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 August 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   0-8773

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

            Colorado                                          84-060812
----------------------------------------              --------------------------
(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)

Company's telephone Number, including area code:             (307) 856-9271
                                                      --------------------------


                                      NONE
--------------------------------------------------------------------------------
     (Former name, address and fiscal year, if changed since last report)


     Indicate  by check  mark  whether  the  Company  (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 Company
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 October 15, 1999
------------------------------                   -------------------------------
Common stock, $.001 par value                          10,349,664 Shares



<PAGE>



                           CRESTED CORP. AND AFFILIATE

                                      INDEX

                                                                      Page No.
PART I.    FINANCIAL INFORMATION

ITEM 1.    Financial Statements.

           Condensed Consolidated Balance Sheets
              August 31, 1999 and May 31, 1999.............................3-4

           Condensed Consolidated Statements of Operations
              Three Months Ended August 31, 1999 and 1998....................5

           Condensed Consolidated Statements of Cash Flows
              Three Months Ended August 31, 1999 and 1998....................6

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

ITEM 2.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations..................8-11

PART II.   OTHER INFORMATION

ITEM 1.    Legal Proceedings.............................................12-13

ITEM 6.    Exhibits and Reports on Form 8-K.................................13

           Signatures.......................................................14


                                        2

<PAGE>



                          PART I. FINANCIAL INFORMATION

ITEM 1.  Financial Statements.

                           CRESTED CORP. AND AFFILIATE

                      Condensed Consolidated Balance Sheets

                                     ASSETS

                                                      August 31,        May 31,
                                                        1999             1999
                                                     -----------      ---------
                                                     (Unaudited)
<TABLE>
<S>                                              <C>             <C>
CURRENT ASSETS:
   Cash and cash equivalents                        $2,928,800      $3,509,000
   Accounts receivable
     Trade, net of allowance for doubtful accounts      63,800          72,200
     Affiliates                                      2,144,700       1,875,300
   Current portion of long-term receivable
     Related parties                                   116,000         115,000
   Inventory and other                                 122,800          34,200
                                                     ---------       ---------
TOTAL CURRENT ASSETS                                 5,376,100       5,605,700

LONG-TERM NOTES RECEIVABLE
   Related parties                                      13,900          10,200

INVESTMENTS IN AFFILIATES                              103,500         126,000

INVESTMENT IN CONTINGENT
   STOCK PURCHASE WARRANT                                 --              --

PROPERTIES AND EQUIPMENT                             5,964,800       5,951,800
   Less accumulated depreciation,
   depletion and amortization                       (3,472,800)     (3,437,400)
                                                    ----------      ----------
                                                     2,492,000       2,514,400

OTHER ASSETS                                           159,700         158,700
                                                     ---------       ---------
                                                    $8,145,200      $8,415,000
                                                    ==========      ==========
</TABLE>


            See notes to Condensed Consolidated Financial Statements.

                                        3

<PAGE>



                           CRESTED CORP. AND AFFILIATE

                      Condensed Consolidated Balance Sheets

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

                                                    August 31,          May 31,
                                                       1999              1999
                                                    ----------       ----------
                                                    (Unaudited)
<TABLE>
<S>                                             <C>              <C>
CURRENT LIABILITIES:
    Accounts payable and accrued expenses          $  307,300       $  371,700
    Deferred GMMV purchase option                   2,000,000        2,000,000
    Current portion of long-term debt
      Affiliate                                     7,266,800        7,054,000
      Others                                          106,200           25,300
                                                   ----------        ---------
TOTAL CURRENT LIABILITIES                           9,680,300        9,451,000

LONG-TERM DEBT                                          9,000           16,700

RECLAMATION LIABILITY                                 725,900          725,900

COMMITMENTS AND CONTINGENCIES

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

SHAREHOLDERS' DEFICIT:
    Preferred stock, $.001 par value;
      100,000 shares authorized;
      none issued or outstanding                         --               --
    Common stock, $.001 par value;
      20,000,000 shares authorized;
      10,349,664 and 10,284,694 shares
         issued and outstanding, respectfully          10,300           10,300
    Additional paid-in capital                      6,387,300        6,387,300
    Accumulated deficit                            (8,711,500)      (8,220,100)
                                                   ----------       ----------
TOTAL SHAREHOLDERS' DEFICIT                        (2,313,900)      (1,822,500)
                                                   ----------        ---------
                                                   $8,145,200       $8,415,000
                                                   ==========       ==========
</TABLE>


            See notes to Condensed Consolidated Financial Statements.

