United States Securities and Exchange Commission
                           Washington, D.C. 20549

                                 FORM 10-K

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                    THE SECURITIES EXCHANGE ACT OF 1934

                  For the Fiscal Year ended June 30, 1998
                       COMMISSION FILE NUMBER 1-6537

                          ALL STAR GAS CORPORATION
           (Exact Name of Registrant as Specified in Its Charter)

                   MISSOURI                           43-1494323
        -------------------------------           -------------------
        (State or other jurisdiction of             (IRS Employer
         Incorporation or Organization            Identification No.)

     P.O. BOX 303, 119 WEST COMMERCIAL STREET, LEBANON, MISSOURI, 65536
     ------------------------------------------------------------------
           (Address of Principal Executive Offices and Zip Code)

                               (417) 532-3103
            ----------------------------------------------------
            (Registrant's Telephone Number, Including Area Code)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                            TITLE OF EACH CLASS
                   -------------------------------------
                   12-7/8% Senior Secured Notes Due 2004
                    9% Subordinated Debentures Due 2007

      SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE


Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part II of this Form
10-K or any amendment to this Form 10-K.  (X)

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 ___

The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of close of business on September 24, 1998 is:  $116,480.

Shares of Common Stock, $0.001 par value, outstanding as of close of
business on September 24, 1998:   1,564,050.

Upon request, All Star Gas Corporation will furnish a copy of an exhibit
listed but not contained herein. A fee of $.05 per page, to cover the
Company's costs in furnishing exhibits requested will be charged. Please
direct all requests to: Corporate Secretary, 119 W. Commercial Street,
Lebanon, Missouri 65536; Telephone (417) 532-3103.




                                    PART 1


ITEMS 1 AND 2.  BUSINESS AND PROPERTIES

INTRODUCTION

      All Star Gas Corporation ("All Star Gas" or the "Company") was
founded in 1963 and through its subsidiaries has been in operation for over
35 years. The Company is engaged primarily in (a) the retail marketing of
propane to residential, agricultural, and commercial customers, (b) the
retail marketing of propane-related appliances, supplies, and equipment,
and (c) the renting of consumer propane storage tanks to residential and
commercial customers under various brand names, including All Star,
Empiregas, and the names of numerous predecessors. During the fiscal year
which ended June 30, 1998, All Star Gas supplied propane to approximately
112,000 customers in 19 states from 127 retail service centers and sold
approximately 94 million gallons.

      Propane, a hydrocarbon with properties similar to natural gas, is
separated from natural gas at gas processing plants and refined from crude
oil at refineries. It is stored and transported in a liquid state and
vaporizes into a clean-burning energy source that is recognized for its
transportability and ease of use relative to other forms of stand alone
energy. Residential and commercial uses include heating, cooking, water
heating, refrigeration, clothes drying, and incineration. Commercial uses
also include metal cutting, drying, container pressurization and charring,
as well as use as a fuel for internal combustion engines, such as
over-the-road vehicles, forklifts, and stationary engines. Agricultural
uses include brooder heating, stock tank heating, crop drying, tobacco
curing, and weed control, as well as use as a motor fuel for farm equipment
and vehicles.

      Propane is recognized as a clean alternative transportation fuel
"ATF" by the Federal and state governments and is the most widely used ATF
in the United States. The Federal government has enacted certain mandates
for use of ATF's by government and private fleets under the Clean Air Act
of 1990 and Energy Policy Act of 1992. Federal and state governments have
also provided various economic incentives for use of ATF's which will
positively impact propane demand.

      The retail propane business is a "margin-based" business in which
gross profits depend on the excess of sales price over propane supply
costs. Sales of propane to residential and commercial customers, which
account for the vast majority of the Company's revenue, have provided a
relatively stable source of revenue for the Company. Sales to residential
customers accounted for approximately 65.6% of the Company's aggregate
propane sales revenue and 74.7% of its aggregate gross margin from propane
sales in fiscal year 1998. Historically, this market has provided higher
margins than other retail propane sales. Based on fiscal year 1998 propane
sales revenue, the customer base consisted of 24.5% commercial and 9.9%
agricultural and other customers. While commercial propane sales are
generally less profitable than residential retail sales, the Company has
traditionally relied on this customer base to provide a steady, noncyclical
source of revenues. No single customer accounts for more than 1.1% of
revenue from sales.

      On June 30, 1994, the Company engaged in a series of transactions
(the "Transaction") including the transfer of all of the shares of common
stock of Empire Energy Corporation ("Energy") to the Company's former
chairman, Robert W. Plaster, and certain departing directors, officers, and
employees. Energy held the common stock of 136 subsidiaries of the Company
that carried on the business of the Company in ten states, primarily in the
Southeast. As part of the Transaction, the Company also acquired the assets
of PSNC Propane Corporation ("PSNC"). Except where noted otherwise, all
financial information in this report and the financial statements included
with this report include the results of operations of Energy through June
30, 1994, and exclude the results of operations of PSNC, but balance sheet
data for June 30, 1994, and all financial information from periods
beginning thereafter exclude the assets of Energy and include the assets of
PSNC.

      On August 15, 1995, the Company entered into a joint venture with
Northwestern Growth Corporation, a subsidiary of Northwestern Public
Service Corporation, to acquire the assets of Synergy Group Incorporated,
the nation's fifth largest LP gas distributor. The Company acquired, for
$30,000, 30% of the common stock of SYN, Inc. ("Synergy"), the acquisition
entity. The Company entered into a Management Agreement pursuant to which
the Company provided all management of the retail facilities and accounting
services at the central office. In exchange for those services, the Company
received a $500,000 annual base management fee, an incentive management
fee, and $3.25 million annual overhead reimbursement (adjusted annually for
inflation). Unless specifically referenced, all information contained
herein excludes information pertaining to the Synergy operations.

      On December 7, 1995, the Company entered into a joint venture with
Northwestern Growth Corporation, a subsidiary of Northwestern Public
Service Company to acquire the stock of Myers Propane Gas Company, a large
Ohio LP gas distributor. The Company acquired 49% of the common stock of
Myers Acquisition Company (Myers), the acquisition entity. The Company
entered into a Management Agreement pursuant to which the Company provided
all management and administrative services. In exchange for those services,
the Company was entitled to a management fee upon the attainment of certain
performance goals.

      In December, 1996, the Company and Northwestern Growth Corporation
(NGC), completed an agreement for the sale of various interests of the
Company in Synergy and Myers and the modification and termination of
certain agreements between NGC, Synergy and Myers on the one hand and the
Company on the other hand. The agreement terminated the management
agreements pursuant to which the Company provided management activities for
Synergy and Myers effective December, 1996. The agreement resulted in a
payment of $18 million to the Company resulting in a gain reflected on the
Statement of Operations of $16.9 million which is net of transaction and
other costs and fees. The Company may be entitled to an additional amount
based on a third party's indemnification obligations to Synergy.

      Sources of Supply. During 1998, approximately 90% of the Company's
propane purchases of its propane supply were on a contractual basis
(generally, one year agreements subject to annual renewal). The Company's
two largest suppliers provide 15.4% and 14.1% of the total supply purchased
by the Company. Supply contracts do not, generally, lock in prices, but
rather provide for pricing in accordance with posted prices at the time of
delivery or established by current major storage points, such as Mont
Belvieu, TX, and Conway, KS. The Company has established relationships with
a number of suppliers and believes it would have ample sources of supply
under comparable terms to draw upon to meet its propane requirements if it
were to discontinue purchasing from its two major suppliers. The Company
takes advantage of the spot market as appropriate. The Company has not
experienced a shortage that has prevented it from satisfying its customer's
needs and does not foresee any significant shortage in the supply of
propane.

      Distribution. The Company purchases propane at refineries, gas
processing plants, underground storage facilities, and pipeline terminals
and transports the propane by railroad tank cars and tank trailer trucks to
the Company's retail service centers, each of which has bulk storage
capacity ranging from 16,000 to 180,000 gallons. The Company is a shipper
on all major interstate LPG pipeline systems. The retail service centers
have an aggregate storage capacity of approximately 8.24 million gallons of
propane, and each service center has equipment for transferring the gas
into and from the bulk storage tanks. The Company operates 9 over-the-road
tractors and 11 transport trailers to deliver propane and consumer tanks to
its retail service centers and also relies on common carriers to deliver
propane to its retail service centers.

      Deliveries to customers are made by means of 303 propane delivery
trucks owned by the Company. Propane is stored by the customers on their
premises in stationary steel tanks generally ranging in capacity from 25 to
1,000 gallons, with large users having tanks with a capacity of up to
30,000 gallons. Most of the propane storage tanks used by the Company's
residential and commercial customers are owned by the Company and leased,
rented, or loaned to customers.

      Operations. The Company has organized its operations in a manner that
the Company believes enables it to provide excellent service to its
customers and to achieve maximum operating efficiencies. Personnel located
at the retail service centers in the various regions are primarily
responsible for customer service and sales. A number of functions are
centralized at the Company's corporate headquarters in order to achieve
certain operating efficiencies as well as to enable the personnel located
in the retail service centers to focus on customer service and sales. The
corporate headquarters and the retail service centers are linked via a
computer system. Each of the Company's primary retail service centers is
equipped with a computer connected to the central management information
system in the Company's corporate headquarters. This computer network
system provides retail company personnel with accurate and timely
information on pricing, inventory, and customer accounts. In addition, this
system enables management to monitor pricing, sales, delivery, and the
general operations of its numerous retail service centers and to plan
accordingly to improve the operations of the Company. The Company makes
centralized purchases of propane through its corporate headquarters for
resale to the retail service centers enabling the Company to achieve
certain advantages, including price advantages, because of its status as a
large volume buyer. The functions of cash management, accounting, taxes,
payroll, permits, licensing, asset control, employee benefits, human
resources, and strategic planning are also performed on a centralized
basis.

      Factors Influencing Demand. Because a substantial amount of propane
is sold for heating purposes, the severity of winter weather and resulting
residential and commercial heating usage have an important impact on the
Company's earnings. Approximately two-thirds of the Company's retail
propane sales usually occur during the five months of November through
March. Sales and profits are subject to variation from month to month and
from year to year, depending on temperature fluctuations.

      Competition. The Company encounters competition from a number of
other propane distributors in each geographic region in which it operates.
The Company competes with these distributors primarily on the basis of
service, stability of supply, availability of consumer storage equipment,
and price. Propane competes primarily with natural gas, electricity and
fuel oil principally on the basis of price, availability and portability.

      The Company also competes with suppliers of electricity. Generally
speaking, the cost of propane compares favorably to electricity allowing
the Company to enjoy a competitive advantage due to the higher costs of
electricity. Fuel oil does not present a significant competitive threat in
the Company's primary service areas due to the following factors: (i)
propane is a residue-free, cleaner energy source, (ii) environmental
concerns make fuel oil relatively unattractive, and (iii) fuel oil
appliances are not as efficient as propane appliances.

