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

              For the transition period from ________ to __________


                         Commission file number 0-19365

                            CROWN ENERGY CORPORATION
             (Exact name of registrant as specified in its charter)

             Utah                                      87-0368981
(State or other jurisdiction of incorporation        (I.R.S. Employer
         or organization)                           Identification No.)


             215 South State, Suite 650, Salt Lake City, Utah, 84111
               (Address of principal executive offices, zip code)

                                 (801) 537-5610
              (Registrant's telephone number, including area code)

                                 Not applicable
              (Former name, former address and former fiscal year,
                         if changed since last report)

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

                                Yes X    No
                                   ----    ----

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

There were  13,285,581  shares of $.02 par value common stock  outstanding as of
July 1, 1999.

<PAGE>


                            CROWN ENERGY CORPORATION

                                      INDEX

                                                                         PAGE(S)


PART I.   Financial Information


          ITEM 1.  Financial Statements

            Condensed Consolidated Balance Sheets at March 31,
               1999 (unaudited) and December 31, 1998                       3

            Condensed Consolidated Statement of Operations for the Three
               Months ended March 31, 1999 and 1998 (unaudited)             5

            Condensed Consolidated Statement of Cash Flows for the
               Three Months ended March 31, 1999 and 1998 (unaudited)       6

            Notes to Condensed Consolidated Financial Statements
               (unaudited)                                                  8


          ITEM 2.  Management's Discussion and Analysis of Financial
                   Condition and Results of Operations                     16


PART II.  Other Information

          ITEM 1.  Legal Proceedings                                       20

          ITEM 2.  Changes in Securities                                   20

          ITEM 3.  Defaults upon Senior Securities                         20

          ITEM 4.  Submission of Matters to a Vote of Security Holders     20

          ITEM 5.  Other Information                                       20

          ITEM 6.  Exhibits and Reports on Form 8-K                        20


PART III. Signatures                                                       21


<PAGE>
<TABLE>
<CAPTION>

                          PART I-FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                            CROWN ENERGY CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS


                                                                                   March 31,
                                                                                     1999              December 31,
                                                                                 [unaudited]               1998
                                                                                 ------------         ------------
CURRENT ASSETS:
<S>                                                                              <C>                  <C>
     Cash and cash equivalents                                                   $  1,075,406         $  3,735,632
     Accounts receivable, net of allowance for uncollectible
        accounts of $100,475 and $100,475 at March 31, 1999
        and December 31, 1998, respectively                                         3,344,586            2,823,778
     Inventory                                                                      8,652,571            4,445,819
     Prepaid and other current assets                                                 158,207               39,371
                                                                                 ------------         ------------

          Total Current Assets                                                     13,230,770           11,044,600
PROPERTY PLANT, AND EQUIPMENT, Net                                                  4,954,045            3,013,792

INVESTMENT IN AND ADVANCES
     TO AN EQUITY AFFILIATE                                                         5,243,507            4,551,441

GOODWILL, Net                                                                       3,980,043            4,040,231

OTHER INTANGIBLE ASSETS, Net                                                          221,648              225,000
OTHER ASSETS                                                                          300,968             696,200
                                                                                 ------------         ------------

TOTAL                                                                            $ 27,930,981         $ 23,571,264
                                                                                 ============         ============
</TABLE>
        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>

                                              CROWN ENERGY CORPORATION

                                        CONDENSED CONSOLIDATED BALANCE SHEETS

                                        LIABILITIES AND STOCKHOLDERS' EQUITY



                                                                                   March 31,
                                                                                     1999             December 31,
                                                                                  [unaudited]             1998
                                                                                 ------------         ------------
CURRENT LIABILITIES
<S>                                                                              <C>                  <C>
     Accounts payable                                                            $  3,698,315         $  1,857,407
      Preferred stock dividends payable                                               100,000              467,433
     Accrued expenses                                                                 262,201              180,116
     Long-term debt - estimated current portion                                     1,139,805            1,000,000
     Line-of-credit to related party                                               10,935,221            8,935,221
                                                                                 ------------         ------------

     Total current liabilities                                                     16,135,542           12,440,177
                                                                                 ------------         ------------


MINORITY INTEREST IN CONSOLIDATED
     JOINT VENTURES                                                                 1,108,330            1,255,477

CAPITALIZATION:
     Long-term debt                                                                 5,445,882            4,325,723
     Redeemable preferred stock                                                     4,797,170            4,783,019
     Common stockholders' equity                                                      444,057              766,868
                                                                                 ------------         ------------

          Total capitalization                                                     10,687,109            9,875,610
                                                                                 ------------         ------------


TOTAL                                                                            $ 27,930,981         $ 23,571,264
                                                                                 ============         ============
</TABLE>
        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>

                            CROWN ENERGY CORPORATION

                                   [Unaudited]

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS




                                                                                   For the Three Months Ended
                                                                                             March 31,
                                                                                 ---------------------------------
                                                                                     1999                 1998
                                                                                 ------------         ------------
<S>                                                                              <C>                  <C>
SALES, Net of demerits                                                           $  4,819,084         $          0

COST OF SALES                                                                       4,729,659                    0
                                                                                 ------------         ------------

GROSS PROFIT                                                                           89,425                    0

GENERAL AND ADMINISTRATIVE EXPENSES                                                   585,951              141,289
                                                                                 ------------         ------------

INCOME (LOSS) FROM OPERATIONS                                                        (496,526)            (141,289)

                                                                                 ------------         ------------

OTHER INCOME (EXPENSES):
   Interest income and other income                                                   112,251               47,227
   Interest and other expense                                                        (382,118)              (6,523)
   Equity in losses of unconsolidated equity affiliate                               (229,398)                   0
                                                                                 ------------         ------------

        Total other expense, net                                                     (499,265)              40,704

LOSS BEFORE INCOME TAXES
   AND MINORITY INTERESTS                                                            (995,791)            (100,585)
                                                                                 ------------         ------------

DEFERRED INCOME TAX BENEFIT                                                                 0                    0

MINORITY INTEREST IN EARNINGS OF
   CONSOLIDATED JOINT VENTURE                                                         319,696                    0
                                                                                 ------------         ------------


NET LOSS                                                                            ($676,095)           ($100,585)
                                                                                 ------------         ------------

NET LOSS PER COMON SHARE-
   Basic                                                                               ($0.06)              ($0.02)
                                                                                 ============        =============

</TABLE>
        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                       5
<PAGE>
<TABLE>
<CAPTION>

                            CROWN ENERGY CORPORATION

                                   [Unaudited]

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                                     For the Three Months Ended
                                                                                              March 31,
                                                                                       1999               1998
                                                                                   ------------      ------------