                                        4

<PAGE>



                           CRESTED CORP. AND AFFILIATE

                 Condensed Consolidated Statements of Operations

                                                       Three Months Ended
                                                            August 31,
                                                    ---------------------------
                                                       1999            1998
                                                       ----            ----
                                                    (Unaudited)     (Unaudited)
<TABLE>
<S>                                               <C>              <C>
REVENUES:
   Mineral revenue                                   $ 17,100         $ 24,500
   Commercial operations                              105,200          329,800
   Interest                                            40,200           37,400
   Oil sales                                            5,500            9,500
   Management fees and other                           77,700          220,900
                                                    ---------        ---------

                                                      245,700          622,100

COSTS AND EXPENSES:
   Mineral operations                                $260,200         $327,200
   Commercial operations                              209,500          202,200
   General and administrative                         242,000          627,100
   Oil production                                         900           11,100
   Interest                                             2,000            6,700
                                                     --------         --------

                                                      714,600        1,174,300
                                                     --------        ---------
LOSS BEFORE
   EQUITY LOSS
   AND INCOME TAX PROVISION                          (468,900)        (552,200)

EQUITY IN LOSS OF AFFILIATES                          (22,500)         (62,900)
                                                     --------          -------

LOSS BEFORE
   PROVISION FOR INCOME TAXES                        (491,400)        (615,100)

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

NET LOSS                                            $(491,400)       $(615,100)
                                                    =========        =========

NET LOSS PER SHARE,
   BASIC AND DILUTED                                $    (.05)       $    (.06)
                                                    =========        =========

BASIC WEIGHTED AVERAGE
   SHARES OUTSTANDING                              10,349,664       10,237,694
                                                   ==========       ==========

DILUTED WEIGHTED AVERAGE
   SHARES OUTSTANDING                              10,349,664       10,302,694
                                                   ==========       ==========

</TABLE>

            See notes to Condensed Consolidated Financial Statements.

                                        5

<PAGE>



                           CRESTED CORP. AND AFFILIATE

                 Condensed Consolidated Statements of Cash Flows

                                                         Three Months Ended
                                                             August 31,
                                                      --------------------------
                                                        1999            1998
                                                        ----            ----
                                                     (Unaudited)    (Unaudited)
<TABLE>
<S>                                                <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                            $(491,400)     $(615,100)
  Adjustments to reconcile net loss to net cash
    (used in) provided by operating activities:
      Depreciation, depletion and amortization           35,400         63,700
      Equity in loss of affiliates                       22,500         62,900
    Net changes in components
      of working capital                               (414,000)     1,218,400
                                                      ---------      ---------

NET CASH (USED IN) PROVIDED BY
  OPERATING ACTIVITIES                                 (847,500)       729,900
                                                      ---------       --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   (Increase) decrease in long-term receivables          (4,700)        19,300
  Purchases of property and equipment                   (13,000)       (25,700)
  Increase in other assets                               (1,000)        (1,400)
                                                       --------       --------
NET CASH USED IN
   INVESTING ACTIVITIES:                                (18,700)        (7,800)
                                                       --------       --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from long-term debt                           90,700        100,500
  Payment on long-term debt                             (17,500)        (6,100)
  Net activity on long-term debt to affiliate           212,800        398,400
                                                      ---------      ---------
NET CASH PROVIDED BY
  FINANCING ACTIVITIES                                  286,000        492,800
                                                      ---------      ---------

NET (DECREASE) INCREASE
  IN CASH AND CASH EQUIVALENTS                         (580,200)     1,214,900

CASH AND CASH EQUIVALENTS AT
  BEGINNING OF PERIOD                                 3,509,000      1,012,700
                                                      ---------      ---------

CASH AND CASH EQUIVALENTS AT
  END OF PERIOD                                     $ 2,928,800      2,227,600
                                                    ===========      =========

SUPPLEMENTAL DISCLOSURES:

  Interest paid                                       $   2,000       $  6,700
                                                      =========       ========
</TABLE>


            See notes to Condensed Consolidated Financial Statements.

