FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549


[X]  Quarterly  report  pursuant  to section 13 or 15(d) of the  Securities
     Exchange Act of 1934 For the fiscal quarter ended November 30,1998  or 
[ ]  Transition report pursuant to section 13 or 15(d)of the Securities Exchange
     Act of 1934 for the transition period from-----------to---------

Commission  file number 0-8773 
                        -------

                                 CRESTED CORP. 
--------------------------------------------------------------------------------
            (Exact Name of Registrant as Specified in its Charter)

     Colorado                                             84-0608126 
-------------------------------------------        ----------------------
    (State or other jurisdiction of                (I.R.S. Employer
    incorporation or organization)                 Identification No.)

    877 North 8th West, Riverton, WY                      82501
--------------------------------------------       -----------------------
   (Address of principal executive offices)        (Zip Code)

Registrant's telephone Number, including area code:       (307) 856-9272 
                                                   -----------------------


                                      NONE
--------------------------------------------------------------------------------
      (Former name, address and 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.

             Class                           Outstanding at January 14, 1999  
--------------------------------         ---------------------------------------
 Common stock, $.001 par value                      10,302,694 Shares



<PAGE>



                           CRESTED CORP. AND AFFILIATE

                                      INDEX

                                                                      Page No.
PART I.    FINANCIAL INFORMATION

ITEM 1.    Financial Statements.

           Condensed Consolidated Balance Sheets
              November 30, 1998 and May 31, 1998...........................3-4

           Condensed Consolidated Statements of Operations
              Three and Six Months Ended November 30, 1998 and 1997..........5

           Condensed Consolidated Statements of Cash Flows
              Six Months Ended November 30, 1998 and 1997....................6

           Notes to Condensed Consolidated Financial Statements..............7

ITEM 2.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations....................12

PART II. OTHER INFORMATION

ITEM 1.    Legal Proceedings.............................................13-14
ITEM 4.    Submission of Matters to a Vote of Security Holders. . .  . . . .15
ITEM 5.    Other Information. . . . . . . . . . . . . . . . . . . . . . . . 15
ITEM 6.    Exhibits and Reports on Form 8-K.................................15

           Signatures.......................................................16


                                        2

<PAGE>



                          PART I. FINANCIAL INFORMATION

ITEM 1.  Financial Statements.

                           CRESTED CORP. AND AFFILIATE

                      Condensed Consolidated Balance Sheets

                                     ASSETS
<TABLE>
<S>                                                <C>             <C>
                                                   November 30,      May 31,
                                                        1998           1998 
                                                   ------------     -----------
                                                    (Unaudited)

CURRENT ASSETS:
   Cash and cash equivalents                        $1,700,100     $1,012,700
   Accounts receivable
     Trade, net of allowance for doubtful accounts      61,100         89,500
     Affiliates                                      1,722,900        939,900
     SMP Settlement receivable                            -         2,513,000
   Current portion of long-term receivable
     Related parties                                   232,000        227,800
   Inventory and other                                  99,200         26,400
                                                    ----------    -----------
        TOTAL CURRENT ASSETS                         3,815,300      4,809,300

LONG-TERM NOTES RECEIVABLE
   Related parties                                      94,200        116,500
   Real estate sale,net of 
   valuation allowance of $882,900                     182,500        182,500

INVESTMENTS IN AFFILIATES                            1,334,900      1,643,300

INVESTMENT IN CONTINGENT WARRANT
   STOCK PURCHASE WARRANT                              651,000        651,000

PROPERTIES AND EQUIPMENT
     Land                                              397,400        397,400
     Buildings and improvements                      2,185,000      2,185,000
     Aircraft and related equipment                  2,424,400      2,393,300
     Developed oil properties, full cost method        886,800        886,800
     Undeveloped mining properties                      14,200         14,200 
                                                    ----------   ------------
                                                     5,907,800      5,876,700
Less accumulated depreciation,
   depletion and amortization                       (3,339,700)    (3,221,700)
                                                    ----------    -----------
                                                     2,568,100      2,655,000

OTHER ASSETS                                           155,400        153,800
                                                    ----------    -----------
                                                    $8,801,400    $10,211,400
                                                    ==========    ===========
</TABLE>



            See notes to Condensed Consolidated Financial Statements.