Cash Flows From Operating Activities:
<S>                                                                                 <C>               <C>
       Net income (loss)                                                               ($676,095)        ($100,585)
                                                                                    ------------      ------------

       Adjustments  to  reconcile  net  loss  to  net  cash  used  by  operating
           activities:
                Amortization, depreciation and depletion                                 144,371             1,700
                Equity in losses of unconsolidated affiliate                             244,559                 0
                Minority interest                                                       (319,697)                0
                Change in assets and liabilities:
                    Accounts receivable                                                 (520,805)                0
                    Inventory                                                         (4,206,752)                0
                    Other assets                                                         486,214          (157,638)
                    Accounts payable                                                   1,840,910            (2,305)
                    Accrued expenses                                                      82,084           (21,227)
                                                                                    ------------      ------------

                           Total adjustments                                          (2,249,116)         (179,470)
                                                                                    ------------      ------------

                           Net Cash Provided by (Used in) Operating Activities         (2,925,211)        (280,055)
                                                                                    ------------      ------------


Cash Flows From Investing Activities:
       Investment in and advances to Crown Asphalt Ridge, LLC                           (936,626)         (565,159)
       Acquisition of Cowboy Asphalt Terminal                                         (1,973,511)                0
       Purchase of property and equipment                                               (257,392)          (26,712)
                                                                                    ------------      ------------

                           Net Cash Used by
                                Investing Activities                                  (3,167,529)         (591,871)
                                                                                    ------------      ------------


Cash Flows From Financing Activities:
       Net change in line of credit from related party                                 2,000,000                 0
       Sale of equity interest in subsidiary to a minority shareholder                   172,550                 0
       Net changes in long-term debt                                                   1,259,964                 0
                                                                                    ------------      ------------

                           Net Cash Provided by Used in Financing Activities          $3,432,514                $0
                                                                                    ------------      ------------
</TABLE>
        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                       6
<PAGE>
<TABLE>
<CAPTION>

                            CROWN ENERGY CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   [Continued]


                                                                                      For the Three Months Ended
                                                                                                March 31,
                                                                                         1999                1998

<S>                                                                                <C>                   <C>
Net Increase (Decrease) in Cash:                                                     ($2,660,226)          ($871,926)
                                                                                    ============        ============

Cash at Beginning of Period                                                         $  3,735,632        $  3,100,765
                                                                                    ============        ============

Cash at End of Period                                                               $  1,075,406        $  2,228,834
                                                                                    ============        ============


Supplemental Disclosure of Cash Flow Information
       Cash paid during the period:
           Interest                                                                 $     19,148        $      6,523
                                                                                    ============        ============

           Income taxes                                                                      ---                 ---
                                                                                    ============        ============


Supplemental Schedule of Non-cash Investing and Financing Activities:

       For the period ended March 31, 1999:

          On January 27, 1999, the Company issued 317,069 shares of common stock
         to its preferred  stockholders  as payment in full for preferred  stock
         dividends payable totaling $467,433.


       For the period ended March 31, 1998:

           None
</TABLE>

        The accompanying notes are an integral part of these consolidated
                             financial statements.

                                        7
<PAGE>


                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS


         NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                  The accompanying  consolidated  financial statements have been
                  prepared  by the  Company  without  audit.  In the  opinion of
                  management,   all  adjustments   (which  include  only  normal
                  recurring   adjustments)   necessary  to  present  fairly  the
                  financial  position,  results  of  operations  and  changes in
                  stockholders'  equity and cash flows at March 31, 1999 and for
                  all periods presented have been made.

                  Certain information and footnote disclosures normally included
                  in financial  statements prepared in accordance with generally
                  accepted accounting principles have been condensed or omitted.
                  It is suggested that these condensed  financial  statements be
                  read in  conjunction  with the financial  statements and notes
                  thereto  included in the  Company's  December  31, 1998 Annual
                  Report on Form 10-K.  The results of operations for the period
                  ended March 31,  1999 are not  necessarily  indicative  of the
                  operating results for the full year.

                  Organization  -  Crown  Energy   Corporation   (CEC)  and  its
                  wholly-owned subsidiaries, Crown Asphalt Corporation (CAC) and
                  Crown Asphalt Products Company (Capco) (collectively  referred
                  to as the "Company"),  are engaged in the mining,  production,
                  and selling of asphalt  products.  Prior to 1998,  the Company
                  was engaged in the  production and selling of oil and gas from
                  leases it operated in the State of Utah through its previously
                  owned subsidiary, Gavilan Petroleum, Inc. (Gavilan).

                  Majority Owned  Subsidiaries - Capco is the  majority-owner of
                  Crown  Asphalt  Distribution,  LLC  (Crown  Distribution)  and
                  Cowboy Asphalt Terminal,  LLC (CAT LLC). Crown Distribution is
                  a joint  venture  formed on July 2,  1998,  between  Capco and
                  MCNIC Pipeline and Processing  Company (MCNIC) for the purpose
                  of acquiring  certain assets of Petro Source  Asphalt  Company
                  (Petro  Source).  Capco owns  50.01% and MCNIC owns  49.99% of
                  Crown Distribution. Capco is the general manager and operating
                  agent of Crown Distribution. CAT LLC is a joint venture formed
                  on  June  16,  1998  between   Capco  and   Foreland   Asphalt
                  Corporation  (Foreland).  CAT LLC is an asphalt  terminal  and
                  storage  facility.  On December 21, 1998,  Capco  assigned its
                  interest in CAT LLC to Crown Distribution.  Crown Distribution
                  owns 66.67% and Foreland owns 33.33% of CAT LLC.

                  Principles  of  Consolidation  -  The  consolidated  financial
                  statements  include  the  accounts  of  the  Company  and  its
                  wholly-owned   subsidiaries.   All  significant   intercompany
                  transactions have been eliminated in consolidation.

                  Investment in and Advances to Equity Affiliate - The Company's
                  investment  in  Crown  Asphalt  Ridge  LLC  (Crown  Ridge)  is
                  accounted  for  using  the  equity  method.  Accordingly,  the
                  Company's  investment  is recorded at cost and adjusted by the
                  Company's  share of  undistributed  earnings  and losses.  The
                  excess of the  Company's  investment  in Crown  Ridge over its
                  equity in the  related  underlying  net assets  (approximately
                  $2,168,000) is being amortized over 40 years.

                  Revenue Recognition - Revenues are recognized when the related
                  product is shipped.

                  Income  Taxes - The Company  utilizes  an asset and  liability
                  approach for  financial  accounting  and  reporting for income
                  taxes.  Deferred  income  taxes  are  provided  for  temporary
                  differences in the bases of assets and liabilities as reported
                  for financial statement and income tax purposes. As of

                                       8
<PAGE>

                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS

                  March 31,  1999,  all net deferred tax assets were offset by a
                  valuation allowance.