                                        6

<PAGE>



                                  CRESTED CORP.

              Notes to Condensed Consolidated Financial Statements


     1) The  Condensed  Consolidated  Balance  Sheet as of August  31,  1999 the
Condensed  Consolidated  Statements of  Operations  and Cash Flows for the three
months ended August 31, 1999 and 1998, have been prepared by the Company without
audit. The Condensed  Consolidated Balance Sheet at May 31, 1999, has been taken
from the audited financial statements included in the Company's Annual Report on
Form 10-K filed for the year then  ended.  In the  opinion of the  Company,  the
accompanying  financial  statements contain all adjustments  (consisting of only
normal recurring accruals) necessary to fairly present the financial position of
the Company and its  affiliate as of August 31, 1999,  the results of operations
and cash flows for the three months ended August 31, 1999 and August 31, 1998.

     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 Company's May 31, 1999 Form 10-K. The
results of  operations  for the periods  ended  August 31, 1999 and 1998 are not
necessarily indicative of the operating results for the full year.

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

      4) Debt at August 31,  1999 and May 31,  1999  consists  primarily  of the
balance on a note payable to USE of $7,266,800 and $7,054,000, respectively. The
remaining  current portion  long-term debt of $106,200 and $25,300 at August 31,
1999 and May 31, 1999  respectively is for various  equipment  purchases and the
financing of annual insurance premiums through financial institutions.

      5) The reclamation liability of $725,900 represents the Company'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.

      6) Certain  reclassifications have been made in the May 31, 1999 financial
statements to conform to the classifications used in August 31, 1999.


                                        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  Company's  liquidity,  capital  resources and
results of operations during the periods included in the accompanying  financial
statements.

Liquidity and Capital Resources

      During the  quarter  ended  August 31,  1999,  the Company  experienced  a
decrease in working capital in the amount of $458,900.  This decrease in working
capital  increased the working capital deficit of the Company at August 31, 1999
to $4.3 million from a working  capital deficit of $3.8 million at May 31, 1999.
The primary  changes in working  capital were reductions of $580,200 in cash and
cash  equivalents,  an increase of $303,500 in long term debt and an increase in
accounts receivable affiliates of $269,400.

      Cash was  consumed by  operations,  $847,500,  and  investing  activities,
$18,700,  while financing activities increased cash by $286,000. The increase in
financing  activities  came as a result of increased  debt due to the  Company's
parent,  U.S. Energy Corp.  ("USE"), in the amount of $212,800 and debt to third
parties primarily for the financing of prepaid insurance  premiums in the amount
of $90,700.  During the quarter  ended August 31, 1999,  long term debt was also
reduced by $17,500.

      Accounts receivable  affiliates  increased as a result of amounts advanced
on behalf of various affiliated  companies.  The majority of these advances were
to Plateau Resources Ltd. ("Plateau"). During the quarter ended August 31, 1999,
the  Company  advanced  $257,100  to Plateau for  construction  projects.  These
projects were the  construction of boat storage and gravel crushing  facilities.
It is believed that upon completion,  both of these facilities will provide cash
flows to the Company and USE.

      The Company reported a $2,000,000  deferred  purchase option at August 31,
1999 and May 31, 1999.  This option is as the result of Kennecott  Energy paying
the Company a signing bonus upon the execution of the  Acquisition  Agreement on
June 23,  1997.  The option is  non-refundable  and will be offset  against  any
future cash  commitments  the Company  may incur on the GMMV  properties  in the
future.