                                        3

<PAGE>



                           CRESTED CORP. AND AFFILIATE

                      Condensed Consolidated Balance Sheets

                 LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY

<TABLE>
<S>                                               <C>               <C>
                                                   November 30,      May 31,
                                                       1998            1998 
                                                   ------------     ---------
                                                    (Unaudited)

CURRENT LIABILITIES:
    Accounts payable and accrued expenses          $  323,300       $ 698,800
    Deferred GMMV Purchase Option                   2,000,000       2,000,000
    Current portion of long-term debt
      Affiliate                                     6,892,500       6,547,100
      Others                                           93,800          36,400
                                                   ----------       ---------
TOTAL CURRENT LIABILITIES                           9,309,600       9,282,300

LONG-TERM DEBT                                         24,600          42,100

ACCRUED RECLAMATION LIABILITY                         725,900         725,900

COMMITMENTS AND CONTINGENCIES

FORFEITABLE COMMON STOCK, $.001 par value
    65,000 shares issued, forfeit able until earned    43,900          43,900

SHAREHOLDERS' (DEFICIT) EQUITY:
    Preferred stock, $.001 par value;
      100,000 shares authorized;
      none issued or outstanding                      --              --
    Common stock, $.001 par value;
      20,000,000 shares authorized;
      10,237,694 shares issued and outstanding         10,200          10,200
    Additional paid-in capital                      6,375,400       6,375,400
    Accumulated deficit                            (7,688,200)     (6,268,400)
                                                   ----------       ----------
                                                   (1,302,600)        117,200
                                                   ----------       ----------
                                                   $8,801,400      10,211,400
                                                   ==========      ===========

</TABLE>

            See notes to Condensed Consolidated Financial Statements.

                                        4

<PAGE>



                           CRESTED CORP. AND AFFILIATE

                 Condensed Consolidated Statements of Operations
<TABLE>

                                      Three Months Ended      Six Months Ended
                                          November 30,           November 30,   
                                       1998         1997        1998       1997
<S>                          <C>          <C>          <C>          <C>    
                                  (Unaudited) (Unaudited) (Unaudited)(Unaudited)
REVENUES:
   Mineral revenue           $      --    $     --     $     --     $   429,300
   Commercial operations          57,500      171,500      387,300      392,200
   Interest                       31,000       23,600       68,400       51,900
   Oil sales                      17,400       14,000       26,900       38,300
   Management fees and others     74,700      184,300      295,600      339,700
   Royalties from mineral 
     interests                    17,800       26,400       42,300       55,200
   Gain on sale of assets           --            800         --            800 
                             -----------  -----------  ------------  -----------
                                 198,400      420,600      820,500    1,307,400 
                             -----------  -----------  ------------  -----------
COSTS AND EXPENSES:

   Mineral operations        $   224,800  $   174,200   $  552,000   $  361,600
   Commercial operations         221,700       41,000      423,900       64,400
   General and administrative    293,800      409,300      920,900      783,500
   Oil Production                  8,400        3,100       19,500        7,300
   Interest                        6,400        6,200       13,100       10,600
                             -----------  ------------ ------------  -----------
                                 755,100      633,800    1,929,400    1,227,400
                             -----------  ------------ ------------  -----------
 (LOSS) INCOME BEFORE
   EQUITY IN LOSS OF AFFILIATE
   AND INCOME TAX PROVISION     (556,700)    (213,200)  (1,108,900)      80,000

EQUITY IN LOSS OF AFFILIATE     (248,000)     (44,100)    (310,900)     (91,400)
                             -----------  -----------  ------------  -----------

LOSS  BEFORE PROVISION FOR
  INCOME TAXES                  (804,700)    (257,300)  (1,419,800)     (11,400)

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

NET LOSS                     $  (804,700) $  (257,300) $(1,419,800) $   (11,400)
                             ===========  ===========  ===========  ============

LOSS PER SHARE,
   BASIC AND DILUTED         $     (0.08  $     (0.02) $     (0.14) $     *       
                             ===========  ===========  ===========  ============

BASIC WEIGHTED AVERAGE
   SHARES OUTSTANDING         10,237,694   10,237,694   10,237,694   10,237,694 
                             ===========  ===========  ===========  ============
DILUTED WEIGHTED AVERAGE
   SHARES OUTSTANDING         10,302,694   10,302,694   10,302,694   10,302,694 
                             ===========  ===========  ===========  ============
</TABLE>

*  Less than $0.01 per share.





            See notes to Condensed Consolidated Financial Statements.

                                        5

<PAGE>



                           CRESTED CORP. AND AFFILIATE

                 Condensed Consolidated Statements of Cash Flows

                                                          Six Months Ended
                                                            November 30,  
                                                     ---------------------------
<TABLE>
<S>                                                 <C>             <C> 
                                                        1998            1997
                                                     (Unaudited)     (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Loss                                           $(1,419,800)      $(11,400)
  Adjustments to reconcile net loss to net cash
    provided by operating activities:
      Depreciation, depletion and amortization           118,000         96,700
      Equity in loss of affiliates                       310,900         91,400
      Gain on sale of assets                               --              (800)
      Net changes in components
      of working capital                               1,310,100       (359,800)
                                                     ------------   ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES      319,200       (183,900)
                                                     ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Deferred GMMV Purchase Option                            --         2,000,000
  Changes in notes receivable                             18,100        (21,900)
  Investment in affiliates                                (2,500)      (184,000)
  Purchase of property and equipment                     (31,100)      (437,700)
  Proceeds from sale of assets                             --             2,000
  Increase in other assets                                (1,600)        --    
                                                     ------------   ------------
NET CASH (USED IN)PROVIDED BY INVESTING ACTIVITIES       (17,100)     1,358,400 
                                                     -----------    ------------
                                                     