      Although propane is generally more expensive than natural gas on an
equivalent BTU basis comparison, propane serves as an alternative to
natural gas in rural areas where natural gas is not available. Propane is
also utilized by natural gas customers on a stand-by basis during peak
demand periods. The costs involved in building or connecting to a natural
gas distribution system have tempered natural gas growth in most of the
Company's trade territory.

      Risks of Business. The Company's propane operations are subject to
all the operating hazards and risks normally incident to handling, storing,
and transporting combustible liquids, such as the risk of personal injury
and property damages caused by accident or fire.

      Effective July 1, 1998, the Company's comprehensive general, auto and
excess liability policy provides for losses of up to $101.0 million with a
$200,000 self-insured retention for general and excess liability losses.
The Company's combined auto and workers' compensation coverage has a
$250,000 deductible per occurrence.

REGULATION

      The Company's operations are subject to various federal, state, and
local laws governing the transportation, storage and distribution of
propane, occupational health and safety, and other matters. All states in
which the Company operates have adopted fire safety codes that regulate the
storage and distribution of propane. In some states these laws are
administered by state agencies, and in others they are administered on a
municipal level. Certain municipalities prohibit the below ground
installation of propane furnaces and appliances, and certain states are
considering the adoption of similar regulations. The Company cannot predict
the extent to which any such regulations might affect the Company, but does
not believe that any such effect would be material. It is not anticipated
that the Company will be required to expend material amounts by reason of
environmental and safety laws and regulations, but inasmuch as such laws
and regulations are constantly being changed, the Company is unable to
predict the ultimate cost to the Company of complying with environmental
and safety laws and regulations.

      All Star Gas currently meets and exceeds Federal regulations
requiring that all persons employed in the handling of propane gas be
trained in proper handling and operating procedures. All employees have
participated, or will participate within 90 days of their employment date,
in hazardous materials training. The Company has established ongoing
training programs in all phases of product knowledge and safety including
participation in the National Propane Gas Association's ("NPGA") Certified
Employee Training Program.

EMPLOYEES

      As of September 15, 1998 the Company had approximately 625 employees,
none of whom was represented by unions. The Company has never experienced
any significant work stoppage or other significant labor problems and
believes it has good relations with its employees.

ITEM 3.  LEGAL PROCEEDINGS.

      The Company and its subsidiaries are defendants in various routine
litigation incident to its business, none of which is expected to have a
material adverse effect on the Company's
financial position or results of operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

      The Company held its annual shareholder meeting on July 17, 1998. The
only matter presented for a vote was the re-election of Jim J. Shoemake as
director. Mr. Shoemake was re- elected with 1,547,410 votes cast in favor
and no votes cast against, withheld or abstaining. The term of office of
the following directors continued after the meeting: Paul S. Lindsey, Jr.,
Douglas A. Brown, Kristin L. Lindsey, Jim J. Shoemake, and Bruce M.
Withers, Jr.


                                  PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS.

      As of September 24, 1998, the Company's Common Stock was held of
record by 9 shareholders. There is currently no active trading market in
the Company's Common Stock.

      As of September 24, 1998, there are outstanding warrants to purchase
175,536 shares of the Company's Common Stock. Each warrant represents the
right to purchase one share of the Company's Common Stock for $.01 per
warrant. The warrants are exercisable currently and will expire July 15,
2004.

      No dividends on the Common Stock of the Company were paid during the
Company's 1997 or 1998 fiscal years. The indenture relating to the 12 7/8%
Senior Secured Notes due 2004 and the terms of the Company's revolving
credit facility each contain dividend restrictions that prohibit the
Company from paying common stock cash dividends. As a result, the Company
has no current intention of paying cash dividends on the Common Stock.

ITEM 6.  SELECTED FINANCIAL DATA.

      The following table presents selected consolidated operating and
balance sheet data of All Star Gas as of and for each of the years in the
five-year period ended June 30, 1998. The financial data of the Company as
of and for each of the years in the five-year period ended June 30, 1998
were derived from the Company's audited consolidated financial statements.
The financial and other data set forth below should be read in conjunction
with the Company's consolidated financial statements, including the notes
thereto, included with this report. Because the operating data for the
period ending June 30, 1994 does not take into account the effects of the
Transaction on the Company, the data for that period is not comparable to
the data for the years ended June 30, 1995 - 1998.

<TABLE>
<CAPTION>
                                                         YEAR ENDED JUNE 30,
                                       -----------------------------------------------------
                                         1994       1995       1996       1997      1998
                                         ----       ----       ----       ----      ----
                                       (In thousands except ratios and per share amounts)
<S>                                    <C>         <C>        <C>        <C>        <C>     
Operating data:

   Operating revenue                   $124,452    $74,090    $82,702    $94,543    $86,510 
   Gross profit (1)                      66,532     38,478     39,384     41,468     44,094 
   Operating expenses                    44,866     29,144     27,987     28,853     29,747 
   Depreciation & amortization           10,150      6,166      6,770      6,867      9,334 
   Operating income                      11,516      3,168      4,627      5,748      5,013 
                                                                                            
Interest expense:                                                                           
   Cash interest                          8,542     10,681     10,657     10,605     11,391 
   Amortization of debt discount                                                            
      & expenses                          2,016      4,889      5,476      6,140      6,796 
   Total interest expense                10,558     15,570     16,133     16,745     18,187 
Net income (loss) before                                                                    
extraordinary items(2)                   (1,190)    (8,726)    (7,897)     2,222    (9,954) 
                                                                                            
Other operating data:                                                                       
                                                                                            
   Capital expenditures                  19,979     11,874      8,838     13,340     17,384 
   Cash from sale of retail service                                                         
     centers and other assets               366      2,956      6,177      5,478      2,821 
   EBITDA  (3)                           21,566      8,784     11,002     13,347     14,007 
   Basic & diluted income (loss)                                                            
   before extraordinary items          $  (0.08)   $ (5.53)   $ (5.00)   $  1.41    $ (6.36)


                                                          YEAR ENDED JUNE 30,
                                       ------------------------------------------------------
                                         1994       1995        1996       1997      1998
                                         ----       ----        ----       ----      ----
Balance sheet data:
   Total assets                        $104,644    $105,128   $102,002   $107,832   $113,788 
   Long-term debt (including
     current maturities)                105,612     115,647    122,858    126,632    142,350 
   Stockholders' equity (deficit)       (28,220)    (36,946)   (44,843)   (42,720)   (52,674)

</TABLE>

(1)  Represents operating revenue less the cost of products sold.

(2)  All Star Gas did not declare or pay dividends on its common stock
     during the five-year period ending June 30, 1998.

(3)  EBITDA consists of earnings before depreciation, amortization,
     interest, income taxes, and other non-recurring expenses excluding
     gains/losses on sales of assets. EBITDA is presented here because it
     is a widely accepted financial indicator of a highly leveraged
     company's ability to service and/or incur indebtedness. However,
     EBITDA should not be construed as an alternative either (i) to
     operating income (determined in accordance with generally accepted
     accounting principles) or (ii) to cash flows from operating activities
     (determined in accordance with generally accepted accounting
     principles).


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

      The following discussion and analysis of the Company's results of
operations, financial condition and liquidity should be read in conjunction
with the historical consolidated financial statements of All Star Gas and
the notes thereto included in this Report.

RESULTS OF OPERATIONS

Fiscal Years Ended June 30, 1998 and June 30, 1997

      Operating Revenue. Operating revenue decreased $8.0 million, or 8.5%
to $86.5 million in fiscal year 1998 as compared to $94.5 million in fiscal
year 1997. The decrease was primarily due to an $8.2 million decrease in
propane sales which was the result of 15.3% lower propane sales prices
offset by a 10.4% increase in gallons sold. Propane sales prices decreased
an average of 14.8(cent) per gallon over fiscal 1997 which was the result
of lower wholesale prices which are discussed in the cost of products sold
section.

      Cost of products sold. Cost of products sold decreased $10.7 million,
or 20.1%, to $42.4 million in fiscal year 1998 as compared to $53.1 million
in fiscal year 1997. This was due to lower average wholesale propane costs
of 13.7(cent) per gallon. In fiscal year 1998, the propane industry has
experienced higher than historical supply levels in both the domestic and
Canadian markets. Combined with warmer winter weather, which has depressed
demand, these large supplies have resulted in significantly lower product
costs. Lower costs were partially offset by increased volumes from net
acquisitions and dispositions of retail service centers. The decrease in
cost of propane products sold was partially offset by an increase in cost
of gas systems and appliances of $130,000.

      Gross profit. The Company's gross profit for the year increased $2.6
million to $44.1 million in fiscal year 1998 as compared to $41.5 million
in fiscal year 1997. This increase is primarily due to a $2.6 million
improvement in propane sales gross profit. Propane sales gross profits
increased as margins per gallon remained relatively stable while volumes
increased 10.4% in fiscal 1998 as compared to fiscal 1997. Other
improvements to gross profit are the result of increased income from rental
and leasing activities of $222,000 and increased emphasis of selling value
added services through a service labor increase of $123,000. These
improvements were partially offset by a decrease in margins on gas systems
and appliances of $195,000.

      General and administrative expense. General and administrative
expenses increased $2.1 million to $29.7 million in fiscal 1998 compared to
$27.6 million in fiscal 1997. The majority of the increase is due to the
elimination of the overhead reimbursement associated with the management of
SYN Inc. that was terminated in December 1996. This reimbursement was $1.4
million for the year ending June 30, 1997. Other notable changes include an
increase in salaries and employee benefits of $765,000 in fiscal 1998
mainly due to increased personnel associated with the acquisition of retail
service centers. Transportation expenses increased $402,000 due to the
increased maintenance costs of the Company's aircraft and the improvement
and maintenance of its trucks and equipment. Professional expenses
decreased $295,000 over fiscal 1997 due to the additional costs in 1997
associated with a proposed restructuring of the company's debt and equity
which was abandoned.

      Provision for doubtful accounts. The provision for doubtful accounts
decreased $140,000, or 29.2%, from $483,000 in fiscal 1997 to $342,000 in
fiscal 1998. The decrease is a result of the enhanced credit and collection
efforts begun in fiscal 1995 as well as a reflection of the upgrade in
customers during the same time frame. The Company also tied certain
employees' incentive compensation to credit and collection results.

      Depreciation and amortization. Depreciation and amortization expense
increased $2.4 million to $9.3 million in fiscal 1998 from $6.9 million in
fiscal 1997. This increase is due primarily to the addition of fixed assets
through the acquisition of retail service centers occurring in the 1997
fiscal year and the current period. Depreciation expense on modernization
expenditures and other asset purchases also contributed to the increase in
fiscal 1998.