Capital Resources

      General:  The primary  source of the Company's  capital  resources for the
remaining  nine months of fiscal  2000 are the cash on hand at August 31,  1999;
the potential  receipt of cash from the SMP Arbitration  Award;  possible equity
financing from affiliated companies,  and proceeds under the line of credit. The
Company will continue to rely on USE to provide funding for its expenditures for
the remaining nine months of fiscal 2000. Additionally, the Company and USE will
continue to offer for sale various  assets such as equipment,  lots and homes in
Ticaboo,  Utah, real estate  holdings in Wyoming,  Colorado and Utah and mineral
interests. Interest, rentals of real estate holdings and equipment, and aviation
fuel sales, also will provide cash.

      Line of Credit:  The Company and USE have a $1,000,000 line of credit with
a commercial bank. The line of credit is secured by various real estate holdings
and equipment belonging to the Company and USE. It is anticipated that this line
of credit may be used to finance short term working  capital needs.  The Company
and USE are  currently  seeking  an  increase  in their  line of credit  through
financial  institutions  to fund  expanding  operations  in the current coal bed
methane exploration and development programs as well as alternate feed and waste
disposal businesses.

                                        8

<PAGE>



      Financing:  Equity  financing for Sutter Gold Mining Company  ("SGMC") and
Plateau  are  dependent  on the market  price of gold and  uranium  among  other
conditions.  As of  August  31,  1999,  the  prices  for these  metals  remained
depressed  and it is not known  when  they will  recover.  The  Company  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 the  Company  and USE could be  impacted  negatively  due to
holding  costs  of the  properties.  The  Company  and USE  continue  to  pursue
alternative uses for these properties  including  tourism at the SGMC properties
and alternate feed or waste disposal at the Plateau properties.

      The Company and USE are also seeking  financing through equity markets for
their expansion into the coal bed methane and alternative  feed/waste management
businesses. Discussions are currently underway regarding these financing efforts
with investment banking firms.

      During the  quarter  ended  August 31,  1999,  the  Company and USE became
involved in the  exploration  phase of coal bed methane as drilling  contractors
for third  parties.  The Company and USE will use  existing  drilling  assets in
these drilling  projects.  This opportunity allows the Company and USE to become
involved  in the  acquisition  of coal bed  methane  properties  and develop gas
producing  fields for their own  account.  The  Company  and USE have  committed
capital resources to the coal bed methane project for the purchase of equipment,
mineral  leases  and  operating  costs  until such time as equity  financing  is
obtained.

      Summary:  The Company  believes  that cash on hand at August 31, 1999,  as
well as proceeds from its line of credit and the Company's continued reliance on
USE, will be adequate to fund working capital  requirements through fiscal 2000.
However,  these capital  resources will not be sufficient to provide the funding
for major capital  expansions of the Company's mineral  properties and projected
business expansions.

Capital Requirements

      General: The primary requirements for the Company's working capital during
the  remainder of fiscal 2000 are expected to be the costs  associated  with the
development  activities of Plateau, care and maintenance costs of the former SMP
uranium  properties,  payments of holding fees for mining claims,  the Company's
portion of the costs associated with the GMMV properties, business expansion and
development   costs  associated  with  the  coal  bed  methane  and  alternative
feed/waste   disposal   businesses  and  corporate  general  and  administrative
expenses.

      SGMC:  The Company 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 Company
assists  in the  efforts to secure  financing  to place the SGMC  properties  in
California into production.

      SGMC is developing  alternate  uses of its mineral  properties  until such
time as production of gold is profitable.  SGMC is developing various facilities
to utilize its properties in the tourism  business.  It is not anticipated  that
any of the  Company  or USE's  cash  resources  will be needed to  complete  the
development  of these assets.  It is projected that cash flows will be generated
from this business early in the third quarter of 2000.

      Sheep Mountain Mines:  The holding and reclamation  costs  associated with
the Sheep Mountain  uranium  mineral  properties are the  responsibility  of the
Company and USE. The holding  costs during 1999 were  approximately  $57,000 per
month. The Company and USE continue to search for improved  techniques that will
reduce these monthly costs. The future  reclamation  costs on the Sheep Mountain
properties are

                                        9

<PAGE>



covered by a  reclamation  bond which is secured by the pledge of certain of the
Company's and USE's real estate assets.  The reclamation bond amount is reviewed
annually  by  the  state  regulatory  agencies.  The  Company's  portion  of the
reclamation  liability on the Sheep Mountain properties is $725,900 and is shown
as "Reclamation liability " within the condensed consolidated balance sheet.