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from long term debt                           100,500        313,300
  Payment on long term debt                              (60,600)       (31,200)
  Net activity on debt to affiliate                      345,400        --     
                                                     ------------   ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                385,300        282,100
                                                     ------------   ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                687,400      1,456,600

CASH AND CASH EQUIVALENTS AT
  BEGINNING OF PERIOD                                  1,012,700         37,100
                                                     ------------   ------------

CASH AND CASH EQUIVALENTS AT
  END OF PERIOD                                     $  1,700,100    $ 1,493,700 
                                                     ===========     ===========

SUPPLEMENTAL DISCLOSURES:
  Interest paid                                     $     13,100    $    10,600
                                                     ===========     ===========

</TABLE>


            See notes to Condensed Consolidated Financial Statements.

                                        6

<PAGE>



                           CRESTED CORP. AND AFFILIATE

              Notes to Condensed Consolidated Financial Statements


     1) The Condensed Consolidated Balance Sheet as of November 30, 1998 and the
Condensed Consolidated Statements of Operations for the three and six months and
Cash  Flows for the six  months  ended  November  30,  1998 and 1997,  have been
prepared by the Registrant  without audit.  The Condensed  Consolidated  Balance
Sheet at May 31,  1998,  has been taken from the  audited  financial  statements
included in the Registrant's  Annual Report on Form 10-K filed for the year then
ended. In the opinion of the Registrant,  the accompanying  financial statements
contain all adjustments (consisting of only normal recurring accruals) necessary
to fairly present the financial  position of the Registrant and its affiliate as
of November 30, 1998 and May 31, 1998,  the results of operations  for the three
and six months ended  November 30, 1998 and 1997, and the cash flows for the six
months ended.

     2) 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 financial
statements be read in conjunction  with the Registrant's May 31, 1998 Form 10-K.
The results of operations  for the periods ended  November 30, 1998 and 1997 are
not necessarily indicative of the operating results for the full year.

     3) The  condensed  consolidated  financial  statements  of  the  Registrant
include its proportionate  share of the accounts of USECB Joint Venture ("USECB"
or "USECC")  which is owned 50% by the  Registrant  and 50% by the  Registrant's
parent,  U.S.  Energy  Corp.  ("USE").  All material  inter-company  profits and
balances have been eliminated.

     4) Deferred  GMMV  purchase  option at  November  30, 1998 and May 31, 1998
consists of the Registrant's half of the $4,000,000  Signing Bonus received when
the  Registrant and its parent,  USE entered into an Acquisition  Agreement with
Kennecott Uranium Company  ("Kennecott") to acquire  properties.  The amount was
forfeitable until certain  requirements were satisfied by the Registrant and USE
(See GMMV discussion in Item 2).

     5) Debt at November 30, 1998 and May 31, 1998 consists  primarily of a note
payable  to  the   Registrant's   parent  USE  of  $6,892,500   and   6,547,100,
respectively.  The remaining long-term debt of $118,400 at November 30, 1998 and
78,500 at May 31, 1998 is for various  equipment  purchases and the financing of
annual insurance premiums through financial institutions.

     6) The reclamation  liability of $725,900 represents the Registrant's share
of the liability at the Sheep Mountain Mines in the Crooks Gap Mining  District.
This  reclamation  work may be  performed  over  several  years  and will not be
commenced  until such time as all the uranium  mineralization  contained  in the
properties is produced or the properties are  abandoned.  It is not  anticipated
that either of these events will occur for sometime into the future.

     7) In  February  1997,  SFAS No.  128  "Earnings  per Share" was issued and
specifies the computation, presentation and disclosure requirements for earnings
per share.  SFAS 128 is effective for periods ended after  December 15, 1997 and
requires  retroactive  restatement  of prior  period  earnings  per  share.  The
statement  replaces "primary earnings per share" with "basic earnings per share"
and  replaces  "fully  diluted  earnings per share" with  "diluted  earnings per
share."  Adoption  of SFAS  128  did not  have  an  effect  on the  Registrant's
previously reported net income (loss) per common share.

     8) Certain  reclassifications  have been made in the May 31, 1998 financial
statements to conform to the classifications used in November 30, 1998.


                                        7

<PAGE>



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

     The  following  is  Management's  Discussion  and  Analysis of  significant
factors which have affected the Registrant's  liquidity,  capital  resources and
results of operations during the periods included in the accompanying  financial
statements.

