 2000 Matters" discussion, the
words "believes," "intends," "expects," "estimates," "plans," "goals," and
similar expressions are intended to identify forward-looking statements. 
Forward-looking statements include, without limitation, expectations as to when
the Assessment, Remediation Planning and Implementation phases of the Year 2000
Plan, as well as Year 2000 contingency planning will be completed; the estimated
cost of achieving Year 2000 readiness; and the belief that TransMontaigne's
Information Technology and Embedded Systems will be Year 2000 ready in a timely
and appropriate manner. All forward-looking statements involve a number of risks
and uncertainties which could cause the actual results to differ materially from
the projected results. Factors which may cause those 

                                       53
<PAGE>
 
in affected systems and equipment; the failure of others to timely achieve
appropriate Year 2000readiness; and the actions or inaction of governmental
agencies and others with respect to Year 2000 problems.

NEW ACCOUNTING STANDARDS

         Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS 131"), was issued June
1997 by the Financial Accounting Standards Board. SFAS 131 established new
standards which change the way public companies report information about
segments. This statement is based on the management approach to segment
reporting and requires companies to report selected quarterly segment
information and entity-wide disclosures about products and services, major
customers and geographic areas in which the entity holds assets and reports
revenues. SFAS 131 is effective for financial statements for fiscal years
beginning after December 31, 1997. TransMontaigne does not expect the adoption
of SFAS 131 to have a material effect on the disclosures in its financial
statements.

         Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"), was issued in June
1998 by the Financial Accounting Standards Board. SFAS 133 establishes new
accounting and reporting standards for derivative instruments and for hedging
activities. This statement requires an entity to establish at the inception of a
hedge, the method it will use for assessing the effectiveness of the hedging
derivative and the measurement approach for determining the ineffective aspect
of the hedge. Those methods must be consistent with the entity's approach to
managing risk. SFAS 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. TransMontaigne is in the process of assessing the
impact, if any, that SFAS 133 will have on its consolidated financial
statements.

                                      54
<PAGE>
 
PART II.  OTHER INFORMATION
---------------------------


ITEM 2.     CHANGES IN SECURITIES

TransMontaigne's Restated Certificate of Incorporation, filed December 4, 1995,
authorizes the Board of Directors of TransMontaigne without any action by the
stockholders, to provide by resolution or resolutions for the issuance of the
shares of preferred stock as a class or in series, and, by filing a certificate
of designations, pursuant to the Delaware General Corporation Law, setting forth
a copy of such resolution, to divide the 2,000,000 shares of authorized
preferred stock of TransMontaigne, par value $0.01 per share, into such class or
series. The Board of Directors is further authorized to fix the dividend rights,
dividend rates, voting rights, conversion rights, rights and terms of
redemption, the redemption price or prices, the liquidation preferences and all
other powers, preferences, rights, qualifications, limitations and restrictions
of any class or unissued series of preferred stock.

At a duly convened meeting of TransMontaigne's Board of Directors held on March
17, 1999, the Board of Directors adopted resolutions which established a
Series A Convertible Preferred Stock consisting of 250,000 shares of the 
2,000,000 shares of authorized but unissued preferred stock, par value $0.01 per
share and approved the sale of the Series A Convertible Preferred Stock in a
private offering to close on or before March 31, 1999. Further, the Board of
Directors adopted a form of Certificate of Designations amending
TransMontaigne's Restated Certificate of Incorporation, above referenced,
setting forth the voting rights, designations, preferences, qualifications,
privileges, limitations, restrictions, options, conversion rights and other
special and relative rights of the Series A Convertible Preferred Stock. The
Certificate of Designations was filed of record with the Secretary of State of
Delaware on March 26, 1999 in connection with the closings referenced below, and
is included as Exhibit 3.1 to this Quarterly Report on Form 10-Q.

On March 25, 1999 and March 30, 1999, TransMontaigne closed a private placement
of $170,115,000 of Series A Convertible Preferred Stock Units. Each unit was
offered for $1,000, and consisted of one share of Series A Convertible Preferred
Stock, convertible at option of each holder into common stock at $15 per share,
and 66.67 warrants, each warrant being exercisable to purchase six-tenths of a
share of common stock at a price of $14 per share. A total of 170,115 shares 

                                      55
<PAGE>
 
of Series A Convertible Preferred Stock, convertible into 11,341,000 common
shares, and 11,341,568 warrants to acquire 6,804,940 shares of common stock at
$14 per share were issued to certain existing common stockholders, as well as to
other investment companies, institutional investors and accredited investors.
TransMontaigne received net proceeds of $170,115,000 in the offering. No
commissions were paid. TransMontaigne used the proceeds to repay a portion of
the long-term debt incurred under its bank credit facility and for general
corporate purposes.

Because the issuance occurred in a privately negotiated transaction that did not
involve a public offering, the shares of the Series A Convertible Preferred
Stock issued and associated warrants are exempt from registration under Section
4(2) of the Securities Act of 1933.