      It is not  anticipated  that the Sheep Mountain  properties will be placed
into production during Fiscal 2000. The Company and USE have determined that the
Sheep  Mountain  mining   properties  should  be  maintained  and  prepared  for
production in the future when the price of uranium  increases to the level where
the  Company  and USE are able to  obtain  long  term  delivery  contracts  with
favorable  price terms and the  Sweetwater  Mill (which is owned and operated by
the GMMV) is placed into production. There are no major reclamation expenditures
expected during the balance of Fiscal 2000 that the Company and USE are aware of
on the Sheep Mountain properties.

      GMMV: In 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.
The management  committee of the GMMV is endeavoring to reduce the holding costs
of the GMMV mineral and mill  properties.  The Company and USE have notified the
GMMV  management  committee  that they have  elected  to be a  non-participating
partner in  funding  current  holding  and  reclamation  costs.  By making  this
election,  the Company and USE will be diluted pursuant to the terms of the GMMV
contract.  It is not  believed  that the  dilution  in the  short  term  will be
material to the Company and USE's ownership interest in the GMMV.

      Plateau:   Plateau  owns  and  operates  the  Ticaboo  Town  site,  motel,
convenience store and restaurant.  Additionally,  Plateau owns and maintains the
Tony M uranium mine and  Shootaring  Uranium mill.  The Company does not own any
portion of Plateau but shares in the cash flow  streams of the  properties  with
USE on a 50-50 basis.  The Company and USE are  currently  seeking joint venture
partners  and  equity  financing  to enter into the  alternative  feed and waste
disposal  businesses.  Currently,  discussions  are  underway  with third  party
companies  and  investment  banking firms  regarding  the  expansion  into these
business  opportunities.  The Company and USE will continue to fund the costs of
permitting and stand-by costs associated with the properties. Expansion into the
alternate feed and waste disposal businesses will require additional capital.

     Yellow  Stone Fuels  Corp.  ("YSFC"):  In  Management's  opinion,  YSFC has
sufficient cash to fund its limited  operations.  YSFC continues to maintain its
mineral  interests and look for  additional  business  opportunities.  It is not
anticipated that the Company or USE will be obligated to advance funds on behalf
of YSFC.

      Term Debt and Other Obligations: Debt to non-related parties at August 31,
1999, was $115,200  compared to $42,000 at May 31, 1999. The increase in debt to
non-related  parties  consists  primaraly of debt due on the financing of annual
insurance  premiums.  The balance of the debt to non-related  parties is for the
purchase of various pieces of heavy equipment and bears different interest rates
with various maturity dates.
All payments on the debt are current.

      As of August 31, 1999, the Company was indebted to USE in the total amount
of $7,266,800. USE has not indicated that it will call the debt, when it is due.
The Company has had preliminary  discussions with USE to potentially  retire the
note with shares of its common stock.

     Reclamation  Obligations:  It is not anticipated  that any of the Company's
working  capital will be used in Fiscal 2000 for the  reclamation  of any of its
mineral property interests. The reclamation costs are

                                       10

<PAGE>



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
Company owns an interest will enter the reclamation phase prior to May 31, 2000.
GMMV is in the process of starting the reclamation of an open pit mine which was
developed by a previous owner. It is believed that the cost of reclamation  will
be covered by a commitment  by the prior owner to provide the initial $8 million
in  reclamation.  These funds are to be recovered from a future  production over
ride until such time as they are repaid.

      Other:  The Company and USE are currently not in production on any mineral
properties.  The Company  and USE are not using  hazardous  substances  or known
pollutants to any great degree in the  maintenance of mineral  properties or the
development  of new  businesses.  Consequently,  recurring  costs  for  managing
hazardous   substances,   and  capital  expenditures  for  monitoring  hazardous
substances or pollutants have not been significant.  The Company and USE are not
aware of any claims for  personal  injury or  property  damages  that need to be
accrued or funded.  The Company and USE maintain both workers  compensation  and
liability insurance coverage which they believe cover any claims that may exist.