Liquidity and Capital Resources

     During the six months  ended  November 30, 1998,  the  Registrant  received
$2,513,000  in cash as a result of a partial  settlement  of the Sheep  Mountain
Partners  ("SMP")  arbitration.  Primarily as a result of receiving these funds,
the cash position of the Registrant increased to $1,700,100 at November 30, 1998
from  $1,012,700  at May 31,  1998.  Other  increases in  components  of working
capital were  increases  in  Inventory  and other assets of $72,800 and Accounts
Receivable  Affiliates of $783,000.  The components of the increase in inventory
and other assets was as a result  increases in prepaid  insurance of $67,000 and
$5,800 in increased inventory at the Registrant's aircraft operations.  Accounts
Receivable  Affiliates  increased due to the Registrant and USE advancing  funds
for the Green Mountain Mining Venture ("GMMV") and Plateau Resources ("Plateau")
operations.  The GMMV advances had not yet been  reimbursed at November 30, 1998
due to certain differences of opinion between the GMMV participants  relating to
allowable  charges  under  the  temporary  standby  status  of the  GMMV  mining
properties.  As of December 31, 1998, the majority of this advance had been paid
by GMMV.  The  Registrant,  USE and Kennecott  continue to work on resolving the
balance of the funds due the Registrant and USE.

     The major  component of  decreased  working  capital  during the six months
ended November 30, 1998, is an increase in the debt due to USE of $345,400. This
increase  is due to  amounts  owed to USE for shared  expenses  that USE paid on
behalf of both  companies.  These expenses  during the six months ended November
30, 1998 consisted  primary of payroll and operating  expenses.  Other debt also
increased by $100,500 as a result of financing the Registrant's and USE's annual
liability  insurance  premiums.  There was also a reduction of other debt in the
amount of $60,600  for a net  increase  in other debt of $39,900  during the six
months ended November 30, 1998.

     Accounts payable  decreased from $698,800 at May 31, 1998 to $323,300 as of
November  30,  1998.  This  decrease  of  $375,500  is as a  result  of  reduced
operations  at the  GMMV  properties.  As part  of the  agreements  to  purchase
Kennecott's  interest in the GMMV, the Registrant  received a $2,000,000 signing
bonus.  This amount is carried as a deferred  purchase option until such time as
the  anticipated  acquisition of the Kennecott  interest is concluded or standby
costs are offset against the  $2,000,000  deferred  purchase  option until it is
reduced to zero.  

Capital Resources

     General:  The primary source of the Registrant's  capital resources for the
remaining  six months of fiscal 1999 is the cash on hand at November  30,  1998;
the potential  receipt of cash from the SMP Arbitration  Award;  possible equity
financing from affiliated companies, and proceeds under the line of credit after
it is renewed.  The Registrant  will continue to rely on USE to provide  funding
for its expenditures for the remaining six months of fiscal 1999.  Additionally,
the Registrant and USE will continue to offer for sale various  non-core  assets
such as equipment,  lots and homes in Ticaboo,  real estate holdings in Wyoming,
Colorado  and Utah and  mineral  interests.  Interest,  rentals  of real  estate
holdings and equipment,  aircraft  chartering and aviation fuel sales, also will
provide cash.


                                        8

<PAGE>



     Line of Credit: The Registrant and USE have had a $1,000,000 line of credit
with a  commercial  bank.  The line of credit was secured by various real estate
holdings and equipment  belonging to the  Registrant and USE. The Registrant and
USE are currently  negotiating  with the commercial bank to increase the line of
credit. No assurance can be given that the line of credit will be increased. The
commercial bank however has given initial indications that at a minimum the line
of credit will be renewed in its initial  amount of $1,000,000  during the third
quarter  of 1999.  It is  anticipated  that the  line of  credit  may be used to
finance short term working capital needs .

     Financing:  Equity  financing for Sutter Gold Mining  Company  ("SGMC") and
Plateau Resources Ltd. ("Plateau") are dependent on the market price of gold and
uranium among other  conditions.  As of November 30, 1998,  the prices for these
metals  remained  depressed  and it is not known  when they  will  recover.  The
Registrant  and USE continue to be optimistic  concerning the future markets for
these metals but cannot accurately forecast what the prices will be in the short
or long term markets. If the price for these metals do not increase in the short
term, the working capital of Registrant and USE will be impacted  negatively due
to holding costs of the  properties  and the ability of raising  equity  funding
could be impaired.

     Summary:  The Registrant believes that cash on hand at November 30, 1998 as
well the  anticipated  proceeds from the Nukem  litigation and the  Registrant's
continued reliance on USE, will be adequate to fund working capital requirements
through fiscal 1999. However,  these capital resources will not be sufficient to
provide the funding for major  capital  expansions of the  Registrant's  mineral
properties.  For these expansions, the Registrant and USE continue to seek joint
venture partners.