      Interest expense. Interest expense increased approximately $800,000
to $11.4 million in fiscal 1998 from $10.6 million in fiscal 1997 primarily
due to the increased mortgage obligation debt service resulting from recent
acquisitions.


Fiscal Years Ended June 30, 1997 and June 30, 1996

      Operating Revenue. Operating revenue increased $11.8 million, or
14.3%, to $94.5 million in fiscal year 1997 as compared to $82.7 million in
fiscal year 1996. The increase was primarily due to an $11.8 million
increase in propane sales which was the result of 21% higher propane sales
prices and a 4.4% reduction in gallons sold. Propane prices increased an
average of 18(cent) per gallon over fiscal 1996 which was the result of
higher wholesale prices which are discussed in the cost of products sold
section.

      Cost of products sold. Cost of products sold increased $9.8 million,
or 22.5%, to $53.1 million in fiscal year 1997 as compared to $43.3 million
in fiscal year 1996. This increase was due to the cost of propane increase
of $10.2 million due to higher wholesale propane costs of 14(cent) per
gallon. The increase in wholesale propane costs were due to low propane
inventories, as reported by the major supply points for the United States,
compared to the five year historical average. The increase of cost of
products was offset by a reduction in refined fuel costs of $200,000 due to
the disposal of the locations selling refined fuels and reduction in cost
of gas systems and appliances of $200,000.

      Gross profit. The Company's gross profit for the year increased $2.1
million to $41.5 million in fiscal year 1997 as compared to $39.4 million
in fiscal year 1996. This increase is primarily due to a $1.6 million
improvement in propane sales gross profit to .427(cent) per gallon in
fiscal 1997 as compared to .390(cent) per gallon in fiscal 1996. This
increase represents an improvement of .037(cent) per gallon or 9.3% over
fiscal 1996, which is primarily due to the company's purchasing, hedging
and consumer pricing strategy of improved margins as a result of the
changes in geographic mix to higher margin areas and improvement of
customer base through the marketing focus of value added products and
services. Other improvements to gross profit are the result of increased
margins on gas system and appliance sales of $300,000 and increased
emphasis of selling value added services through a service labor increase
of $200,000.

      General and administrative expense. General and administrative
expenses increased slightly by $100,000 to $27.6 million in fiscal 1997
compared to $27.5 million in fiscal 1996. Although general and
administrative expenses were flat from 1996 to 1997, there were reductions
in many categories due tro the elimination of activities required for the
management of the Synergy properties in December, 1996. The various
reductions in the expense categories were offset by the elimination of the
reimbursement of overhead expenses from Synergy of $2.4 million.

      Insurance and related liability claims expense decreased
substantially by $900,000 or 36% to $1.7 million in fiscal 1997 as compared
to $2.6 million in fiscal 1996. The decrease is due primarily to an
improved claims record and the pooling of coverage with Synergy resulting
in reduced premiums.

      Most other categories of general and administrative expenses were
reduced in fiscal 1997 from fiscal 1996 as a result of the elimination of
Synergy management, as previously discussed, except for salaries which
remained fairly stable, decreasing only $200,000, or .9% from $15.8 million
in fiscal 1996 to $15.6 million in fiscal 1997, which was offset by certain
other staffing related to the elimination of Synergy management. The
Company strategically expanded its executive staff and middle management in
order to allow for improved succession planning which was offset by the
reduction in certain other staffing related to the elimination of Synergy
management.

      Provision for doubtful accounts. The provision for doubtful accounts
decreased approximately $400,000, or 46%, from $900,000 in fiscal 1996 to
$500,000 in fiscal 1997. The decrease is a result of the enhanced credit
and collection efforts established in fiscal 1995 as well as a reflection
of the upgrade in customers during the same time frame. The Company has
also tied employees' incentive compensation to credit and collection
results.

      Depreciation and Amortization. Depreciation and amortization
increased slightly by $100,000 to $6.9 million in fiscal 1997 from $6.8
million in fiscal 1996. The increase is primarily due to fixed assets
purchases through acquisitions and capital expenditures during fiscal 1997.

      Interest Expense.  Interest expense was relatively unchanged from
fiscal 1996 to 1997.

LIQUIDITY AND CAPITAL RESOURCES

      The Company's liquidity requirements have arisen primarily from
funding its working capital needs, capital expenditures and debt service
obligations. Historically, the Company has met these requirements from cash
flows generated by operations and from borrowings under its working capital
facility.

      Cash flow provided by operating activities was $5.6 million in fiscal
year 1998 as compared to the cash flow used in fiscal year 1997, of $1.7
million. This change is due to the Company's increasing certain liabilities
and accrued expenses while carrying lower levels of inventory and accounts
receivable.

      Cash flow used in investing activities was $8.4 million as compared
to the cash flow provided in fiscal year 1997, of $10.5 million. This
change is due primarily to the $18.0 million provided by the Synergy/Myers
transaction in fiscal 1997.

      Cash flow provided by financing activities was $2.7 million as
compared to the cash flow used in fiscal year 1997, of $8.7 million. This
change is due primarily to a $4.5 million net increase in borrowings in
fiscal 1998 compared to a $5.8 net reduction in fiscal 1997 on the
Company's working capital facility.

      Pursuant to the indenture for the 12-7/8% Senior Secured Notes, the
Company is required to make a $4.5 million, semi-annual interest payment on
each July 15 and January 15. Beginning in fiscal year 2000, the semi-annual
cash interest payment on the Notes will increase to $8.2 million. The
Company decided to utilize its 30 day grace period for the January 1998 and
July 1998 interest payments. The Company experienced a temporary shortage
in cash flow due to the unusually warm weather, lower petroleum prices
which have caused a decrease in customer demand for pre-paid gas contracts
and delays in several asset sale transactions. The Company met the
scheduled interest payments through the use of operating cash flows,
available borrowings on its working capital facility and loans from a
related party.

      The Company has net working capital and stockholders' equity
deficiencies and its working capital borrowing facility is due in full in
December 1998. The Company is considering several alternatives for
mitigating these conditions during the year which include seeking a long
term extension of the existing credit facility and exploring other
financing and recapitalization alternatives. In addition, management has
undertaken significant reductions in general and administrative expenses
during the latter portion of fiscal 1998 which are expected to positively
impact fiscal 1999 results. Capital expenditures have been high over the
past three fiscal years as the Company has upgraded and improved its trucks
and equipment. During the past fiscal year, the Company has also incurred
costs related to the change of the Company name on its retail facilities
and the renovation of an existing building which was converted into the
corporate facilities for the Company allowing the Company to exit an
expensive lease agreement. While the Company believes that it will be able
to obtain the necessary financing and/or capital to mitigate these
conditions, no commitments have been obtained and no assurances can be made
that such financing and/or capital will be available to the Company. An
inability to obtain financing and/or capital could have a material adverse
effect on the Company and its ability to conduct business.

      The Company's financial statements have been prepared assuming the
Company will continue as a going concern, realizing assets and liquidating
liabilities in the ordinary course of business. The Company's independent
accountants, Baird, Kurtz & Dobson, have stated in their independent
accountant's report filed as part of this Annual Report, that the net
working capital and stockholders' equity deficiencies as well as the fact
that the Company's working capital borrowing facility is due in full in
December, 1998, raise substantial doubt about the Company's ability to
continue as a going concern. The financial statements set forth in this
Annual Report do not include any adjustments that might result from the
outcome of this uncertainty. Although not currently planned, realization of
assets in other than the ordinary course of business to meet liquidity
needs could result in losses not reflected in the financial statements set
forth in this Annual Report and could have a material adverse effect on the
Company and its ability to conduct business.

YEAR 2000

      The Year 2000 problem concerns the inability of information systems
to recognize and process date-sensitive information properly from and after
January 1, 2000.

      To minimize or eliminate the effect of the year 2000 problem on the
Company's information systems and applications, the Company is continually
identifying, evaluating, implementing and testing changes to its computer
systems, applications and software necessary to achieve Year 2000
compliance. The Company has given an executive officer of the Company
responsibility to identify, evaluate and implement a plan to bring all of
the Company's critical business systems and applications into Year 2000
compliance prior to December 31, 1999. The year 2000 initiative consists of
four phases: (i) identification of all critical business systems subject to
Year 2000 risk (the "Identification Phase"); (ii) assessment of such
business systems and applications to determine the method of correcting any
Year 2000 problems (the "Assessment Phase"); (iii) implementing the
corrective measures (the "Implementation Phase"); and (iv) testing and
maintaining system compliance (the "Testing Phase"). The Company has
substantially completed the Identification, Assessment and Implementation
Phases and has identified and assessed four areas of risk: (i) third party
vendor software, such as business applications and operating systems; (ii)
computer hardware components; (iii) electronic data transfer systems
between the Company and its suppliers and customers; and (iv) embedded
systems, such as phone switches. Although no assurances can be made, the
Company believes that it has identified substantially all of its systems,
applications and related software that are subject to Year 2000 compliance
risk and has either implemented or initiated the implementation of a plan
to correct such systems that are not Year 2000 compliant. The Company does
not anticipate completion of the Testing Phase until sometime prior to
December 1999.

      The Company relies on third party service providers for services such
as telecommunications, internet service, utilities and other key services
as well as other third parties such as customers and suppliers.
Interruption of those services and business due to Year 2000 issues could
affect the Company's operations. The Company has developed a course of
action to determine the status of such third party service providers,
customers and suppliers to determine alternative and contingency
requirements. While approaches to reducing risks of interruption of
business operations vary, options include identification of alternative
service providers, customers and suppliers available to provide such
service and business if such third party fails to become Year 2000
compliant within an acceptable time frame prior to December 31, 1999.

      Since the Company has recently updated its information systems (which
have been certified to be Year 2000 compliant) in the ordinary course of
business, there has not been any additional cost incurred by the Company in
connection with its Year 2000 compliance plan other than as would have been
incurred in the ordinary course. The Company has been expensing and
capitalizing the costs of updating its information systems and therefore
its Year 2000 compliance plan in accordance with appropriate accounting
policies. The Company does not believe that it will incur significant
future costs for remediation in connection with Year 2000 compliance. In
the event the Year 2000 modifications and conversions are not adequate, the
Year 2000 problem could have a material impact on the operations and
financial condition of the Company.