      The tax years  through May 31, 1994 are closed after audit by the IRS. The
Company and USE are currently in hearings with the Appeals  Office of the IRS in
Denver,  Colorado to discuss  resolving  issues raised for Fiscal 1995 and 1996.
Although no definite outcome can be predicted,  the Company and USE believe that
there will not be a material  cash  impact  from the  ultimate  outcome of these
hearings.

Results of Operations

     Three Months  Ended  August 31, 1999  Compared to Three Months Ended August
31, 1998

      During the quarter ended August 31, 1999,  revenues  decreased by $376,400
to $245,700 as compared to revenues of $622,100  during the quarter ended August
31, 1998.  This  decrease  was  primarily  associated  with the  curtailment  of
contract  work  that  the  Company  and USE had been  doing  for the  GMMV.  The
reduction of work on the GMMV  properties was as a result of low spot prices for
uranium and the  inability of the Company and USE to raise the funds to purchase
Kennecott  Energy's  50%  interest in the GMMV.  The GMMV  management  committee
determined in late July 1998 to significantly reduce expenditures at its mineral
properties.  This  curtailment  reduced  the rental of  equipment  revenues  and
management fees previously received by the Company and USE from GMMV.

      Costs and Expenses  were $714,600 for the quarter ended August 31, 1999 as
compared to $1,174,300  for the quarter ended August 31, 1998.  This decrease of
$459,700 was also related to the reduction of activities at the GMMV properties.
In addition to the reduction of activity at the GMMV properties, the Company and
USE granted a bonus to two of their  employees  for services  related to the SMP
arbitration/litigation  during the quarter ended August 31, 1998.  There were no
similar bonuses granted during the quarter ended August 31, 1999.

      Operations  for the quarter  ended  August 31, 1999  resulted in a loss of
$491,400 or $0.05 per share as compared to a loss of $615,100 or $0.06 per share
for the quarter ended August 31, 1998.



                                       11

<PAGE>



                           PART II. OTHER INFORMATION

ITEM 1.     Legal Proceedings

Sheep Mountain Partners Arbitration/Litigation

      In 1991, disputes arose between USE/Crested  (USECC),  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 the
arbitration  proceedings  and the State  Court case was also  stayed.  In fiscal
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  hearings  before a three  member  panel of the AAA,  the  Panel
entered an Order and Award in April 1996 and supplemented it in July 1996, which
were ultimately  confirmed by the U.S.  District Court of Colorado in its Second
Amended Judgment (the  "Judgment").  Please see Item 3. Company's 1999 Form 10-K
for more details of this arbitration/litigation.  Nukem appealed the Judgment of
the U.S.  District  Court to the 10th Circuit  Court of Appeals  (10th CCA).  On
October  22,  1998,  the 10th CCA issued its Order and  Judgment  affirming  the
District Court's Judgment (without modification).  The Judgment ordered that the
uranium purchase contracts Nukem entered into with three CIS republics including
the  purchase  rights,  the uranium  acquired  pursuant to those  rights and the
profits therefrom were impressed with a constructive trust in favor of SMP.

      On  November  13,  1998,  Nukem/CRIC  filed  motions  for  entry  of  full
satisfaction of the Judgment if Nukem/CRIC  paid only the balance  remaining due
on the monetary  portion of the Judgment.  USECC responded  opposing the motions
and  requesting  payment of the balance of the  monetary  award.  On February 8,
1999,  the  District  Court denied the motion of  Nukem/CRIC  for entry of final
satisfaction  of the Judgment and ordered  Nukem/CRIC to forthwith pay USECC the
balance of $5,971,600 plus interest of $105,700.
Nukem/CRIC made that payment to USECC on February 9, 1999.