Capital Requirements

     General:  The primary  requirements  for the  Registrant's  working capital
during the remainder of fiscal 1999 are expected to be the costs associated with
the development  activities of Plateau, care and maintenance costs of the former
SMP mineral  properties  acquired from SMP in June of 1998,  payments of holding
fees for mining claims,  the  Registrant's  portion of the costs associated with
the GMMV  properties  should the Registrant  elect to participate in the holding
costs of these properties and corporate general and administrative expenses.

     SGMC: The Registrant owns a minority  interest in SGMC and is therefore not
directly responsible for the ongoing administrative and development costs of the
properties  owned  by SGMC.  Through  its  affiliation  with  USE  however,  the
Registrant  assists  in the  efforts  to  secure  financing  to  place  the SGMC
properties into production.

     SMP: As part of a settlement agreement reached during the fourth quarter of
1998, the SMP mines and associated properties were transferred to the Registrant
and USE.  The  holding  and  reclamation  costs  associated  with  these  mining
properties are the  responsibility  of the Registrant and USE. The holding costs
historically have been  approximately  $85,000 per month. The Registrant and USE
continue to search for improved techniques that will reduce these monthly costs.
The future  reclamation costs on the SMP properties are covered by a reclamation
bond which is secured by the pledge of certain of the  Registrant and USE's real
estate assets.  The dollar amount for the reclamation bond is reviewed  annually
by the state regulatory  agencies.  The Registrant's  portion of the reclamation
liability  on the SMP  properties  is  $725,900  and is  shown  as  "Reclamation
liability " within the condensed consolidated balance sheet.

     It is  not  anticipated  that  the  SMP  properties  will  be  placed  into
production  during Fiscal 1999. The Registrant and USE have  determined that the
SMP mining  properties  should be maintained  and prepared for production in the
future  when the price of uranium  increases  into the $15 per pound range or at
such  time as the  Registrant  and USE are able to  obtain  long  term  delivery
contracts with favorable price terms and the

                                        9

<PAGE>



     Sweetwater  Mill  (which is owned and  operated by the GMMV) is placed into
production. There are no known major reclamation obligations required during the
balance of Fiscal 1999.

     In addition to receiving the SMP mining  properties  back in the settlement
of a portion of the SMP arbitration issues, the Registrant and USE also received
one of the market related  delivery  contracts which had previously  belonged to
SMP.  There is one  delivery  under this  contract  during the third  quarter of
Fiscal  1999.  The  delivery  requirement  was  sold  to a third  party  and the
Registrant  and USE will make a nominal  amount of profit on the sale during the
third quarter of 1999. As of November 30, 1998, the Registrant has no additional
delivery or  financing  commitments  for the sale or purchase of uranium  during
Fiscal 1999.

     GMMV: During July 1998, the GMMV Management Committee unanimously agreed to
place the  Jackpot  Mine and  Sweetwater  Mill on active  standby  status.  This
decision was made as a result of uncertainties in the short term uranium market.
These  same  uncertainties  have  made  the  financing  of  the  acquisition  of
Kennecott's  interest in the GMMV more  difficult.  The  Registrant  and USE had
until October 31, 1998 to complete the financing efforts to purchase Kennecott's
interest.  The financing  was not  successfully  completed  and the  Acquisition
Agreement which, was signed on June 23, 1997, expired on October 31, 1998.


     After  October 31, 1998 the mines and the mill  continue to be  maintained.
Kennecott's  obligation  to fund the first $50  million in  expenditures  is now
satisfied and the  Registrant and USE will be obligated to fund their 50% of the
ongoing costs. The Management Committee of the GMMV is currently discussing what
level  of  expenditures  should  be made to  maintain  the  properties.  A final
decision on these expenditures has not been reached but the Registrant,  USE and
Kennecott  are desirous that the expenses be held to a minimum.  The  Registrant
and USE will need to elect to either  participate in the standby costs or become
diluted by not participating.

     Certain  disagreements  as to how the holding  costs from July 1998 forward
have existed between  Kennecott,  the Registrant and USE. Until such time as the
disagreements  are resolved and a firm  understanding is arrived at, no estimate
as to any potential financial commitment for the holding costs of the properties
to the Registrant and USE can be made. If the GMMV  participants are not able to
resolve the disagreements on holding cost obligations, the GMMV contracts direct
such disagreements to arbitration for resolution.

     Plateau: Plateau owns and operates the Ticaboo Townsite, motel, convenience
store and restaurant. Additionally Plateau owns and maintains the Tony M uranium
mine and Shootaring  Uranium mill. The Registrant and USE are currently  working
to obtain the necessary  permits from the State of Utah to place the  Shootaring
mill into  production.  Until such time as financing is received and  profitable
contracts are obtained, the Registrant and USE will not put the properties owned
by Plateau into production.  Historically,  the net holding costs of the Plateau
properties have been $70,000 per month.