      THE ESTIMATES AND CONCLUSIONS HEREIN ARE FORWARD-LOOKING STATEMENTS
AND ARE BASED ON MANAGEMENT'S BEST ESTIMATES OF FUTURE EVENTS. RISKS OF
COMPLETING THE PLAN INCLUDE THE AVAILABILITY OF RESOURCES, THE ABILITY TO
DISCOVER AND CORRECT THE POTENTIAL YEAR 2000 SENSITIVE PROBLEMS WHICH COULD
HAVE A SERIOUS IMPACT ON CERTAIN OPERATIONS AND THE ABILITY OF THE
COMPANY'S SERVICE PROVIDERS, CUSTOMERS AND SUPPLIERS TO BRING THEIR SYSTEMS
INTO YEAR 2000 COMPLIANCE.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

      See the Consolidated Financial Statements included elsewhere herein.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

      None


                                  PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

      The directors and executive officers of the Company are as follows:

                                     POSITION HELD WITH THE COMPANY
        NAME            AGE             AND PRINCIPAL OCCUPATION
        ----            ---          ------------------------------
Paul S. Lindsey, Jr.     53    Chairman of the Board, Chief Executive
                               Officer, and President since June 1994;
                               previously Vice Chairman of the Board (1982
                               to 1994) and Chief Operating Officer (1988
                               to 1994); term as director expires 2000

Douglas A. Brown         38    Director since June 1994; Partner ZS Fund
                               since 4/97; previously member Holding
                               Capital Group, Inc. (since 1989); term as
                               director expires 2000

Kristin L. Lindsey       50    Director/Executive Vice President since Oct.
                               1996; previously Director/Vice President to
                               June 1994; previously pursued charitable and
                               other personal interest; term as director
                               expires 1999

Bruce M. Withers, Jr.    71    Director since June 1994; previously
                               Chairman and Chief Executive Officer of
                               Trident NGL Holding, Inc. (since August
                               1991) and President of the Transmission and
                               Processing Division of Mitchell Energy
                               Corporation (1979 to 1991); term as director
                               expires 1999

Jim J. Shoemake          60    Director since June 1994; partner of
                               Guilfoil, Petzall & Shoemake (since 1970);
                               term as director expires 2001

Valeria Schall           44    Executive Vice President since October,
                               1996, previously Vice President since 1992;
                               Corporate Secretary since 1985 and Assistant
                               to the Chairman since 1987

James M. Trickett        48    Chief Operating Officer since 1997, Sr. Vice
                               President since September 1997; previously
                               Divisional Manager since June 1996, and
                               Regional Manager since August 1995.
                               Divisional Manager with Synergy Gas
                               Corporation since 1990.

Robert C. Heagerty       51    Sr. Vice President since September 1997,
                               previously Divisional Vice President since
                               June 1993; previously Regional Manager since
                               December 1986.

J. Greg House, Sr.       41    Vice President - Management Information
                               Systems since June, 1996; previously
                               Director-MIS since September 1994 and
                               Manager-MIS Paul Mueller Co. since 1987.


      Each director will serve for a term of three years. Officers of the
Company are elected by the Board of Directors of the Company and will serve
at the discretion of the Board, except for Mr. Lindsey who is employed
pursuant to an employment agreement that expires June 24, 1999 (subject to
extension).

ITEM 11.  EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

      The following table provides compensation information for each of the
years ended June 30, 1998, 1997, and 1996 for (i) the Chief Executive
Officer of the Company, (ii) the four other executive officers of the
Company who are most highly compensated and whose total compensation
exceeded $100,000 for the most recent fiscal year (of which there was only
two) and (iii) those persons who are no longer executive officers of the
Company but were among the four most highly compensated and whose total
compensation exceeded $100,000 for the most recent year (of which there
were none)

                               SUMMARY COMPENSATION TABLE

                                   Annual Compensation
<TABLE>
<CAPTION>
Name and Principal
Position at End of         Fiscal                          Other Annual     All Other
Fiscal Year 1998            Year     Salary      Bonus     Compensation    Compensation
------------------          ----     ------      -----     ------------    ------------

<S>                         <C>     <C>         <C>           <C>             <C>
Paul S. Lindsey, Jr.        1998    $400,000     -----         -----          -----
Chief Executive Officer,    1997    $350,000    $750,000       -----          -----
Chairman of the Board       1996    $350,000     -----         -----          -----
and President

Valeria Schall              1998    $100,000    $35,000        -----          -----
Executive Vice              1997    $73,500     $32,500        -----          -----
 President                  1996    $64,000     $27,500        -----          -----

Kristin L. Lindsey          1998    $100,000    $35,000        -----          -----
Executive Vice              1997    $73,500     $32,500        -----          -----
President and Director      1996    $64,000      -----         -----          -----

</TABLE>


EMPLOYMENT AGREEMENT

      On June 24, 1994, the Company entered into an employment agreement
with Mr. Lindsey. The agreement has a five-year term and provides for the
payment of an annual salary of $400,000 and reimbursement for reasonable
travel and business expenses. The agreement requires Mr. Lindsey to devote
substantially all of his time to the Company's business. The agreement is
for a term of five years, but is automatically renewed for one year unless
either party elects to terminate the agreement at least four months prior
to the end of the term or any extension. The agreement may be terminated by
Mr. Lindsey or the Company, but if the agreement is terminated by the
Company and without cause, the Company must pay one year's salary as
severance pay.

INCENTIVE STOCK OPTION PLAN

      There were no options granted to the named officer nor exercised by
him during fiscal year 1998 and no unexercised options held by him as of
the end of the 1998 fiscal year.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

      A compensation committee was formed in July 1994, consisting of
Messrs. Withers, Shoemake, and Brown. Mr. Lindsey makes the initial
recommendation concerning executive compensation for the executive officers
of the Company, other than recommendations concerning his own and his
wife's compensation, which are then approved by the compensation committee.
The compensation committee determines the compensation of Mr. Lindsey's
wife and, subject to the employment agreement described above, Mr. Lindsey.

DIRECTOR COMPENSATION

      During the last completed fiscal year, the directors of All Star Gas
received an annual fee of $25,000, payable quarterly, for their services.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The table below sets forth information with respect to the beneficial
ownership of shares of Common Stock of the Company as of September 24,
1998, by persons owning more than five percent of any class, by all
directors of the Company, by the individuals named in the Summary
Compensation Table owning shares, and by all directors and executive
officers of the Company as a group.

                                  Number of Shares
Name of Beneficial Owner(1)      Beneficially Owned      Percent
----------------------------     ------------------      -------
Paul S. Lindsey, Jr.(2)              1,507,610            67.02
Kristin L. Lindsey(2)                  753,805            33.51
Douglas A. Brown                       144,530              6.4
Valeria Schall                          79,603              3.5
Bruce M. Withers, Jr.                   39,248             1.74
Jim J. Shoemake                         39,248             1.74
All directors and executive           1,947,559           86.58
  officers as a group
  (9 persons)(3)
-----------------

(1)  The address of each of the beneficial owners is c/o All Star Gas
     Corporation, P.O. Box 303, 119 W. Commercial Street, Lebanon, Missouri
     65536.
(2)  Mr. Lindsey's shares consist of 753,805 shares owned by the Paul S.
     Lindsey, Jr. Trust established January 24, 1992 and 753,805 shares
     owned by the Kristin L. Lindsey Trust established January 24, 1992.
     Mr. Lindsey has the power to vote and to dispose of the shares held in
     the Kristin L. Lindsey Trust. Mrs. Lindsey's shares consist of the
     shares owned by the Kristin L. Lindsey Trust. Mrs. Lindsey disclaims
     ownership of the shares held by her husband in the Paul S. Lindsey,
     Jr. Trust.
(3)  The amounts shown include the shares beneficially owned by Mr. Lindsey
     and Mrs. Lindsey as set forth above, and 216,932 shares owned by other
     executive officers.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      Mrs. Kristin L. Lindsey, who beneficially owns approximately 33.51%
of the Company's outstanding Common Stock and is a Director of the Company,
is the majority stockholder in a company that supplies paint and labels to
the Company. The Company's purchases of paint and labels from this company
totaled $188,804 in fiscal year 1998 and $285,637 in fiscal year 1997.

      The Company has entered into an agreement with each shareholder (all
of whom are directors or employees of the Company) providing the Company
with a right of first refusal with respect to the sale of any shares by
such shareholders. In addition, the Company has the right to purchase from
such shareholders all shares they hold at the time of their termination of
employment with the Company at the then current fair market value of the
shares. The fair market value is determined in the first instance by the
Board of Directors and by an independent appraisal (the cost of which is
split between the Company and the departing shareholder) if the departing
shareholder disputes the board's determination.

      The Company entered into an operating lease with its Chief Executive
Officer to lease a turbo prop aircraft for use in Company travel. The lease
requires $94,800 in annual payments for a term of 3 years beginning in
January, 1998, and had a requirement for a $87,500 deposit.

      Over the past fiscal year the Company received advances bearing
interest at a rate of 12% from its Chief Executive Officer in an amount of
$1.8 million which has a remaining balance at September 24, 1998 of
$326,000.


                                  PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

          (a)(1)  Financial Statements
                    Report of Independent Accountants
                    Consolidated Balance Sheets as of June 30, 1998 and
                       1997
                    Consolidated Statement of Operations for the Years
                       Ended June 30, 1998, 1997, and 1996
                    Consolidated Statements of the Stockholders' Equity
                       (Deficit) for the Years Ended June 30, 1998, 1997,
                       and 1996
                    Consolidated Statements of Cash Flows for the Years
                       Ended June 30, 1998, 1997, and 1996

          (a)(2)  Financial Statement Schedules

                    Schedule II Valuation and qualifying accounts

          (a)(3)  Exhibits



EXHIBIT
NO.         Description
-------     -----------
3.1         Articles of Incorporation of the Company (incorporated herein
            by reference to Exhibit 3.1 to the Company's Registration
            Statement on Form S-1 (No. 33-53343)

3.2         Certificate of Amendment of the Certificate of Incorporation of
            the Company, dated April 26, 1994, relating to the change of
            name (incorporated herein by reference to Exhibit 3.2 to the
            Company's Registration Statement on Form S-1 (No. 33-53343)

3.3         By-laws of the Company (incorporated herein by reference to
            Exhibit 3.3 to the Company's Registration Statement on Form S-1
            (No. 33-53343)

4.1         Indenture between All Star Gas Corporation and J. Henry
            Schroder Bank & Trust Company, Trustee, relating to the 9%
            Subordinated Debentures due December 31, 2007, and the form of
            9% Subordinated Debentures due December 31, 2007, (incorporated
            herein by reference to Exhibit 4(a) to the All Star
            Incorporated and Exco Acquisition Corp. (Commission File No.
            2-83683) Registration Statement on Form S-14 with the
            Commission on May 11, 1983); and First Supplemental Indenture
            thereto between All Star Gas Corporation (now known as EGOC)
            and IBJ Schroder Bank & Trust Co., dated as of December 13,
            1989, (incorporated herein by reference to Exhibit 4(c) to All
            Star Gas Corporation (now known as EGOC) Registration Statement
            on Form 8-B filed with the Commission on February 1, 1990)