                  Loss Per Share -  Effective  for the year ended  December  31,
                  1997, the Company  adopted  Statement of Financial  Accounting
                  Standards (SFAS) No. 128, Earnings Per Share. Accordingly, net
                  loss per common share computed under the basic method uses the
                  weighted   average  number  of  the  Company's  common  shares
                  outstanding.  The effect of common shares from stock  options,
                  warrants,  and convertible securities is not considered in the
                  loss per share  computations as such common stock  equivalents
                  are anti-dilutive.

                  Cash and Cash  Equivalents - For purposes of the statements of
                  cash  flows,  the  Company  considers  all highly  liquid debt
                  investments  purchased with a maturity of three months or less
                  to be cash equivalents.

                  Use of  Estimates  in  Preparing  Financial  Statements  - The
                  preparation  of  financial   statements  in  conformity   with
                  generally accepted  accounting  principles requires management
                  to make  estimates  and  assumptions  that affect the reported
                  amounts  of  assets  and   liabilities,   the  disclosures  of
                  contingent assets and liabilities at the date of the financial
                  statements  and the  reported  amount of revenues and expenses
                  during the reporting period.  Actual results could differ from
                  those estimated.

                  Inventory  -  Inventories   consist   principally  of  asphalt
                  hydrocarbons  and  chemical  supplies  which are valued at the
                  lower of cost  (computed  on a first-in,  first-out  basis) or
                  market.

                  Long-Lived  Assets - The Company  evaluates the carrying value
                  of long-term assets including intangibles based on current and
                  anticipated  undiscounted cash flows and recognizes impairment
                  when such cash  flows will be less than the  carrying  values.
                  Measurement  of the amount of  impairments,  if any,  is based
                  upon the  difference  between  carrying  value and fair value.
                  There were no  impairments  as of March 31, 1999 and  December
                  31, 1998.

                  Goodwill - The Company has  recorded the amount paid for Petro
                  Source in excess of the fair value of the net tangible  assets
                  acquired at the date of acquisition as goodwill. Such goodwill
                  is amortized using the straight-line method over 20 years.

                  Asphalt Demerits - Crown's  subsidiary,  Capco, blends asphalt
                  for sale to contractors and state  agencies.  The asphalt sold
                  must meet certain specifications for a particular application.
                  If the  asphalt  sold does not meet these  specifications  for
                  whatever  reason,  the asphalt supplier may be held liable for
                  possible  damages  (asphalt  demerits)  therefrom.  Management
                  believes that the Company's product liability  insurance would
                  cover any significant damages.

                  Environmental Expenditures - Environmental related restoration
                  and  remediation  costs are recorded as liabilities  when site
                  restoration   and   environmental   remediation  and  clean-up
                  obligations are either known or considered  probable,  and the
                  related costs can be reasonably estimated. Other environmental
                  expenditures, that are principally maintenance or preventative
                  in  nature,   are  recorded  when  expended  and  expensed  or
                  capitalized as appropriate.

                  Comprehensive  Income - In 1998, the Company  adopted SFAS No.
                  130, "Reporting  Comprehensive Income". SFAS 130 requires that
                  an enterprise (a) classify items of other comprehensive income
                  by

                                       9
<PAGE>


                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS

                  their  nature in a  financial  statement  and (b)  display the
                  accumulated balance of other  comprehensive  income separately
                  from  additional  paid-in  capital,   retained  earnings,  and
                  stockholders'  equity. The Company does not currently have any
                  components of comprehensive income other than net loss.

                  Segment Reporting - In 1998, the Company adopted SFAS No. 131,
                  "Disclosures  About  Segments  of an  Enterprise  and  Related
                  Information",  which redefined how business enterprises report
                  information  about  operating  segments  in  annual  financial
                  statements.  The  statement  also  establishes  standards  for
                  related disclosures about products and services,  geographical
                  areas, and major customers.  During 1998, the Company operated
                  primarily in the production and  distribution of asphalt.  The
                  Company's  operations and sales are dispersed throughout Utah,
                  Arizona,  California,   Nevada,  and  Colorado  and  could  be
                  adversely  affected by economic  downturns in these states and
                  by  federal  or  state  funding   policies   related  to  road
                  construction or improvements.

                  Derivative  Instruments  and Hedging - In June 1998,  the FASB
                  issued SFAS No. 133, Accounting for Derivative Instruments and
                  Hedging  Activities,  which supersedes SFAS No. 80, Accounting
                  for Futures Contracts, SFAS No. 105, Disclosure of Information
                  About Financial  instruments with  Off-Balance-Sheet  Risk and
                  Financial  instruments with  Concentration of Credit Risk, and
                  SFAS  No.   119,   Disclosure   about   Derivative   Financial
                  Instruments and Fair Value of Financial Instruments,  and also
                  amends certain aspects of other SFAS's previously issued. SFAS
                  No. 133  establishes  accounting  and reporting  standards for
                  derivative  instruments  and hedging  activities.  It requires
                  that an entity  recognize all  derivatives as either assets or
                  liabilities in the balance sheet and measure those instruments
                  at fair value.  SFAS No. 133 is  effective  for the  Company's
                  financial  statements  for the year ending  December 31, 2001.
                  The  Company  does not expect the impact of SFAS No. 133 to be
                  material in relation to its financial statements.

                  Stock-Based Compensation - The Company has elected to continue
                  to apply  Accounting  Principles  Board  (APB)  Opinion 25 (as
                  permitted  by  SFAS  No.  123,   Accounting  for   Stock-Based
                  Compensation).  The appropriate  disclosures  required by SFAS
                  No. 123 are included in Note 8.

                  Reclassifications  - Certain  amounts  in the  March 31,  1998
                  consolidated  financial  statements have been  reclassified to
                  conform with classifications adopted in the current year.


         NOTE 2 - FORMATION OF JOINT VENTURE

                  On  August  1,  1997,  Crown's  wholly-owned  subsidiary,  CAC
                  entered  into a joint  venture with MCNIC.  The joint  venture
                  operates through Crown Ridge and will be devoted to extracting
                  commercially  marketable products from CAC's oil sand reserves
                  (the "Reserves") located at Asphalt Ridge in eastern Utah.