     Yellow  Stone Fuels  Corp.  ("YSFC"):  In  Management's  opinion,  YSFC has
sufficient  cash to  complete  its  projected  1999  exploration  program on its
in-situ  uranium  properties.  As of November 30, 1998, YSFC owed the Registrant
and USE  $400,000  on a  convertible  promissory  note plus  interest at 10% per
annum. The note was not paid on the due date of December 31, 1998. The directors
of YSFC and  management of the  Registrant  and USE are  discussing how the note
will be retired.  At the time of this filing,  it is  anticipated  that the note
will be retired partially in cash and partially in stock of YSFC pursuant to the
terms  of the  note  and  will be  completely  retired  during  March  of  1999.
Additional  amounts  of  money  totaling  $157,800  have  been  advanced  by the
Registrant  and USE for YSFC to a total  indebtedness  at  November  30, 1998 of
$577,800. YSFC has sufficient cash on hand to retire this indebtedness.


                                       10

<PAGE>



     Term Debt and Other  Obligations:  Debt to non-related  parties at November
30, 1998 was  $118,400 as compared to $78,500 at May 31,  1998.  The increase in
debt to third  parties  consists  primary of debt due on the financing of annual
insurance premiums. The balance of the debt to third parties is for the purchase
of various pieces of heavy equipment and bears different  interest rates and has
various maturity dates.

     As of November 30, 1998,  the  Registrant  was indebted to USE in the total
amount of $6,892,500.  USE has not indicated that it will call the debt,  (which
is covered in a promissory  note),  when it is due. The Registrant  will need to
either  retire the note with shares of its common  stock;  pay the debt with any
monies received from the SMP Arbitration  Award, or negotiate with USE to extend
the note and or negotiate an alternative method of repayment.

     Reclamation Obligations: It is not anticipated that any of the Registrant's
working  capital will be used in Fiscal 1999 for the  reclamation  of any of its
mineral property  interests.  The reclamation costs are long term and are either
bonded  through  the  use of cash  bonds  or the  pledge  of  assets.  It is not
anticipated  that any of the mining  properties in which the Registrant  owns an
interest will enter the reclamation phase prior to May 31, 1999.

     Other:  The  Registrant  and USE  currently  are not in  production  on any
mineral  properties,  and  development  work continues on several of their major
investments.  The Registrant and USE are not using hazardous substances or known
pollutants  to any great  degree in these  activities.  Consequently,  recurring
costs for managing hazardous substances, and capital expenditures for monitoring
hazardous substances or pollutants have not been significant. The Registrant and
USE are also not aware of any claims for  personal  injury or  property  damages
that need to be accrued or funded.

     The tax years  through May 31,  1992 are closed  after audit by the IRS. On
October 5, 1998 the Registrant and USE met with the Appeals Office of the IRS in
Denver,  Colorado to discuss  resolving  issues raised for Fiscal 1993 and 1994.
The  Registrant  and USE have  resolved all  outstanding  issues for those years
without  incurring any cash  commitments  for  additional  taxes due. The IRS is
currently concluding its review of Fiscal 1995 and 1996 for both companies,  but
no final reports have been issued therefore no representations can be made as to
their ultimate outcome.

Results of Operations

Six Months Ended November 30, 1998 Compared to Six Months Ended November 30,1997

     During the six months ended November 30, 1998,  revenues decreased from the
same period of the previous year by $486,900 to total revenues of $820,500.  The
major  reduction  was as a result of the  Registrant  not receiving any revenues
from the delivery of uranium from one of the SMP delivery contracts.  During the
six months ended  November  30,  1997,  the  Registrant  recognized  $429,300 in
revenue from the profits derived from a SMP contract delivery.  No such revenues
were  recognized  during the six months ended  November 30, 1998.  Additionally,
management  fees and other  income  decreased  by $44,100  during the six months
ended November 30, 1998 from the revenues  recognized  during the same period of
the previous year due to the curtailment of operations at the GMMV properties as
of July 1998.

     Costs and expenses for the six months ended  November 30, 1998 increased by
$702,000  over the same period of the  previous  year.  The primary  increase in
costs came as a result of increased  activity on mineral  properties,  primarily
associated with decline  development in June and July on the GMMV properties and
subsequent shut down expenses of the GMMV properties,  commercial operations and
an increase in general and  administrative  overhead to supervise  the increased
activity.  The  Registrant  and USE  also  paid  bonuses  to four  employees  as
recognition of the extraordinary  dedication they had given to their work in the
SMP

                                       11

<PAGE>



arbitration/litigation.  These bonuses, which included taxes due, were $561,000.
The projects  which are being  developed,  are currently  not in the  production
phase and do not  generate  cash flow.  With the decline in the market  price of
uranium,  it is  anticipated  that  the  properties  will  not  be  placed  into
production  in Fiscal 1999.  However,  a decision was made in July 1998 to place
the GMMV Jackpot Mine on active  standby  status.  The  Registrant  is therefore
anticipating reductions in costs.