      On April 28, 1999,  USECC filed a petition in the U.S.  District  Court to
dissolve SMP and for an accounting. Nukem/CRIC responded that the District Court
did not  have  jurisdiction  and  again  filed a motion  seeking  entry of final
satisfaction of the Judgment.  On July 16, 1999, the District Court again denied
the motion of Nukem/CRIC for entry of final  satisfaction of Judgment and denied
USECC's petition for dissolution because neither USECC nor Nukem/CRIC petitioned
the Court for  dissolution  of SMP before the Court  entered its Second  Amended
Judgment. On August 2, 1999, Nukem/CRIC filed a Notice of Appeal to the 10th CCA
of the District Court's July 16, 1999 Order.  Thereafter,  USECC filed a request
with the District Court for post judgment  assistance to compel Nukem to account
for its profits on the CIS  contracts.  USECC also filed a motion to dismiss the
appeal of Nukem/CRIC  to the 10th CCA. The post judgment  request and the motion
to dismiss are pending before the Courts.

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.) and their

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corporation  Dejavue,  Inc. sued USE, Crested and others in Utah State Court 3rd
Judicial District. See Item 3 of Company's 1999 Form 10K for more details. After
a five day  trial,  a jury  denied  the  claims of two of three  plaintiffs  but
awarded  the third  plaintiff  $156,000  in damages  against USE and awarded the
plaintiff Dejavue,  Inc. $91,668 in attorney fees. USE posted a supersedeas bond
for $275,000 to appeal the judgment and plaintiffs also appealed the judgment to
the Utah Court of Appeals.  Plaintiffs and USE have both filed their briefs with
the Utah Court of Appeals.  The Court set October 25, 1999 for oral arguments in
Salt Lake City, UT.

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. Please see
Item 3 of  Company's  1999 Form 10K.  The Trial  Court  ruled  against  both the
palintiff  and  defendants on their  respective  claims.  BGBI and Parador,  and
USE/Crested  all appealed the decision to the Nevada Supreme  Court.  BGBI filed
its brief on appeal and Parador  and USECC have filed  their  answer and opening
brief. Defedant and Cross-Respondent H.B. Lane, contractor is seeking to file an
answering brief to Parador's cross-appeal by November 15, 1999.

Sutter Gold Mining Company (SGMC) Litigation

      In 1993,  Amador County issued a conditional  use permit  ("CUP") to allow
SGMC to develop the Sutter Gold Mine (SGM) near the town of Sutter Creek, Amador
County,  California.  A number of  conditions  were included in the original CUP
which  accommodated  local citizen and government  agency  concerns about noise,
waste  disposal,  traffic and other  aspects of the proposed  mining  operation.
Please see Item 3 of Company's 1999 Form 10K.

      In 1997 and 1998, SGMC proposed  amendments to the CUP for a new design of
the SGM  which  would  lower  its  environmental  impact  by  reducing  traffic,
potentially  eliminating  the use of cyanide  on-site,  and  removing  two large
tailings dams which would have been built to hold mine and mill waste. In August
and September 1998, the Board of Supervisors approved the amendments to the CUP.

      On September 28, 1998 a lawsuit was filed in Amador County Superior Court,
California  (Case  No. 98 CV 3298) by  Concerned  Citizens  of Amador  County as
plaintiffs,  against  the  County  of  Amador  and the  Amador  County  Board of
Supervisors,  and  against  SGMC  as a  real  party  in  interest.  The  lawsuit
challenged  the  actions  of  Amador  County  and its  Board of  Supervisors  in
approving  the  amended  CUP.  A hearing  was held on June 7, 1999 and the Court
denied plaintiffs' lawsuit on August 30, 1999. Plaintiffs have until October 29,
1999 to appeal the decision.

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

      (a)   Exhibits.  None.

      (b) Reports on Form 8-K.  The Company did not file any Reports on Form 8-K
during the quarter ended August 31, 1999.


                                       13

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                                   SIGNATURES

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

                                             CRESTED CORP.
                                             (Company)



Date:  October 15, 1999                By:   /s/ John L. Larsen
                                          --------------------------------------
                                             JOHN L. LASREN,
                                             Chief Executive Officer
                                             and Chairman



Date:  October 15, 1999                By:   /s/ Robert Scott Lorimer
                                          --------------------------------------
                                             ROBERT SCOTT LORIMER,
                                             Principal Financial Officer
                                             and Chief Accounting Officer


                                      14

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