                  MCNIC   and  CAC  hold   sharing   ratios   of  75%  and  25%,
                  respectively,  in  profits,  losses and  obligations  of Crown
                  Ridge.  The  forgoing  ratios will be adjusted to provide each
                  party with a 50% sharing ratio upon the achievement of certain
                  payouts to MCNIC.  CAC's required capital  contribution to the
                  Crown  Ridge  consists  of  (i)  CAC's  rights  under  certain
                  equipment  leases  with  a fair  market  value  of up to  $3.5
                  million to be obtained by CAC; (ii) the  Sublicense of Crown's
                  proprietary  oil sands  refining  technology  from Park Guymon
                  Enterprises,  Inc.;  (iii) the  capital  reserves  (which were
                  valued at the

                                       10
<PAGE>


                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS


                  time of the  formation  of Crown Ridge at  $500,000)  and (iv)
                  cash, if any, needed to bring CAC's capital  contributions  up
                  to 25% of the capital  required to  construct  the initial oil
                  sands refining plant.  After giving effect to the value of the
                  items described above, MCNIC, in turn, has been funding 75% of
                  the cash required to construct the initial plant  contemplated
                  by Crown Ridge's L.L.C.'s Operating Agreement.

         NOTE 3 - ACQUISITION OF ASSETS

                  Acquisition of Cowboy Asphalt  Terminal  Property - On January
                  9, 1999,  CAT LLC  acquired the Cowboy  Terminal  Property for
                  $1,973,511.  CAT LLC paid deposits  totaling  $496,441  during
                  1998.  In addition,  CAT LLC paid  $195,000 in cash at closing
                  and executed and delivered a promissory  note in the amount of
                  $1,282,070.  This  promissory  note  is  payable  in 84  equal
                  monthly  installments of $20,627 beginning on February 1, 1999
                  and ending on January 1, 2006.  The note bears interest at the
                  rate of 9% and is secured by a deed of trust  encumbering  the
                  Cowboy Terminal Property. The acquisition was accounted for as
                  a purchase. There were no significant operations during 1998.

                  Acquisition  of Laurel and  Williston  Asphalt  Terminals - On
                  April 17, 1999,  the Company  acquired the fixed  assets,  the
                  associated  inventory,  and certain contractual  agreements of
                  Asphalt Supply & Services, Inc. and Inoco, Inc. (collectively,
                  the Seller) for  $4,000,0000,  consisting  of $750,000 in cash
                  and 2,500,000  shares of  unregistered  common stock valued at
                  $1.30 per share. In the event that the bid price of the common
                  stock is less than $1.10 for 120  consecutive  trading days at
                  any time between  April 17, 1999 and  December  31, 2000,  the
                  Seller has the right to require the Company to repurchase  all
                  shares  issued for $1.10 per share.  The Company has the right
                  to  repurchase  up to  2,000,000 of the shares of common stock
                  from the Seller,  at any time,  for $2.05.  Per the agreement,
                  the Seller may only sell up to 500,000 shares of the Company's
                  common stock per calendar  quarter.  The  acquisition has been
                  accounted for as a purchase. Certain conditions precedent were
                  required by the seller for final funding to be  completed.  As
                  of July 1, 1999 such  conditions  have not been  completed and
                  the  Company  fully  intends to enforce  its rights  under the
                  agreement.

                  Acquisition of Rawlins Asphalt Terminal - On May 12, 1999, the
                  Company  acquired the Rawlins  Asphalt  Terminal and inventory
                  for $2,291,571 from S&L Industrial  (S&L).  The purchase price
                  consists of the Company  assuming S&L's debt of  approximately
                  $1,800,000,  entering into a note payable to S&L for $225,000,
                  and a cash payment of $266,571.

                  The  Company   has  been   notified  by  MCNIC  that  it  will
                  participate in the Rawlins,  Williston and Laurel acquisitions
                  and will fund one-half of all the costs.

         NOTE 4 - PROCESSING AGREEMENT EXPIRATION

                  The Company, through its subsidiary, Crown Distribution had an
                  agreement  with Santa Maria  Refining  Company (SMRC) and SABA
                  Petroleum whereby Crown  Distribution  purchased crude oil for
                  processing at the Santa Maria Refinery, and marketed the slate
                  of products produced,  primarily  asphalt.  This agreement was
                  acquired through the Petro Source asset acquisition.  Revenues
                  resulting from the agreement were  approximately  $4.8 million
                  in  1999.  This  amount  represents  substantially  all of the
                  Company's  revenue for the period due the  seasonal  nature of
                  the  Company's  other  asphalt  distribution  operations.  The
                  Company  expects to offset this loss of revenue  with  revenue
                  from its recent acquisitions and its future acquisitions. SMRC
                  extended the agreement, which expired on December 31, 1998, to
                  April 30, 1999. As anticipated, the agreement was not extended
                  subsequent to April 30, 1999. Following the termination of the
                  Processing   Agreement  as  described   within  the  foregoing
                  sentence,  SMRC and the Company  agreed upon terms under which
                  the  Company  would  continue  to  purchase  asphalt  from the
                  facility  until October 31, 1999,  and SMCR would  continue to
                  process  crude  products  delivered  to  it  by  the  Company.
                  Although a formal  Settlement  Agreement has not been executed
                  as of July 2, 1999,  the Company  intends to enforce the terms
                  previously reached by the parties.

                                       11
<PAGE>

                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS


         NOTE 5 - LINE OF CREDIT

                  Capco's  partner in the  acquisition  of the acquired  assets,
                  MCNIC,  extended  a loan  to  Crown  Distribution  to  finance
                  inventory purchased in the acquisition.  As of March 31, 1999,
                  this  loan  plus a working  capital  revolving  line of credit
                  provided by MCNIC, had a balance of approximately  $10,935,221
                  and accrues interest at 8%. Through the period ended March 31,
                  1999,  $303,126 in  interest  had been  accrued.  This line is
                  repaid  solely out of the cash flow from  Crown  Distribution.
                  The Company is currently  reviewing  other  proposals  for the
                  working  capital  line,  however MCNIC has the option to match
                  the terms of such line.

<TABLE>
<CAPTION>

         NOTE 6 - LONG TERM DEBT

                  Long-term debt consists of the following at March 31, 1999:

                  <S>                                                             <C>
                  Debt with Hancock-Geisler R.I.C., interest at 9%, with monthly
                  principal  and  interest  payments  of $20,627 for 82 months    $  1,259,964

                  Preferential  debt with MCNIC,  interest  at 15%,  with annual
                  principal  and interest  installments  equal to 50% of the net
                  cash flows (as  defined) of Crown  Distribution.  This debt is
                  secured by all of the assets of Crown Distribution                 5,325,723

                  Less estimated current portion                                    (1,139,805)
                                                                                    ----------

                  Long-term portion                                              $   5,445,882
                                                                                 =============
</TABLE>

         NOTE 7 - CONCENTRATION OF CREDIT RISK

                  Financial   instruments   which   subject   the   Company   to
                  concentration  of credit  risk  consist  principally  of trade
                  receivables.  The  Company's  policy is to evaluate,  prior to
                  shipment,  each customer's  financial  condition and determine
                  the amount of open line credit to be extended.  It is also the
                  Company's policy to obtain adequate letters of credit or other
                  acceptable security as collateral for amounts in excess of the
                  open line.