     As a result of the reduced  revenues and increased costs  discussed  above,
operations  for the six months  ended  November  30, 1998  resulted in a loss of
$1,419,800  or $0.14 per share as  compared  to a loss of  $11,400  or less than
$0.01 per share for the six months ended November 30, 1997.



Year 2000 Issue

     Computer  programs  written  in the past  utilize  a two  digit  format  to
identify the applicable  year. Any date sensitive  software  beyond December 31,
1999 could fail, if not modified. The result could be among other possibilities,
disruptions  to  the   operations   and  the  inability  to  process   financial
transactions.  The  Registrant  has  evaluated  the  operating  systems  on  all
headquarter and field office  computers and consulted with all of the vendors of
the computer software which is being used by the Registrant and affiliates.  The
vendors have confirmed to the Registrant that all of the  Registrant's  software
and information systems are Year 2000 compliant.


                                       12

<PAGE>



                           PART II. OTHER INFORMATION

ITEM 1.     Legal Proceedings

Sheep Mountain Partners Arbitration/Litigation

     In 1991,  disputes  arose  between  USE/Crested  and  Nukem,  Inc.  and its
subsidiary Cycle Resource  Investment Corp.  ("CRIC"),  concerning the formation
and operation of the Sheep Mountain  Partners  ("SMP")  partnership  for uranium
mining and  marketing,  and activities of the parties  outside SMP.  Arbitration
proceedings  were initiated by CRIC in June 1991 and in July 1991, USECC filed a
lawsuit against Nukem,  CRIC and others in the U.S.  District Court of Colorado.
Later,  USECC filed  another suit for the standby costs at the SMP mines against
SMP in the Colorado State Court.  The Federal Court stayed both the  arbitration
proceedings  and the State Court  case.  In  February  1994,  all of the parties
agreed to exclusive and binding  arbitration of the disputes before the American
Arbitration  Association  ("AAA") for which the legal  claims made by both sides
included fraud and misrepresentation,  breach of contract, breach of duties owed
to the SMP partnership and other claims.

     Following 73 hearing days before a three member panel of the AAA, the Panel
entered an Order and Award on April 18, 1996 and  supplemented the Order on July
3, 1996.  The Orders were  ultimately  confirmed by the U.S.  District  Court of
Colorado in its Second  Amended  Judgment on June 27, 1997.  Please see "Item 3.
Legal  Proceedings" in the Registrant's  1998 Form 10-K for more details of this
arbitration/litigation.  Nukem/CRIC  appealed the decision of the U.S.  District
Court to the 10th Circuit Court of Appeals (CCA) and on September 24, 1998, oral
arguments  were made to a three judge panel.  On October 22, 1998,  the 10th CCA
affirmed  the Second  Amended  Judgment  issued by the  Federal  Court which had
confirmed the AAA Orders and Award, and issued its Mandate on November 13, 1998.
Thereafter,  Nukem and CRIC filed a motion in the U.S. District Court seeking to
stay the  execution  of the  Judgment  and  offered  to deposit in Court the net
amount of the monetary  judgment due USECC of $5,971,596 in full satisfaction of
the Second Amended Judgment.  USECC filed a response alleging that the equitable
portion of the  Judgment  granting  USECC a one half  interest in the  contracts
Nukem had to purchase  uranium from CIS  republics,  had not been  satisfied and
requested the Court to deny the Motion of Nukem/CRIC.  USECC also filed a motion
to compel the bonding company which posted the supersedeas  bond for Nukem/CRIC,
to pay the monetary  amount of the Second  Amended  Judgment.  As of January 13,
1999, no ruling on the motions had been received from the U.S. District Court.

Ticaboo Townsite Litigation

     In fiscal 1998, a prior  contract  operator of the Ticaboo  restaurant  and
lounge,  and two employees  supervising the motel and convenience  store in Utah
(owned by Canyon Homesteads,  Inc.) sued USE, Crested, Canyon and others in Utah
state  court.  After a five day trial,  a jury denied the claims of two of three
plaintiffs but awarded the third plaintiff $156,000 in compensatory and punitive
damages plus $90,000 in attorneys fees against USE. USE filed motions  including
a motion for  judgment  notwithstanding  the verdict  ("JNOV")  The motions were
denied by the Court and USE posted a supersedeas bond for $275,000 to appeal the
judgment. The appeal is pending.

BGBI Litigation

     USE and Crested are  defendants and counter or  cross-claimants  in certain
litigation in the District Court of the Fifth  Judicial  District of Nye County,
Nevada,  brought by Bond Gold Bullfrog Inc. ("BGBI") on July 30, 1991. BGBI (now
known as Barrick  Bullfrog,  Inc.) is an  affiliate  of Barrick  Corp.,  a large
international  gold producer  headquartered in Toronto,  Canada.  The litigation
primarily concerns extra-lateral

                                       13

<PAGE>



rights  associated  with two patented lode mining claims owned by Parador Mining
Company Inc.  ("Parador")  which were initially leased to a predecessor of BGBI.
The two  mining  claims  are in and  adjacent  to BGBI's  Bullfrog  open pit and
underground mine near Beatty,  Nevada.  USE and Crested assert certain interests
in the claims under an April 1991  assignment and lease with Parador.  The lease
and  assignment  were made subject to the earlier  lease to BGBI's  predecessor.
Please see "Item 3, Legal  Proceedings " of Registrant's 1998 Form 10-K for more
details of this litigation.  The record on appeal has been filed with the Nevada
Supreme  Court and USE,  Crested and Parador have until January 26, 1999 to file
their opening brief and appendix.