The rights of the common stockholders have been materially limited by the
issuance of Series A Convertible Preferred Stock described above. The
preferential rights of the holders of the Series A Convertible Preferred Stock,
fully described in the Certificate of Designations of Series A Convertible
Preferred Stock referenced above, include a preference on dividends and a
preference upon dissolution or liquidation of TransMontaigne. Dividends are
payable on the Series A Convertible Preferred Stock before any dividends may be
declared or paid on the common stock. Upon liquidation, dissolution or winding
up of TransMontaigne, the holders of Series A Convertible Preferred Stock have a
preference for repayment prior to any payment made upon or distributed to the
holders of the common stock. In addition, the voting rights of the common
stockholders have been diluted since holders of the Series A Convertible
Preferred Stock will vote together with the common stockholders as a single
class on all actions to be voted on by the stockholders of TransMontaigne other
than the election of directors. Each holder of a share of Series A Convertible
Preferred Stock is entitled to a number of votes on each such action equal to
the number of shares of common stock (excluding fractional shares) into which
each share of Series A Convertible Preferred Stock is convertible on the record
date of such stockholder vote.

Additional information regarding the Series A Convertible Preferred Stock and
its effect on the rights of the holders of TransMontaigne's common stock is
included in the exhibits to the TransMontaigne Inc. Current Report on Form 8-K
filed on April 1, 1999 and incorporated by reference (Securities and Exchange
Commission File No. 001-11763).

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<PAGE>
 
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

      3.1      Certificate of Designations of Series A Convertible Preferred
               Stock. Incorporated by reference to TransMontaigne Inc. Current
               Report on Form 8-K (Securities and Exchange Commission File No.
               001-11763) filed on April 1, 1999.
      4.1      Warrant Agreement between TransMontaigne and BankBoston, N.A., as
               the Warrant Agent, dated March 25, 1999. Incorporated by
               reference to TransMontaigne Inc. Current Report on Form 8-K
               (Securities and Exchange Commission File No. 001-11763) filed on
               April 1, 1999.
      10.1     Amendment No. 2 dated as of March 25, 1999 to the Second Amended
               and Restated Credit Agreement between TransMontaigne Inc. and
               BankBoston, N.A., as Agent, dated as of October 30, 1998. FILED
               HEREWITH.
      10.2     Letter Amendment No. 4, dated as of March 25, 1999, to Master
               Shelf Agreement dated as of April 17, 1997, among TransMontaigne
               Oil Company, The Prudential Insurance Company of America and U.S.
               Private Placement Fund. FILED HEREWITH.
       27      Financial Data Schedule.  FILED HEREWITH.
      99.1     Press Release dated March 31, 1999. Incorporated by reference to
               TransMontaigne Inc. Current Report on Form 8-K (Securities and
               Exchange Commission File No. 001-11763) filed on April 1, 1999.
      99.2     Form of Preferred Stock and Warrant Purchase Agreement (without
               exhibits). Incorporated by reference to TransMontaigne Inc.
               Current Report on Form 8-K (Securities and Exchange Commission
               File No. 001-11763) filed on April 1, 1999.
      99.3     Stockholders' Agreement among TransMontaigne and certain
               institutional purchasers signatories thereto dated March 25,
               1999. Incorporated by reference to TransMontaigne Inc. Current
               Report on Form 8-K (Securities and Exchange Commission File No.
               001-11763) filed on April 1, 1999.

                                      57
<PAGE>
 
      99.4     Registration Rights Agreement between TransMontaigne and the
               purchasers signatories thereto dated March 25, 1999. Incorporated
               by reference to TransMontaigne Inc. Current Report on Form 8-K
               (Securities and Exchange Commission File No. 001-11763) filed on
               April 1, 1999.
      99.5     Amendment and Waiver between TransMontaigne and Louis Dreyfus
               Corporation dated March 25, 1999. Incorporated by reference to
               TransMontaigne Inc. Current Report on Form 8-K (Securities and
               Exchange Commission File No. 001-11763) filed on April 1, 1999.
      99.6     Second Amendment and Waiver by and among TransMontaigne and
               certain institutional investors signatories thereto dated March
               25, 1999. Incorporated by reference to TransMontaigne Inc.
               Current Report on Form 8-K (Securities and Exchange Commission
               File No. 001-11763) filed on April 1, 1999.


(b)   The following amendment on Form 8-K/A was filed during the quarter ended
      March 31, 1999:

      TransMontaigne Inc. filed a Current Report on Form 8-K/A on January 5,
      1999 amending the Current Report on Form 8-K filed on November 13, 1998,
      solely to add the financial statements of the business acquired, Louis
      Dreyfus Energy Corp. - Atlanta Division, as required by Item 7(a) of Form
      8-K, and the pro forma financial information, as required by Item 7(b) of
      Form 8-K.

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<PAGE>
 
SIGNATURES

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


DATED:  May 17, 1999                        TRANSMONTAIGNE INC.
                                            (Registrant)



                                            /s/ CORTLANDT S. DIETLER
                                            -------------------------
                                            Cortlandt S. Dietler
                                            Chairman and Chief Executive Officer



                                            /s/ RODNEY S. PLESS 
                                            -------------------
                                            Rodney S. Pless
                                            Vice President, Controller and 
                                            Chief Accounting Officer

                                      59