                                       12
<PAGE>

                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

         NOTE 8 - COMMON STOCKHOLDERS' EQUITY AND REDEEMABLE PREFERRED STOCK

                  At March 31, 1999 and December 31, 1998, common  stockholders'
                  equity  and  redeemable   preferred   stock  consists  of  the
                  following:

                                                                                        1999           1998
                  <S>                                                              <C>             <C>
                  Redeemable preferred stock - $.005 par value;  1,000,000 shares
                   authorized;  $10.00 stated value;  500,000 Series A cumulative
                   convertible shares issued and outstanding;  original estimated
                   fair value of $4,716,981, accretion of $14,151 and $56,604 for
                   the  periods  ended  March 31,  1999 and  December  31,  1998,
                   respectively,  toward  the  stated  value  of   $5,000,000       $ 4,797,170    $ 4,783,019

                  Common stockholders' equity:
                   Common stock, $.02 par value;  50,000,000  shares  authorized;
                    13,285,581  and  12,968,512  shares issued and  outstanding at
                    March 31, 1999 and December 31, 1998, respectively              $   265,711    $   259,370
                   Additional paid-in capital                                         6,134,281      5,787,340
                   Stock warrants outstanding; 683,750 at
                    March 31, 1999 and December 31, 1998, respectively                  243,574        243,574
                   Common stock subscription receivable from officers                  (549,166)      (549,166)
                   Retained deficit                                                  (5,650,343)    (4,974,250)
                                                                                     ----------     ----------

                   Total                                                            $   444,057   $    766,868
                                                                                    ===========   ============
</TABLE>

        NOTE 9 - CAPITAL TRANSACTIONS

                  Preferred Stock - The Company is authorized to issue 1,000,000
                  preferred  shares,  par value $.005 per share.  On November 4,
                  1997, the Company  completed the sale of 500,000 shares of its
                  Series A Cumulative  Convertible  Preferred  Stock  ("Series A
                  Preferred")  pursuant  to a  stock  purchase  agreement  dated
                  September 25, 1997 for an aggregate sales price of $5,000,000.
                  Each share of Series A Preferred is  convertible at the option
                  of its holder,  at any time,  into 8.57 shares of common stock
                  of the Company.  At the date of the issuance of the  preferred
                  stock,  the  embedded  conversion  price  was  $1.17  and  the
                  estimated fair value of the common stock was $1.03.  Dividends
                  accrue on the outstanding Series A Preferred at the rate of 8%
                  per annum and may be paid through cash or common shares of the
                  Company at the option of the holder.  Subject to the  holder's
                  right to  convert  the Series A  Preferred,  the  Company  may
                  redeem  the  Series A  Preferred  at any time from the date on
                  which it is issued at a percentage of the Series A Preferred's
                  stated  value  of $10 per  share;  130%  of  stated  value  if
                  redemption  occurs  within  thirty-six  months  of the date of
                  issuance,  115% of stated value if redemption  occurs  between
                  thirty-six and forty-eight  months after the date of issuance,
                  110% of stated value if redemption occurs between  forty-eight
                  and  sixty  months  after  the date of  issuance,  and 100% if
                  redemption  occurs  thereafter.  The  holder  of the  Series A
                  Preferred  may also require the Company to redeem the Series A
                  Preferred  after  the  eighth  anniversary  of  the  Series  A
                  Preferred's  issuance.  The  holders of the Series A Preferred
                  shall have the right,  but shall not be obligated,  to appoint
                  20% of

                                       13
<PAGE>

                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS


                  the Company's  Board of  Directors.  The Company may not alter
                  the  rights  and   preferences  of  the  Series  A  Preferred,
                  authorize   any  security   having   liquidation   preference,
                  redemption,  voting or dividend  rights senior to the Series A
                  Preferred,   increase   the  number  of  Series  A  Preferred,
                  reclassify    its   securities   or   enter   into   specified
                  extraordinary  events without  obtaining written consent or an
                  affirmative  vote  of at  least  75%  of  the  holders  of the
                  outstanding shares of the Series A Preferred stock. All voting
                  rights of the Series A Preferred  expire upon the  issuance by
                  the Company of its notice to redeem such shares. The shares of
                  common  stock  issuable  upon   conversion  of  the  Series  A
                  Preferred  are  subject to  adjustment  upon the  issuance  of
                  additional shares of the Company's common stock resulting from
                  stock splits,  share  dividends,  and other similar  events as
                  well as upon the  issuance  of  additional  shares or  options
                  which  are  issued in  connection  with the  Company's  equity
                  investment  or as  compensation  to  any  employee,  director,
                  consultant,  or other  service  provider of the Company or any
                  subsidiary,  other  than  options  to  acquire up to 5% of the
                  Company's common stock at or less than fair market value.

                  Common Stock Warrant - In conjunction with the issuance of the
                  preferred stock described  above, the Company issued a warrant
                  to the holders of the preferred  stock.  The fair value of the
                  warrant at the date of issuance  was  estimated to be $283,019
                  and  was  recorded  to  additional  paid-in  capital  and as a
                  reduction  to the stated  value of the  preferred  stock.  The
                  reduction  in  preferred  stock  is  being  accreted  over the
                  five-year  period from the date of  issuance  to the  earliest
                  exercise date of the warrant.  Upon the fifth  anniversary  of
                  the  issuance of the  preferred  stock,  the  warrant  becomes
                  exercisable,  at $.002 per  share,  into the  number of common
                  shares  of the  Company  equal  to (a)  [$5,000,000  plus  the
                  product of (i)  ($5,000,000  multiplied  by (ii) 39% (internal
                  rate of  return)  multiplied  by (iii) 5 years]  (14,750,000),
                  minus (b) the sum of (i) all dividends and other distributions
                  paid by the  Company on the  preferred  stock or on the common
                  stock  received upon  conversion  of the preferred  stock plus
                  (ii) the greater of the  proceeds  from the sale of any common
                  stock  received  by the  holder  upon  the  conversion  of the
                  preferred  stock  prior to the fifth  anniversary  date or the
                  terminal  value (as defined  below) of such common  stock sold
                  before the fifth  anniversary plus (iii) the terminal value of
                  the preferred  stock and common stock received upon conversion
                  of the  preferred  stock  then  held,  divided by (c) the fair
                  market  value of the  Company's  common  stock  on a  weighted
                  average basis for the 90 days immediately  preceding the fifth
                  anniversary  date  of the  issuance  of the  preferred  stock.
                  Terminal  value is  defined  as the sum of (i) the  shares  of
                  common  stock  into  which the  preferred  stock  then held is
                  convertible,  plus (ii) shares of common stock  received  upon
                  conversion of preferred  stock,  multiplied by the fair market
                  value of the  Company's  common  stock on a  weighted  average
                  basis  for  the  90  days  immediately   preceding  the  fifth
                  anniversary  date of the issuance of the preferred  stock. The
                  warrants will expire in 2007.