4.2         Indenture between the Company and Shawmut Bank Connecticut,
            National Association, Trustee, relating to the 12-7/8% Senior
            Secured Notes due 2004, including the 12-7/8% Senior Secured
            Notes due 2004, the Guarantee and the Pledge Agreement
            (incorporated herein by reference to Exhibit 4.2 to the
            Registrant's Annual Report on Form 10-K for the year ended June
            30, 1994)

4.3         Warrant Agreement (incorporated herein by reference to Exhibit
            4.3 to the Registrant's Annual Report on Form 10-K for the year
            ended June 30, 1994)

10.1        Shareholder Agreement, dated as of October 28, 1988, by and
            among All Star Gas wAcquisition Corporation and Robert W.
            Plaster Trust, Robert W. Plaster, Trustee; Paul S. Lindsey,
            Jr.; Stephen R. Plaster Trust, Lynn C. Hoover, Trustee; Cheryl
            Plaster Schaefer Trust, Lynn C. Hoover, Trustee; Robert L.
            Wooldridge; Gwendolyn B. VanDerhoef; Dwight Gilpin; Luther
            Henry Gill; Valeria Schall; Floyd J. Waterman; Larry W. Bisig;
            Larry Weis; Robert Heagerty; Murl J. Waterman; Earl L. Noe;
            Thomas Flak; Michael Kent St. John; James E. Acreman; Carolyn
            Rein; Dan Weatherly; Nina Irene Craighead; Joyce Sue Kinnett;
            Edwin H. McMahon; Paul Stahlman; Ralph Wilson; Alan Simer;
            Ferrell Stamper; and All Star Gas Corporation Employee Stock
            Ownership Plan, Robert W. Plaster, Trustee (incorporated herein
            by reference to Exhibit 10.1 to the Company's Registration
            Statement on Form S-1 (No. 33-53343)

10.2        1995 Stock Option Plan of All Star Gas Company (incorporated
            herein by reference to Exhibit 10.2 to the Registrant's Annual
            Report on Form 10-K for the year ended June 30, 1995)

10.3        Credit Agreement between the Company and Continental Bank, as
            agent (incorporated herein by reference to Exhibit 10.3 to the
            Registrant's Annual Report on Form 10-K for the year ended June
            30, 1994)

10.4        Lease Agreement, dated May 7, 1994, between the Company and
            Evergreen National Corporation (incorporated herein by
            reference to Exhibit F of Exhibit 10.1 to the All Star Gas
            Operating Corporation (Commission File No. 1-6537-3) Quarterly
            Report on Form 10-Q for the fiscal quarter ended March 31,
            1994)

10.5        Services Agreement, dated May 7, 1994, between the Company and
            All Star Service Corporation (incorporated herein by reference
            to Exhibit G of Exhibit 10.1 to the All Star Gas Operating
            Corporation (Commission File No. 1-6537-3) Quarterly Report on
            Form 10-Q for the fiscal quarter ended March 31, 1994)

10.6        Non-Competition Agreement, dated May 7, 1994, by and among the
            Company, Energy, Robert W. Plaster, Stephen R. Plaster, Joseph
            L. Schaefer, Paul S. Lindsey, Jr. (incorporated herein by
            reference to Exhibit E of Exhibit 10.1 to the All Star Gas
            Operating Corporation (Commission File No. 1-6537-3) Quarterly
            Report on Form 10-Q for the fiscal quarter ended March 31,
            1994)

10.7        Employment Agreement between the Company and Paul S. Lindsey,
            Jr. (incorporated herein by reference to Exhibit 10.7 to the
            Company's Registration Statement on Form S-1 (No. 33-53343)

10.8        Asset Purchase Agreement by and among the Company, All Star
            Gas, Inc. of North Carolina, PSNC Propane Corporation, and
            Public Service Company of North Carolina, Incorporated
            (incorporated herein by reference to Exhibit 10.8 to the
            Company's Registration Statement on Form S-1 (No. 33-533343)

10.9        Indemnification Agreement between the Company and Douglas A.
            Brown (incorporated herein by reference to Exhibit 10.9 to the
            Company's Registration Statement on Form S-1 (No. 33-53343)

10.10       Tax Indemnification Agreement between the Company and Energy
            (incorporated herein by reference to Exhibit 10.10 to the
            Company's Registration Statement on Form S-1 (No. 33-53343)

10.11       Supply Contract No. 1, dated June 1, 1993, between EGOC and
            Warren Petroleum Company (incorporated herein by reference to
            Exhibit 10.11 to the Company's Registration Statement on Form
            S-1 (No. 33-53343)

10.12       Supply Contract No. 2, dated June 1, 1993, between EGOC and
            Warren Petroleum Company (incorporated herein by reference to
            Exhibit 10.12 to the Company's Registration Statement on Form
            S-1 (No. 33-53343)

10.13       Management Agreement between All Star Gas Company, Northwestern
            Growth Corporation and SYN, Inc. dated May 17, 1995
            (incorporated by reference to Exhibit 10.13 to the Company's
            Annual Report on Form 10-K for the year ended June 30, 1996)

10.14       Agreement Among Initial Stockholders and SYN, Inc. dated May
            17, 1995 (incorporated by reference to Exhibit 10.14 to the
            Company's Annual Report on Form 10-K for the year ended June
            30, 1996)

10.15       Waiver Agreement dated April 29, 1995 by and among All Star Gas
            Corporation, SYN, Inc., Paul S. Lindsey, Jr. Northwestern
            Growth Corporation, All Star Energy Corporation, Robert W.
            Plaster, and Stephen R. Plaster (incorporated herein by
            reference to Exhibit 10.15 to the Registrant's Annual Report on
            Form 10-K for the year ended June 30, 1995)

10.16+      Propane Sales Agreement dated August 24, 1995, between All Star
            Gas Corporation and Warren Petroleum Company (incorporated by
            reference to Exhibit 10.16 to the Company's Annual Report on
            Form 10-K for the year ended June 30, 1995)

10.17+      Supply Contract dated April 27, 1995, between All Star Gas
            Corporation and Phillips 66 Company (incorporated by reference
            to Exhibit 10.17 to the Company's Annual Report on Form 10-K
            for the year ended June 30, 1995)

10.18+      Dealer Sale Contract dated January 20, 1995, between All Star
            Gas Corporation and Conoco Inc. (incorporated by reference to
            Exhibit 10.18 to the Company's Annual Report on Form 10-K for
            the year ended June 30, 1995)

10.19+      Supply Contract dated April 24, 1995 between All Star Gas
            Corporation and Enron Gas Liquids, Inc. (incorporated by
            reference to Exhibit 10.19 to the Company's Annual Report on
            Form 10-K for the year ended June 30, 1995)

10.20+      Amendment No. 1 to Supplement A to Loan and Securities
            Agreement dated June 29, 1995 between All Star Gas Corporation
            and Bank of America Illinois (incorporated by reference to
            Exhibit 10.20 to the Company's Annual Report on Form 10-K for
            the year ended June 30, 1995)

10.21       9/9/96 Waiver, Amendment No. 2 to Loan and Security Agreement
            and Amendment No. 4 to Supplement A to Loan and Security
            Agreement with Bank of America Illinois (incorporated by
            reference to Exhibit 10.21 to the Company's Annual Report on
            Form 10-K for the year ended June 30, 1996)

10.22       7/1/96 Agreement Amending Amended and Restated Agreement Among
            Initial Stockholders and Syn Inc. (incorporated by reference to
            Exhibit 10.22 to the Company's Annual Report on Form 10-K for
            the year ended June 30, 1996)

10.23       5/15/96 Waiver between Bank of America Illinois and All Star
            Gas Corporation (incorporated by reference to Exhibit 10.23 to
            the Company's Annual Report on Form 10-K for the year ended
            June 30, 1996)

10.24       2/13/96 Amendment No. 3 to Supplement A to Loan and Security
            Agreement with Bank of America Illinois (incorporated by
            reference to Exhibit 10.24 to the Company's Annual Report on
            Form 10-K for the year ended June 30, 1996)

10.25       11/3/95 Agreement Among Initial Stockholders and Mac
            Inc.(incorporated by reference to Exhibit 10.25 to the
            Company's Annual Report on Form 10-K for the year ended June
            30, 1996)

10.26       11/3/95 Management Agreement between NWPS, Myers Acquisition
            Company and Empire (incorporated by reference to Exhibit 10.26
            to the Company's Annual Report on Form 10-K for the year ended
            June 30, 1996)

10.27       9/28/95 Amendment No. 1 to Loan and Security Agreement and
            Amendment No. 2 to Supplement A to Loan and Security Agreement
            with Bank of America Illinois (incorporated by reference to
            Exhibit 10.27 to the Company's Annual Report on Form 10-K for
            the year ended June 30, 1996)

10.28       7/31/95 Agreement Amending Management Agreement (incorporated
            by reference to Exhibit 10.28 to the Company's Annual Report on
            Form 10-K for the year ended June 30, 1996)

10.29       7/31/95 Agreement Amending and Reinstating Agreement Among
            Initial Stockholders and Syn Inc. (incorporated by reference to
            Exhibit 10.29 to the Company's Annual Report on Form 10-K for
            the year ended June 30, 1996)

10.30+      Propane Sales Agreement dated April 9, 1996, between All Star
            Gas Corporation and Warren Petroleum Company (incorporated by
            reference to Exhibit 10.30 to the Company's Annual Report on
            Form 10-K for the year ended June 30, 1996)

10.31+      Amendment to Supply Contract dated August 15, 1994, between All
            Star Gas Corporation and Phillips 66 Company (incorporated by
            reference to Exhibit 10.31 to the Company's Annual Report on
            Form 10-K for the year ended June 30, 1996)

10.32+      Supply Contract dated April 1, 1996, between All Star Gas
            Corporation and Conoco, Inc.(incorporated by reference to
            Exhibit 10.32 to the Company's Annual Report on Form 10-K for
            the year ended June 30, 1996)

10.33       June 1, 1996, Lease of Aircraft between Paul S. Lindsey,
            Limited Liability Company and All Star Gas Corporation
            (incorporated by reference to Exhibit 10.33 to the Company's
            Annual Report on Form 10-K for the year ended June 30, 1996)

10.34+      Liquified Petroleum Gas Contract dated July 1, 1996 between All
            Star Gas Corporation and Shell Anacortes Refining Company
            (incorporated by reference to Exhibit 10.34 to the Company's
            Annual Report on Form 10-K for the year ended June 30, 1997)

10.35+      Liquified Petroleum Gas Contract dated July 1, 1996 between All
            Star Gas Corporation and Shell Oil Company (incorporated by
            reference to Exhibit 10.35 to the Company's Annual Report on
            Form 10-K for the year ended June 30, 1997)

10.36+      Propane Sales Agreements between All Star Gas Corporation and
            Warren Petroleum Company (incorporated by reference to Exhibit
            10.36 to the Company's Annual Report on Form 10-K for the year
            ended June 30, 1997)

10.37+      Liquified Petroleum Gas Contract dated June 1, 1996 between All
            Star Gas Corporation and Shell Oil Company (incorporated by
            reference to Exhibit 10.37 to the Company's Annual Report on
            Form 10-K for the year ended June 30, 1997)

10.38       Amendment #3 dated 10/29/96 to Loan and Security Agreement and
            Amendment #6 to Supplement A to Loan and Security Agreement
            (incorporated by reference to Exhibit 10.38 to the Company's
            Annual Report on Form 10-K for the year ended June 30, 1997)

10.39       Amendment #4 to Loan and Security Agreement (incorporated by
            reference to Exhibit 10.39 to the Company's Annual Report on
            Form 10-K for the year ended June 30, 1997)

10.40       Amendment No. 5 to Loan and Security Agreement and Amendment
            No. 7 to Supplement A to Loan and Security Agreement dated
            February 20, 1997

10.41       Amendment No. 6 to Loan and Security Agreement and Amendment
            No. 8 to Supplement A to Loan and Security Agreement dated June
            29, 1998

10.42       Waiver dated February 12, 1998

10.43       December 31, 1997, Lease of Aircraft Agreement between Paul S.
            Lindsey, LLC, and All Star Gas Corporation

21.1        Subsidiaries of the Company

27.1        Financial Data Schedules

+  Confidential treatment has been requested.  The copy filed as an exhibit
   omits the information subject to the confidentiality request.