Department of Energy Litigation

     On July 20, 1998,  eight uranium mining  companies  with  operations in the
United  States  (including  USE,  Crested,  YSFC) and the Uranium  Producers  of
America (a trade  organization),  filed a complaint  against  the United  States
Department  of Energy  (the  "DOE")  in a  lawsuit  (file no. 98 CV 1775) in the
United States District Court, Cheyenne, Wyoming alleging inter alia that the DOE
unlawfully  transferred  uranium to USEC Inc.  which  became a  publicly  traded
corporation  in  July  1998.   Please  see  "Item  3.  Legal  Proceedings  "  of
Registrant's 1998 Form 10-K for more details of this litigation. The DOE filed a
motion to dismiss the  complaint  claiming that the U.S.  Congress  withdrew its
consent to be sued in connection with the adoption of the law  privatizing  USEC
Inc. and that USEC Inc. must be joined as an  indispensable  party. The State of
Wyoming moved to join in the litigation on behalf of the  plaintiffs.  A hearing
was held on the  motions on January 8, 1999  before the U.S.  District  Court in
Cheyenne, WY and the Court took the motions under advisement.

Contour Development Litigation

     On July 28, 1998, USE filed a lawsuit in the United States  District Court,
Denver,  Colorado against Contour Development  Company,  L.L.C. and entities and
persons associated with Contour Development Company, L.L.C. (all referred to as,
"Contour")  seeking  compensatory  and  consequential  damages of more than $1.3
million from the  defendants  for  dealings in certain  real estate.  Please see
"Item 3. Legal  Proceedings" of Registrant's  1998 Form 10-K for more details on
this litigation.  The parties have reached an agreement to settle the litigation
subject to certain  conditions  precedent.  If all conditions are met by January
15, 1999, the case will be resolved. Otherwise, the lawsuit will continue.


                                       14

<PAGE>




ITEM 4.  Submission of Matter to a vote of Security Holders

     On December 4, 1998,  the annual meeting of  shareholders  was held and the
only issue considered was the reelection of the five directors:  John L. Larsen,
Max T. Evans, Daniel P. Svilar,  Michael D. Zwickl and Kathleen R. Martin. These
directors  were  reelected  for a term  expiring at the next  succeeding  annual
meeting and until their  successors are duly elected or appointed and qualified.
With respect to the  reelection  of the five  directors,  the votes cast were as
follows:
<TABLE>
<S>                   <C>                <C>          <C>               <C>    

Name of Director      For                Against      Abstain           Withheld
----------------      ---------          -------      --------          --------
John L. Larsen        8,627,540          6575         138,616           1400
Max T. Evans          8,629,240          7075         137,416            400
Daniel P. Svilar      8,629,840          6875         137,416              0
Michael D. Zwickl     8,628,840          6875         137,416           1000
Kathleen R. Martin    8,629,140          6775         137,416            800

</TABLE>

ITEM 5.  Other Information

     On December 28, 1998,  the Utah  Department of Water Quality began a 30 day
public  advertisement of a notice for public comments on the water discharge and
construction  permit for the tailings facility at Shootaring Canyon uranium mill
in southeast Utah. If there are no substantial and significant comments from the
public by January 11,  1999,  there will be no public  hearing and  Registrant's
affiliate  Plateau  Resources Ltd. should receive the discharge and construction
permit.


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

      (a)   Exhibits.  None.

     (b) Reports on Form 8-K. On October 22, 1998, the Registrant filed a Report
in Item 5 on Form 8-K during the second  quarter  ended  November 30, 1998.  The
Report was on the decision of the 10th CCA affirming the Second Amended Judgment
entered by the U.S.  District  Court of Colorado in favor of USE and Crested and
against Nukem/CRIC and the subsequent motions filed thereafter with the District
Court by the Parties.


                                       15

<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, there unto duly authorized.

                                          CRESTED CORP.
                                          (Registrant)



Date: January 14, 1999        By:      /s/ Max T. Evans 
                                     -------------------------------------------
                                             MAX T. EVANS,
                                             President



Date: January 14, 1999        By:      /s/ Robert Scott Lorimer 
                                     -------------------------------------------
                                             ROBERT SCOTT LORIMER,
                                             Principal Financial Officer
                                             and Chief Accounting Officer


                                       16

<PAGE>