                                       14
<PAGE>

                            CROWN ENERGY CORPORATION

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS


         NOTE 10 - LOSS PER SHARE

                 The  following  table  is a  reconciliation  of  the  net  loss
                 numerator  of basic and diluted  net loss per common  share for
                 the years ended March 31, 1999 and 1998:
<TABLE>
<CAPTION>

                                              1999                               1998
                                   ----------------------------      -----------------------------
                                                     Loss                               Loss
                                       Loss        Per Share             Loss        Per Share
<S>                                 <C>                              <C>
Net Loss                            $ (676,095)                      $ (100,585)

Redeemable preferred
  stock dividends                     (100,000)                        (100,000)
                                      --------                         --------

Net loss attributable to
  common stockholders               $ (776,095)    $ (0.06)          $ (200,585)      $ (0.02)
                                    ==========     =======           ==========       =======

Weighted average common
  shares outstanding -
  basic and diluted                 13,193,983                       11,680,549
                                    ----------                       ----------
</TABLE>

                  The  Company  had at March 31,  1999 and  December  31,  1998,
                  incremental  options and warrants to purchase,  computed under
                  the treasury stock method, 668,256 shares of common stock that
                  were not included in the  computation of diluted  earnings per
                  share because their effect was anti-dilutive. The Company also
                  has preferred stock outstanding at March 31, 1999 and December
                  31, 1998 which is  convertible  into  approximately  4,300,000
                  shares  of  common   stock  that  was  not   included  in  the
                  computation  of diluted  earnings  per share as its effect was
                  anti-dilutive.  Accordingly,  diluted  earnings per share does
                  not differ from basic earnings.

                                       15
<PAGE>

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


         The  following  discussion  and  analysis  of the  Company's  financial
condition,  results  of  operations  and  related  matters  includes a number of
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.
Forward-looking  statements  include, by way of illustration and not limitation,
statements containing the works "anticipates", "believes", "expects", "intends",
"future"  and words of similar  import  which  express,  either  directly  or by
implication,  management's  beliefs,  expectations  or intentions  regarding the
Company's  future  performance  or future  events or trends which may affect the
Company or its results of operations.

         Forward-looking  statements  are  subject to known and  unknown  risks,
uncertainties  and other  factors,  including  but not  limited  to  changes  in
economic conditions  generally or with respect to the Company's asphalt products
market  in  particular,  new or  increased  governmental  regulation,  increased
competition,  shortages in labor or materials,  delays or other  difficulties in
shipping or  transporting  the  Company's  products,  technical  or  operational
difficulties  at the facility of Crown Ridge,  difficulties  in integrating  the
Company's  recent joint venture and  acquisition  related  businesses  and other
similar  risks  inherent in the Company's  operations or in business  operations
generally. Any such risks or uncertainties,  either alone or in combination with
other factors, may cause the actual results,  performance or achievements of the
Company to differ materially from its anticipated future results, performance or
achievements  (which  may be  expressed  or  implied  by  such  forward  looking
statements).  Consequently,  the following management's discussion and analysis,
including all  forward-looking  statements  contained therein,  is qualified and
limited by the foregoing  cautionary factors.  Interested persons are advised to
consider all  forward-looking  statements  within the context of such cautionary
factors.

         Liquidity and Capital Resources

         At March 31,  1999,  the Company had cash and other  current  assets of
$13,230,770  as  compared to cash and other  current  assets of  $11,044,600  at
December 31, 1998. The increase of $2,186,170 was primarily due to the Company's
asphalt  inventory  winterfill  program  whereby the Company  purchases  asphalt
during the winter months, when prices are lower, for storage and subsequent sale
during the  asphalt  season,  typically  during the  months  from April  through
October.  The Company's  operations require a working capital line for inventory
purchases and other operating expenses.  MCNIC, the minority interest owner, has
established  such line, in addition to a working  capital loan  provided,  at an
interest rate of 8%. At March 31, 1999, the line had a balance of $5,124,641 and
the working capital loan had a balance of $5,810,580.

         The Company also owed MCNIC an additional  $5,325,723 at March 31, 1999
with  respect  to the  Preferential  Capital  Contribution  which  funded  Crown
Distribution's  acquisition of the assets of Petro Source Asphalt  Company.  The
Preferential  Capital  Contribution  yields a 15% rate of return  and is payable
solely from 50% of the cash flow from Crown Distribution's  operations. At March
31, 1999, the Company has estimated $1,000,000 of this balance to be current.

         The  Company  believes  its  asphalt  distribution  business,  which is
operated  through Capco,  is a growth business whose success is not dependent on
the  Company's  interest  in the  Crown  Ridge  Project.  However,  the  asphalt
distribution business is capital intensive and requires substantial  investments
to acquire  terminal  storage,  blending  and raw material  assets.  The Company
recently  acquired  several  terminals  in  transactions  requiring  substantial
capital  commitments.  On April 17,  1999,  the  Company  acquired  the  asphalt
terminal fixed assets in Laurel, Montana and Williston,  North Dakota along with
certain  contractual  agreements of Asphalt  Supply & Services,  Inc. and Inoco,
Inc. for  $4,000,000,  consisting  of $750,000 in cash and  2,500,000  shares of
unregistered common stock. Final funding of this acquisition will occur when the
seller meets certain  conditions  precedent.  As of July 1, 1999, the seller has
not yet met these  conditions.  On May 12, 1999, the Company acquired an asphalt
terminal  in Rawlins,  Wyoming  along with  inventory  for  $2,291,571  from S&L
Industrial.  The purchase price consisted of the Company  assuming S&L's debt of
approximately $1,800,000,  entering into a note payable to S&L for $225,000, and
a cash payment of $266,571. The

                                       16
<PAGE>

                  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
           OF FINANCIAL CONDITION AND RESULT OF OPERATIONS (continued)

Company  remains  open  to  other  asphalt  related  business  opportunities  to
complement  its  existing  asphalt  distribution  capabilities.  There can be no
assurance that the Company can obtain additional  capital financing  required to
finance such transactions on acceptable terms and conditions.