            (b)  Reports on Form 8-K

                    July 15, 1998

            (c)  Exhibits

                    See (a)(3) above.

            (d)  Financial Statements

                    See (a)(1) above.



      Pursuant to the requirements of Section 13 or 15(d) 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.

                                    All Star Gas Corporation


                                    By:  /s/  Paul S. Lindsey, Jr.
                                        ---------------------------
                                        Paul S. Lindsey, Jr.


      Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


       SIGNATURE              CAPACITY IN WHICH SIGNED           DATE
       ---------              ------------------------           ----
/s/ Paul S. Lindsey, Jr.      Chief Executive Officer     September 24, 1998
--------------------------    and Chairman of the
    Paul S. Lindsey, Jr.      Board of All Star Gas
                              Corporation (principal
                              executive officer)

/s/ Willis D. Green           Controller                  September 24, 1998
--------------------------    (principal financial/
    Willis D. Green           accounting officer)

/s/ Douglas A. Brown          Director of All Star        September 24, 1998
--------------------------    Gas Corporation
    Douglas A. Brown

/s/ Kristin L. Lindsey        Director of All Star        September 24, 1998
--------------------------    Gas Corporation
    Kristin L. Lindsey

/s/ Bruce M. Withers, Jr.     Director of All Star       September 24, 1998
--------------------------    Gas Corporation
    Bruce M. Withers, Jr.

/s/ Jim J. Shoemake           Director of All Star       September 24, 1998
-------------------------     Gas Corporation
    Jim J. Shoemake






                      Independent Accountants' Report



Board of Directors and Stockholders
All Star Gas Corporation
Lebanon, Missouri


      We have audited the accompanying consolidated balance sheets of ALL
STAR GAS CORPORATION as of June 30, 1998 and 1997, and the related
consolidated statements of operations, stockholders' equity (deficit) and
cash flows for each of the three years in the period ended June 30, 1998.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

      We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

      In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
ALL STAR GAS CORPORATION as of June 30, 1998 and 1997, and the results of
its operations and its cash flows for each of the three years in the period
ended June 30, 1998, in conformity with generally accepted accounting
principles.

      The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 2, the
Company has net working capital and stockholders' equity deficiencies at
June 30, 1998, and its working capital borrowing facility is due in full in
December 1998. These matters raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.


                                             /s/ Baird, Kurtz & Dobson


Springfield, Missouri
August 28, 1998, except for Note 4 as
to which the date is September 23, 1998




                          ALL STAR GAS CORPORATION

                        CONSOLIDATED BALANCE SHEETS

                           JUNE 30, 1998 AND 1997
                    (IN THOUSANDS, EXCEPT SHARE AMOUNTS)


                                   ASSETS

                                                  1998         1997
CURRENT ASSETS                                    ----         ----

  Cash                                         $     897     $     965
  Trade receivables, less allowance
   for doubtful accounts; 1998 - $844,
     1997 - $899                                   4,526         5,101
  Inventories                                      6,985         6,924
  Prepaid expenses                                   615           401
  Due from related parties                            --            98
  Refundable income taxes                          1,135           630
  Deferred income taxes                              312            --
                                               ---------     ---------
     Total Current Assets                         14,470        14,119
                                               ---------     ---------

PROPERTY AND EQUIPMENT, AT COST
  Land and buildings                              11,233         9,887
  Storage and consumer service
    facilities                                    77,732        70,984
  Transportation, office and other
    equipment                                     29,348        24,473
                                               ---------     ---------
                                                 118,313       105,344
  Less accumulated depreciation                   37,323        32,118
                                               ---------     ---------
                                                  80,990        73,226
                                               ---------     ---------

OTHER ASSETS
  Debt acquisition costs, net of
    amortization                                   3,086         3,605
  Excess of cost over fair value of net
    assets acquired, at amortized cost            13,202        14,101
  Notes receivable - related parties                 676         1,022
  Other                                            1,364         1,759
                                               ---------     ---------
                                                  18,328        20,487
                                               ---------     ---------

                                               $ 113,788     $ 107,832
                                               =========     =========

See Notes to Consolidated Financial Statements



               LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                  1998           1997
                                                  ----           ----
CURRENT LIABILITIES
  Checks in process of collection              $   1,682     $   1,366
  Current maturities of long-term debt             7,824         2,385
  Accounts payable                                 2,141         2,477
  Accrued salaries                                 1,403         1,517
  Accrued interest                                 4,174         4,081
  Accrued expenses                                   854           841
  Due to related parties                            280
  Customer prepayments                             8,343         6,050
                                               ---------     ---------
     Total Current Liabilities                    26,701        18,717
                                               ---------     ---------

LONG-TERM DEBT                                   134,526       124,247
                                               ---------     ---------

DEFERRED INCOME TAXES                              4,905         7,190
                                               ---------     ---------

ACCRUED SELF-INSURANCE LIABILITY                     330           398
                                               ---------     ---------

STOCKHOLDERS' EQUITY (DEFICIT)
  Common; $.001 par value; authorized
    20,000,000 shares; issued June 30, 1998
    and 1997, 14,291,020 shares                       14            14
  Common stock purchase warrants                   1,227         1,227
  Additional paid-in capital                      27,279        27,279
  Retained earnings                                6,880        16,834
                                               ---------     ---------
                                                  35,400        45,354

  Treasury stock, at cost; 12,726,970 shares     (88,074)      (88,074)
                                               ---------     ---------
                                                 (52,674)      (42,720)
                                               ---------     ---------
                                               $ 113,788     $ 107,832
                                               =========     =========



                          ALL STAR GAS CORPORATION

                   CONSOLIDATED STATEMENTS OF OPERATIONS

                  YEARS ENDED JUNE 30, 1998, 1997 AND 1996
                  (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


                                            1998         1997        1996
                                            ----         ----        ----

OPERATING REVENUE                         $ 86,510    $ 94,543    $  82,702

COST OF PRODUCT SOLD                        42,416      53,075       43,318
                                          --------    --------    ---------
GROSS PROFIT                                44,094      41,468       39,384
                                          --------    --------    ---------

OPERATING COSTS AND EXPENSES
  Provision for doubtful accounts              342         483          889
  General and administrative                29,745      27,638       27,493
  Depreciation and amortization              9,334       6,867        6,770
  (Gain) loss on sale of assets               (340)        732         (395)
                                          --------    --------    ---------
                                            39,081      35,720       34,757
                                          --------    --------    ---------
OPERATING INCOME                             5,013       5,748        4,627
                                          --------    --------    ---------

OTHER INCOME (EXPENSE)
  Interest expense                         (11,391)    (10,605)     (10,657)
  Amortization of debt discount
    and expense                             (6,796)     (6,140)      (5,476)
  Gain on SYN/Myers Transaction                 --      16,922           --
  Restructuring proposal costs                (910)     (1,903)          --
  Write off of carrying value of
    underground storage facility
    and closing costs                           --          --         (200)
                                          --------    --------    ---------
                                           (19,097)     (1,726)     (16,333)
                                          --------    --------    ---------

INCOME (LOSS) BEFORE EQUITY IN NET
  INCOME OF AFFILIATES                     (14,084)      4,022      (11,706)

EQUITY IN NET INCOME OF AFFILIATES              --          --          59
                                          --------    --------    --------

INCOME (LOSS) BEFORE INCOME TAXES          (14,084)      4,022      (11,647)

PROVISION (CREDIT) FOR INCOME TAXES         (4,130)      1,800       (3,750)
                                          --------    --------    ---------

NET INCOME (LOSS)                         $ (9,954)   $  2,222    $  (7,897)
                                          ========    ========    =========

BASIC AND DILUTED INCOME (LOSS)
  PER COMMON SHARE                        $  (6.36)   $   1.41    $   (5.00)
                                          ========    ========    =========

See Notes to Consolidated Financial Statements



                                  ALL STAR GAS CORPORATION

                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                           YEARS ENDED JUNE 30, 1998, 1997 AND 1996
                                         (IN THOUSANDS)

<TABLE>
<CAPTION>
                                       Common                                                Total
                                        Stock      Additional                             Stockholders'
                            Common     Purchase     Paid-In     Retained     Treasury       Equity
                             Stock     Warrants     Capital     Earnings       Stock       (Deficit)
                           --------    --------    ----------   --------     ---------    -------------

<S>                        <C>         <C>          <C>         <C>          <C>            <C>      
BALANCE, JUNE 30, 1995     $     14    $  1,227     $ 27,279    $ 22,509     $(87,975)      $(36,946)

NET LOSS                       --          --           --        (7,897)        --           (7,897)
                           --------    --------     --------    --------     --------       --------

BALANCE, JUNE 30, 1996           14       1,227       27,279      14,612      (87,975)       (44,843)

TREASURY STOCK PURCHASE        --          --           --          --            (99)           (99)

NET INCOME                     --          --           --         2,222         --            2,222
                           --------    --------     --------    --------     --------       --------

BALANCE, JUNE 30, 1997           14       1,227       27,279      16,834      (88,074)       (42,720)

NET LOSS                       --          --           --        (9,954)        --           (9,954)
                           --------    --------     --------    --------     --------       --------

BALANCE, JUNE 30, 1998     $     14    $  1,227     $ 27,279    $  6,880     $(88,074)      $(52,674)
                           ========    ========     ========    ========     ========       ========
</TABLE>