         Under the Company's  contractual  relationships  with MCNIC,  MCNIC has
certain rights to participate in additional  business  opportunities,  including
the  transactions  with Asphalt Supply and Service,  Inc.,  Inoco,  Inc. and the
Rawlins  transaction.  MCNIC has indicated that it intends to participate in the
foregoing  business  opportunities.  Assuming that MCNIC's  participation in the
business  opportunities  is  consumated,  MCNIC  will be  required  to fund  its
proportionate   share  of  the  capital   expenditures  needed  to  pursue  such
opportunities.

         The  Company  believes  it has  sufficient  capital  to meet all of its
current working capital requirements from its cash reserve, working capital line
and other  financing  sources.  However,  the Company is required to fund 25% of
Crown Ridge's capital costs,  start-up costs and operating expenses. As of March
31, 1999, the Company has made cash  contributions of approximately  $2,365,400.
Crown Ridge has experienced  certain  technical  difficulties  which the Company
believes will be resolved.  However,  should such delays continue, or should the
facility  be unable to operate  economically,  the Company  believes  this would
significantly  impact Crown  Ridge's  ability to continue as a going concern and
would adversely impact the Company's operations and financial condition.

         Results of Operations

         1999 vs. 1998

         Total revenue  increased from $0 for the period ended March 31, 1998 to
$4,819,084 for the period ended March 31, 1999, an increase of  $4,819,084.  The
increase was due to revenue  generated from the Company's  processing  agreement
with the Santa Maria Refinery that expired April 30, 1999. The Company's asphalt
terminal distribution  operations,  which the Company expects to provide it with
its primary future growth,  is a seasonal  business,  therefore no revenues were
expected during this period.  The Company expects to offset this loss of revenue
with revenue from its recent acquisitions.

         Cost of sales  increased from $0 for the period ended March 31, 1998 to
$4,729,659 for the period ended March 31, 1999, an increase of $4,729,659.  This
increase was due to costs incurred at the Company's  recently  acquired  asphalt
distribution  terminals  of  $1,264,559  and  costs  related  to the  processing
agreement at the Santa Maria Refinery of $3,465,100.

         General and  administrative  expenses  increased  from $141,289 for the
period ended March 31, 1998 to $585,951 for the period ended March 31, 1999,  an
increase  of  $444,662.  This  change was due to an  increase  in the  Company's
overhead related to its growth in its asphalt distribution business.

         Interest and other  income/expenses  decreased from net other income of
$40,704 for the period  ended  March 31, 1998 to net other  expenses of $499,265
for the period ended March 31, 1999, a decrease of $539,969.  The 1999 total was
comprised of interest  costs related to the Company's  working  capital line and
preferential loan for its asphalt  distribution  business of $378,934 and losses
of $229,398  related to equity in the losses of Crown Ridge.  These amounts were
partially offset by interest income of $112,251.

         Minority  interest  of  $319,696  represents  MCNIC's  approximate  49%
interest in Crown Distribution and Foreland's approximate
33% interest in CAT, LLC.

         Year 2000 Assessment

         Like many other  companies,  the "Year 2000 problem"  creates risks for
the Company. The "Year 2000 problem" is the result of computer systems and other
equipment with embedded chips or processors using two digits,  rather than four,
to define a specific year and  potentially  being unable to accurately  process,
provide and/or receive date

                                       17
<PAGE>

         Year 2000 Assessment (continued)


and time data from, into and between the twentieth and  twenty-first  centuries,
including  the years 1999 and 2000,  and leap year  calculations.  The Year 2000
problem,  if not identified  and corrected in a timely  manner,  could result in
system  failures or  miscalculations,  causing  disruptions  to various  Company
activities  and  operations  and adversely  impact its  financial  condition and
results of operations.


         The Company is  addressing  the Year 2000 problem in three  overlapping
phases:  (i)  the  identification  and  assessment  of all  critical  equipment,
hardware and software  systems  requiring  modification or replacement  prior to
2000; (ii) the remediation and testing of  modifications  to critical items; and
(iii) the development of contingency and business continuation plans to mitigate
the extent of any disruption to the Company's  operations  arising from the Year
2000 problem.

         The  Company  began its  assessment  of Year  2000  issues in the first
quarter of 1999 and the Company  continues  to assess the Year 2000  problem and
its potential  impact on its information  technology  ("IT") and non-IT systems.
These  activities  are intended to encompass all major  categories of systems in
use  by  the  Company,   including  oil  sands  extraction  functions,   asphalt
processing,   transportation  and  logistics  systems,  sales  and  finance  and
accounting.  The Company is also  actively  working with  critical  suppliers of
products  and  services to  determine  that the  suppliers'  operations  and the
products and services  they provide are Year 2000  compliant or to monitor their
progress  toward year 2000  compliance.  The Company  expects  that  assessment,
remediation and contingency  planning  activities will continue  throughout 1999
with the goal of appropriately resolving all material internal systems and third
party issues.  However,  there can be no assurance that the Company will be able
to  complete  its  assessment,   remediate   problems  or  implement   effective
contingency  plans  before  the  end of  1999.  Further,  the  Company's  recent
acquisitions  of asphalt  terminals,  and the  Company's  continuing  efforts to
integrate these assets and new personnel into the Company's overall  operations,
present  additional  difficulties  in the Company's  assessment and  remediation
efforts.

         The Company and its  affiliated  joint  venture  entity,  Crown  Ridge,
employ  a  number  of  IT  systems  in  their  operations,   including,  without
limitation,  computer  networking  systems,  financial systems and other similar
systems.  In 1998, the Company and its  subsidiaries  began  conversion of their
principal computer software systems to a new integrated system to support future
growth and improve  productivity.  Although no  independent  assessment has been
conducted,  management of the Company  believes that the new computer  system is
Year 2000 compliant  based upon  indications  from its computer  systems vendors
that the new computer systems  incorporate current technology and software which
are Year 2000 compliant.

         The Facility  constructed by Crown Ridge  incorporates state of the art
technology and the Company believes that its IT and non-IT systems are Year 2000
compliant.  However, the sophisticated nature of this Facility and the fact that
it is in its initial  operational  phase  requires that the Company  continue to
assess its Year 2000 readiness.

         The Company is also  assessing its non-IT systems  containing  embedded
electronic  circuits.  The Company has identified the operations of Crown Ridge,
Crown Distribution and CAT LLC, the Company's joint venture operating companies,
as having  the most  non-IT  Year 2000  operational  risks  since the  Company's
revenues and income are or will be derived primarily from these  operations.  As
of July 1, 1999, the Company has not identified any material non-IT systems that
are not Year  2000  compliant,  although  the  Company  assessment  efforts  are
ongoing.