See Notes to Consolidated Financial Statements



                              ALL STAR GAS CORPORATION

                        CONSOLIDATED STATEMENTS OF CASH FLOWS

                      YEARS ENDED JUNE 30, 1998, 1997 AND 1996
                                    (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                 1998         1997         1996
                                                 ----         ----         ----
<S>                                            <C>          <C>         <C>       
CASH FLOWS FROM OPERATING
  ACTIVITIES
   Net income (loss)                           $ (9,954)    $  2,222    $ (7,897) 
   Items not requiring (providing) cash:                                          
     Depreciation                                 7,384        5,467       5,427  
     Amortization                                 8,746        7,540       6,819  
     Gain on sale of assets and                                                   
         SYN/Myers transaction                     (340)     (16,190)       (395) 
     Loss on underground storage facility            --           --         200  
     Undistributed earnings of affiliate             --           --         (59) 
     Deferred income taxes                       (2,597)        (750)     (3,850) 
   Changes in:                                                                    
     Trade receivables                               91         (982)        191  
     Inventories                                    372         (905)       (896) 
     Prepaid expenses and other                     937         (644)       (375) 
     Due from related parties                        --        1,163        (599) 
     Accounts payable and customer                                                
       prepayments                                1,584        2,392         508  
     Accrued expenses and self-insurance           (581)      (1,015)      1,243  
                                               --------     --------    --------  
         Net cash provided by (used in)                                           
            operating activities                  5,642       (1,702)        317  
                                               --------     --------    --------  
                                                                                  
CASH FLOWS FROM INVESTING                                                         
  ACTIVITIES                                                                      
   Proceeds from sales of retail service                                          
     centers and other assets                     2,821        2,476       6,177  
   Receipts on sales of retail outlets                                            
     previously accrued                              --        3,002          --  
   Proceeds from SYN/Myers transaction               --       18,000          --  
   Acquisition of retail service centers         (4,435)      (5,248)     (1,087) 
   Purchases of property and equipment           (7,187)      (7,733)     (7,033) 
   Advances from related parties                    378           --          --  
                                               --------     --------    --------  
         Net cash provided by (used in)                                           
            investing activities                 (8,423)      10,497      (1,943) 
                                               --------     --------    --------  
</TABLE>

See Notes to Consolidated Financial Statements



                          ALL STAR GAS CORPORATION

                   CONSOLIDATED STATEMENTS OF CASH FLOWS

                  YEARS ENDED JUNE 30, 1998, 1997 AND 1996
                               (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                          1998        1997    t    1996
                                                          ----        ----        ----
<S>                                                    <C>          <C>          <C>     
CASH FLOWS FROM FINANCING
  ACTIVITIES
   Increase (decrease) in working capital facility     $  4,500     $ (5,839)    $  1,331
   Principal payments on purchase obligations            (2,355)      (1,362)        (837)
   Proceeds on long-term debt obligations                   252
   Increase (decrease) in checks in process of 
     collection                                             316       (1,428)       1,209
   Purchase of treasury stock                                --          (99)          --
                                                       --------     --------     --------
     Net cash provided by (used in) financing   
       activities                                         2,713       (8,728)       1,703
                                                       --------     --------     --------

INCREASE (DECREASE) IN CASH                                 (68)          67           77

CASH, BEGINNING OF YEAR                                     965          898          821
                                                       --------     --------     --------

CASH, END OF YEAR                                      $    897     $    965     $    898
                                                       ========     ========     ========
</TABLE>

See Notes to Consolidated Financial Statements



                          ALL STAR GAS CORPORATION

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           JUNE 30, 1998 AND 1997


NOTE 1:   NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
          ACCOUNTING POLICIES

NATURE OF OPERATIONS

      The Company's principal operation is the sale of wholesale and retail
liquified propane (LP) gas. Most of the Company's customers are owners of
residential single or multi-family dwellings who make periodic purchases on
unsecured credit. Such customers are located throughout the United States
with the larger number concentrated in the central and western states and
along the Pacific coast.

ESTIMATES

      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 and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

PRINCIPLES OF CONSOLIDATION

      The consolidated financial statements include the accounts of All
Star Gas Corporation and its wholly-owned subsidiaries. All significant
intercompany transactions and balances have been eliminated in
consolidation.

REVENUE RECOGNITION POLICY

      Sales and related cost of product sold are recognized upon delivery
of the product or service.

INVENTORIES

      Inventories are valued at the lower of cost or market. Cost is
determined by the first-in, first- out method for retail operations and
specific identification method for wholesale operations. At June 30, the
inventories were:

                                                       1998        1997
                                                       ----        ----
                                                        (In Thousands)

   Gas and other petroleum products                   $ 3,495    $ 3,551
   Gas distribution parts, appliances and equipment   $ 3,490    $ 3,373
                                                      -------    -------

                                                      $ 6,985    $ 6,924
                                                      =======    =======

PROPERTY AND EQUIPMENT

      Depreciation is provided on all property and equipment on the
straight-line method over estimated useful lives of 3 to 33 years.

INCOME TAXES

      Deferred tax liabilities and assets are recognized for the tax
effects of differences between the financial statement and tax bases of
assets and liabilities. A valuation allowance is established to reduce
deferred tax assets if it is more likely than not that a deferred tax asset
will not be realized.

AMORTIZATION

      Debt acquisition costs are being amortized on a straight-line basis
over the terms of the debt to which the costs are related as follows: the
1994 senior secured note costs (originally $5,143,000) are amortized over
ten years; and the revolving credit facility costs (originally $341,000)
are amortized over three years.

      Amortization of discounts on debentures and notes (Note 4) is on the
effective interest, bonds outstanding method.

      The majority of the excess of cost over fair value of net assets
acquired relates to a transaction originating prior to July 1, 1994 and is
being amortized on the straight-line basis over 25 years. Excess of cost
over fair value of net assets on subsequent acquisitions is amortized on
the straight-line basis over 5 years.

INCOME (LOSS) PER COMMON SHARE

      Income (loss) per common share is computed by dividing net income
(loss) by the weighted average number of common shares and, except where
anti-dilutive, common share equivalents outstanding, if any. The weighted
average number of common shares outstanding used in the computation of
earnings per share was 1,564,050, 1,572,902 and 1,579,225 for each of the
periods ended June 30, 1998, 1997 and 1996, respectively.

FUTURES CONTRACTS AND PURCHASE COMMITMENTS

      The Company uses commodity futures contracts to reduce the risk of
future price fluctuations for LP gas inventories and contracts. Gains and
losses on futures contracts purchased as hedges are deferred and recognized
in cost of sales as a component of the product cost for the related hedged
transaction. In the statement of cash flows, cash flows from qualifying
hedges are classified in the same category as the cash flows from the items
being hedged. The Company also routinely makes purchase commitments for the
delivery of LP gas inventories, particularly during its peak winter selling
season. At June 30, 1998, the Company had approximately $9.0 million in
outstanding commitments to purchase LP gas for inventory. As of June 30,
1998 and 1997, the Company's open positions on futures contracts are
immaterial.

RECLASSIFICATION

      Certain reclassifications have been made to the 1997 and 1996
financial statements to conform to the 1998 financial statement
presentation. These reclassifications had no effect on net earnings.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

      The Financial Accounting Standards Board (FASB) recently adopted
Statement of Financial Accounting Standards (SFAS) 130, Reporting
Comprehensive Income. This Statement establishes standards for reporting
and display of comprehensive income and its components in a full set of
financial statements. It does not address issues of recognition or
measurement. SFAS 130 is effective for fiscal years beginning after
December 15, 1997. The adoption of SFAS 130 is not expected to have a
material impact on the Company's financial statements.

      The FASB recently adopted SFAS 131, Disclosures about Segments of an
Enterprise and Related Information. This Statement establishes standards
for the way that public business enterprises report information about
operating segments. The Statement also establishes standards for related
disclosures about products and services, geographic areas and major
customers. SFAS 131 is effective for years beginning after December 15,
1997. SFAS 131, which the Company will initially adopt for fiscal year
1999, is not expected to have a material impact on the Company's financial
statements.

      The FASB recently adopted SFAS 133, Accounting for Derivative
Financial Instruments and Hedging Activities. This Statement establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. SFAS 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999, may be adopted early for periods beginning
after issuance of the Statement and may not be applied retroactively. The
effects of adoption of SFAS 133 on the Company's financial statements are
not determinable currently. The Company expects to initially adopt SFAS 133
for fiscal year 2000.


NOTE 2:     MANAGEMENT'S CONSIDERATION OF GOING CONCERN MATTERS

      The Company has net working capital and stockholders' equity
deficiencies and its working capital borrowing facility (Note 4) is due in
full in December 1998. The financial statements have been prepared assuming
the Company will continue as a going concern, realizing assets and
liquidating liabilities in the ordinary course of business. Management is
considering several alternatives for mitigating these conditions during the
next year. These include seeking a long-term extension of the existing
credit facility and exploring other financing and recapitalization
alternatives. Management is also seeking operational improvements and
economies, such as those the Company expects to realize from reductions in
general and administrative expenses undertaken in the latter part of fiscal
1998. While management believes the Company will be able to obtain the
necessary financing and/or capital, no commitments have been obtained.
Although not currently planned, realization of assets in other than the
ordinary course of business to meet liquidity needs could incur losses not
reflected in these financial statements.


NOTE 3:     RELATED-PARTY TRANSACTIONS

      During 1998, 1997 and 1996, the Company has purchased $189,000,
$286,000 and $203,000, respectively, of paint from a corporation owned by
the spouse of the principal shareholder of the Company.

      Beginning July 1, 1994, the Company entered into a seven-year
services agreement with a subsidiary of a related party to provide data
processing and management information services to the Company. The services
agreement, prior to cancellation in fiscal year 1997, provided for payments
by the Company to be based on an allocation of the subsidiary's actual
costs based on the gallons of LP gas sold by the Company as a percentage of
the gallons of LP gas sold by the Company and Empire Energy Corporation.
For the years ended June 30, 1997 and 1996, total expenses related to this
services agreement were $500,000 and $600,000, respectively.

      On August 15, 1995, the Company entered into a joint venture with
Northwestern Growth Corporation (NGC), a subsidiary of Northwestern Public
Service Corporation, to acquire the assets of Synergy Group, Incorporated
("Synergy"), the nation's fifth largest LP gas distributor at that time.
The Company acquired 30% of the common stock of SYN Inc., the acquisition
entity, and entered into a Management Agreement pursuant to which the
Company provided management services for SYN Inc.

      During 1996, the Company acquired 49% of the common stock of Myers
Acquisition Company (Myers) through another joint venture with NGC. Myers
acquired the stock of a retail LP
distributor in Ohio.