         The Company is highly  dependant  upon  electric  power,  natural  gas,
asphalt, petroleum based products and chemicals, as well as the delivery of such
items by all forms of transportation,  including,  pipeline,  shipping, rail and
truck. A shortage of any of the foregoing  products or a failure of or delays in
one or more methods of  transportation  could have a material  adverse affect on
the Company and Crown Ridge and their respective operations.

         Although  the  Company  has  obtained  assurances  from some of its key
suppliers,  it has not independently  evaluated whether its key suppliers are or
will be Year 2000 compliant,  and therefore the Company's contingency plans will
assume  that at least some of these  suppliers  will have  disruptions  in their
deliveries and services to the Company

                                       18
<PAGE>

         Year 2000 Assessment (continued)

or Crown Ridge.  Given that  assumption (and the risk that some of the Company's
IT or non-IT systems will  experience  unidentified  or  unremediated  Year 2000
problems),  some of the  worst  case  Year  2000  scenarios  the  Company  might
experience  include a complete  shut-down of Crown  Ridge's  facility and one or
more of the asphalt terminals of Crown Distribution, or a failure or substantial
delay in the transportation of the Company's asphalt products. The occurrence of
any of these events could result in lost  revenues,  lost  customers,  increased
processing,  storage or transportation costs,  increased financing costs related
to inventory  shortages or sales order backlogs,  substantial  remediation costs
and other similar costs and expenses.

         The potential  costs, if any, to remediate direct or indirect Year 2000
problems the Company may have or identify has not been determined,  nor can such
costs, if any, be accurately predicted or determined given the ongoing nature of
the  Company's   assessment   efforts.   At  present,   the  Company  has  spent
approximately  $96,000  upgrading its IT systems and has spent roughly $5,000 to
assess or remediate non-IT issues (excluding salaries of Company personnel). The
Company currently expects that the total cost of these programs,  including both
incremental  spending  and  redeployed  resources,  will  not  be in  excess  of
$150,000.  The total cost  estimate  is based on the current  assessment  of the
projects and is subject to change as the projects progress.

         The Company has not yet  developed any  contingency  plans in the event
that it or its  subsidiaries'  IT or non-IT  systems  fail or in the event  that
material suppliers of goods or services fail or have significant  disruptions in
deliveries to the Company and its subsidiaries.

         The   foregoing   disclosure   is  based  on  the   Company's   current
expectations,  estimates and  projections,  which could  ultimately  prove to be
inaccurate.  Because  of  uncertainties,  the  actual  effects  of the Year 2000
problem on the Company may be different from the Company's  current  assessment.
Factors, many of which are outside the control of the Company, that could affect
the Company's  ability to be Year 2000  compliant by the end of 1999 include the
failure of  customers,  suppliers,  governmental  entities and others to achieve
compliance;  the  inability or failure to identify all critical Year 2000 issues
or to  develop  appropriate  contingency  plans  for all Year 2000  issues  that
ultimately may arise.

                                       19
<PAGE>

                          PART II. - OTHER INFORMATION


ITEM 1.  Legal Proceedings

         On May 21,  1998,  Road Runner Oil,  Inc.  ("Road  Runner") and Gavilan
Petroleum,  Inc.  ("Gavilan")  filed an action in the  Third  Judicial  District
Court, Salt Lake County,  State of Utah, as Civil Number 98-0905064  against the
Company and its President.  The action relates to the purchase by Road Runner of
100% of the  stock  of  Gavilan  in 1997,  and  generally  seeks  to (i)  obtain
corporate records of Gavilan in the Company's  possession relating to the amount
of oil  and gas  royalties  potentially  owed  to  third  parties  prior  to the
aforementioned  stock sale, and (ii) to determine the amount of royalties  owed.
The action further alleges, on behalf of Gavilan,  claims of breach of fiduciary
duty,  professional negligence and mismanagement against the Company's President
for alleged  mismanagement of Gavilan's affairs.  The Plaintiffs seek injunctive
relief requiring the tendering by the Company of the referenced records and such
damages as may be proven at trial.  The Company  believes  that the  Plaintiff's
claims are  groundless  and that it is entitled to payment of the $75,000  still
owed by Road Runner as part of the  purchase  price for  Gavilan.  In  addition,
since the action was filed, the Company has tendered  substantial  quantities of
corporate records to the Plaintiffs for their review. On June 17, 1998, an order
was entered  granting an open extension to the Company of its obligation to file
an answer to the  above-described  Complaint so that the parties may  informally
pursue a settlement, if any, of the matter.

         On  February  10,  1999,  CEntry  Constructors  and  Engineers,  L.L.C.
(CEntry)  filed  a  demand  for  arbitration   with  the  American   Arbitration
Association  for  claims  arising  out  of the  November  5,  1997  Engineering,
Construction  and  Procurement  Agreement  between  Crown  Ridge and CEntry (the
Contract) for the design and construction of Crown Ridge's facility near Vernal,
Utah.  CEntry seeks damages in excess of $1.0 million for amounts  allegedly due
to CEntry under the Contract, including a retention or liquidated damages amount
of $803,660, as well as amounts for modifications to the Contract allegedly made
by  Crown  Ridge.   Crown  Ridge  has  denied  the  claims  and  filed  its  own
counterclaims  against  CEntry.  Crown Ridge asserts,  among other things,  that
Crown Ridge is entitled to the retention  amount based upon certain  breaches of
the  Contract by CEntry and that Crown Ridge is entitled to  liquidated  damages
for CEntry's failure to meet a mechanical  completion  deadline specified in the
Contract.  An  arbitration  panel has been selected and  arbitration  will begin
August 2, 1999. The arbitration  will take place in Salt Lake City, Utah and the
case is currently in the discovery phase. Due to the  uncertainties  inherent in
any litigation or arbitration  proceeding,  there can be no assurance that Crown
Ridge will or will not prevail or that  significant  damages will not be awarded
against Crown Ridge.


ITEM 2.  Changes in Securities

         None.

ITEM 3.  Defaults upon Senior Securities

         None.

ITEM 4.  Submission of Matters to a Vote of Security Holders

         None.

ITEM 5.  Other Information

         None.

ITEM 6.  Exhibits and Reports on Form 8-K

         The  Company  filed  a  Form  8-K on  April  29,  1999  to  report  the
acquisition  of  certain  asphalt  terminal  distribution  assets.

                                       20
<PAGE>

                             PART III. - 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.


                                            CROWN ENERGY CORPORATION
(Registrant)


Date: July 2, 1999                          By: /s/ JAY MEALEY
                                               ---------------------------------
                                            Jay Mealey, Chief Executive Officer


Date: July 2, 1999                          By: /s/ ALEXANDER L. SEARL
                                               ---------------------------------
                                            Alexander L. Searl, Chief Operating
                                            and Financial Officer

                                       21