      In December 1996, the Company and NGC completed an agreement for the
sale of the Company's interest in SYN Inc. and Myers and the modification
and termination of certain agreements between NGC, SYN Inc. and Myers on
the one hand and the Company on the other hand. The agreement resulted in
the termination of the Management Agreement and a payment of $18 million to
the Company resulting in a gain reflected in the statement of operations of
$16.9 million, which is net of transaction and other costs and fees.

      The Company received payments of $1.7 million related to management
fees and overhead reimbursement from SYN Inc. for the year ended June 30,
1997.

      During the year ended June 30, 1997, the Company purchased $20.8
million of LP gas on behalf of SYN Inc. and Myers that was transferred at
cost.

      In December 1996, the Company acquired a 10% ownership interest in
Propane Resources Transportation, Inc. (PRT). In December 1996, the Company
issued a long-term mortgage obligation of $1.1 million for the purchase of
certain transport equipment from SYN Inc. This equipment was then sold to
PRT for a $1.1 million long-term note receivable. The balance of this note
receivable was $676,000 and $1.0 million at June 30, 1998 and 1997,
respectively. PRT provided transport services for a portion of the
Company's propane delivery needs resulting in freight charges paid to PRT
during 1998 and 1997 of $768,000 and $1.4 million, respectively.

      During the year ended June 30, 1997, the Company acquired a 39%
interest in Propane Resources Supply and Marketing, LLC (PRSM) for
$263,000. The Company's investment is stated at amortized cost plus equity
in the affiliate's undistributed net income since acquisition. The Company
sells LP gas to PRSM on a regular basis. The Company paid consulting fees
of $200,000 and $117,000 to PRSM during 1998 and 1997, respectively.

      In October 1997, the Company acquired Red Top Gas, a retail LP
distributor owned by a party related to the principal shareholder, for
$6,333,000. Prior to the acquisition, the Company sold LP gas to this
party. At June 30, 1997, the amount due from this related party was
$113,000.

      At June 30, 1998, the Company has invested $134,000 along with
certain key employees in real estate partnerships as special limited
partners for tax credit allocation purposes.

      In 1998, the Company entered into an operating lease with the
principal shareholder for an aircraft. The lease requires $95,000 in annual
payments for a term of three years beginning in January 1998.

      In 1996, the Company entered into an operating lease with the
principal shareholder for a jet aircraft. The lease required
$283,000 in annual payments for a term of three years beginning in June
1996. The lease also required a $200,000 deposit which was paid in June
1996. The Company also leased from the principal shareholder certain real
estate property at an annual cost of $18,000. Both of these leases were
cancelled during 1998 at no further obligation to the Company.

      In 1998, the principal shareholder loaned the Company amounts
totalling $1.8 million with terms ranging from 7 days to 6 months. At June
30, 1998, the balances of these obligations were $280,000.


NOTE 4:     LONG-TERM DEBT

   Long-term debt at June 30 consisted of (In Thousands):

                                                       1998         1997
                                                       ----         ----
   Working capital facility (A)                     $   5,050    $     550
   127/8% Senior Secured Notes, due 2004 (B)          127,200      127,200
   9% Subordinated Debentures, due 2007 (C)             9,746        9,746
   Purchase contract obligations and capital 
     leases (D)                                        12,552        7,609
                                                    ---------    ---------
                                                      154,548      145,105
      Less unamortized discounts                       12,198       18,473
                                                    ---------    ---------
                                                      142,350      126,632
      Less current maturities                           7,824        2,385
                                                    ---------    ---------

                                                    $ 134,526    $ 124,247
                                                    =========    =========

(A)   The working capital facility was provided to the Company in June 1994
      in conjunction with the offering of the 127/8% Senior Secured Notes,
      due 2004. All of the Company's receivables and inventories are
      pledged to the agreement which contains tangible net worth, capital
      expenditures, interest coverage ratio, debt and certain dividend
      restrictions. These dividend restrictions prohibit the Company from
      paying common stock cash dividends. At June 30, 1998, the Company was
      not in compliance with the facility's acquisition availability
      covenant. The Company has received a waiver of this covenant.

      The facility provides for borrowings up to $15 million, subject to a
      sufficient borrowing base. The borrowing base generally limits the
      Company's total borrowings to 85% of eligible accounts receivable and
      52% of eligible inventory. The facility bears interest at either 1.5%
      over prime or 3.0% over the LIBOR rate. The agreement provides for a
      commitment fee of .375% per annum of the unadvanced portion of the
      commitment. The Company's available revolving credit line amounted to
      $771,000 at June 30, 1998, after considering $981,000 of outstanding
      letters of credit. The letters of credit are principally related to
      the Company's self-insurance program (Note 6). The working capital
      facility was due on September 29, 1998, and has been extended to 
      December 29, 1998, bearing interest at 1.5% over prime with the
      previous LIBOR rate option eliminated. The extension provides for a
      commitment fee of .50% per annum of the unadvanced portion of the
      commitment.

(B)   The notes were issued June 1994 at a discount and require interest
      payments at 7% through July 15, 1999, and at 127/8% thereafter. The
      notes are redeemable at the Company's option. Prior to July 15, 1999,
      only 35% of the original principal issued may be redeemed, as a whole
      or in part, at 110% of the principal amount through July 15, 1997,
      and at declining percentages thereafter. The notes are guaranteed by
      the subsidiaries of the Company and secured by the common stock of
      the restricted subsidiaries of the Company.

      The original principal amount of the notes issued ($127,200,000) was
      adjusted ($27,980,000) to give effect for the original issue discount
      and the common stock purchase warrants (effective interest rate of
      13.0%). The discount on these notes is being amortized over the
      remaining life of the notes using the effective interest, bonds
      outstanding method.

      Separate financial statements of the guarantor subsidiaries are not
      included because such subsidiaries have jointly and severally
      guaranteed the notes on a full and unconditional basis; the aggregate
      assets and liabilities of the guarantor subsidiaries are
      substantially equivalent to the assets and liabilities of the parent
      on a consolidated basis; and the separate financial statements and
      other disclosures concerning the subsidiary guarantors are not deemed
      to be material.

      The guarantor subsidiaries are restricted from paying dividends to
      the Company during any periods of default under the respective debt
      agreements.

(C)   The debentures, issued June 1983, are redeemable at the Company's
      option, as a whole or in part, at par value. A sinking fund payment
      sufficient to retire $191,000 of principal outstanding is required on
      December 31, 2005. In June 1994, the Company used proceeds from the
      issuance of the 127/8% Senior Secured Notes, due 2004, to repurchase
      $16,201,000 face value of these debentures at a discount which
      resulted in an extraordinary charge.

      The original principal amount of debentures issued ($27,313,000) was
      adjusted to market at issuance (effective interest rate of 16.5%).
      The remaining discount on these debentures is being amortized over
      the remaining life of the debentures using the effective interest,
      bonds outstanding method. The face value of debentures outstanding at
      June 30, 1998, is $20,483,000 of which $10,737,000 are registered in
      the name of the Company.

(D)   Purchase contract obligations arise from the purchase of operating
      businesses and are collateralized by the equipment and real estate
      acquired in the respective acquisitions. Capital leases include
      leases covering data processing equipment expiring in 1998. At June
      30, 1998 and 1997, these obligations carried interest rates from 7%
      to 11% and are due periodically through 2006.

      Aggregate annual debt service requirements (in thousands) of the
long-term debt outstanding at June 30, 1998, are:

                                                                 Total
                                 Principal      Interest      Debt Service

    1999                         $   7,824     $   10,684      $  18,508
    2000                             2,381         17,954         20,335
    2001                             2,312         17,764         20,076
    2002                             1,434         17,625         19,059
    2003                             1,232         17,519         18,751
    Thereafter                     139,365         20,079        159,444
                                 ---------     ----------      ---------

                                 $ 154,548     $  101,625      $ 256,173
                                 =========     ==========      =========


NOTE 5:    INCOME TAXES

      The provision for income taxes includes these components.

                                              1998         1997       1996
                                              ----         ----       ----
                                                    (In Thousands)

    Taxes currently payable (refundable)    $ (1,533)    $ 2,550    $   100

    Deferred income taxes                     (2,597)       (750)     (3,850)
                                            --------     -------    --------

                                            $ (4,130)    $ 1,800    $ (3,750)
                                            ========     =======    ========

      The tax effects of temporary differences at June 30, 1998 and 1997,
related to deferred taxes were:

                                                         1998         1997
                                                         ----         ----
                                                          (In Thousands)

    Deferred Tax Assets

      Allowance for doubtful accounts                  $    274    $    330
      Accounts receivable advance collections                11          29
      Self-insurance liabilities and contingencies          930         601
      Original issue discount                             7,497       5,252
      Net operating loss carryforwards                      381          --
      Alternative minimum tax credit carryforwards        3,000       1,803
                                                       --------    --------
                                                         12,093       8,015

    Deferred Tax Liability

      Accumulated depreciation and tax cost
        differences                                     (16,686)    (15,205)
                                                       --------    --------

            Net deferred tax liability                 $ (4,593)   $ (7,190)
                                                       ========    ========

      The above net deferred tax liability is presented on the June 30
balance sheets as follows:

                                                         1998           1997
                                                         ----           ----
                                                            (In Thousands)

    Deferred Tax Assets (Liabilities)

      Deferred tax asset - current                     $    312    $     --
      Deferred tax liability - long-term                 (4,905)     (7,190)
                                                       ---------   --------

            Net deferred tax liability                 $ (4,593)   $ (7,190)
                                                       ========    ========

      A reconciliation of income tax expense at the statutory rate to the
Company's actual income tax expense is shown below:

<TABLE>
<CAPTION>
                                                   1998        1997           1996
                                                             (In Thousands)

<S>                                             <C>          <C>           <C>      
   Computed at the statutory rate (34%)         $ (4,789)    $ 1,367       $ (3,960)
   Increase (decrease) resulting from:
       Amortization of excess of cost over
         fair value of net assets acquired           386         268            279
       State income taxes - net of federal
         tax benefit                                 (96)         90           (347)
       Nondeductible travel costs and other
         expenses                                     28          87            112
       Other                                          31         (12)           (84)
       Additional accruals                           310          --            250
                                                --------     ----------    --------

         Actual tax provision                   $ (4,130)    $ 1,800.00    $ (3,750)
                                                ========     ==========    ========
</TABLE>

      At June 30, 1998, the Company had approximately $3.0 million of
alternative minimum tax credits available to offset future federal income
taxes. The credits have no expiration date. The Company also has unused
operating loss carryforwards of $1.1 million, which expire in the year
2018.


NOTE 6:     SELF-INSURANCE AND RELATED CONTINGENCIES

      Under the Company's current insurance program, coverage for
comprehensive general liability, workers' compensation and vehicle
liability is obtained for catastrophic exposures as well as those risks
required to be insured by law or contract. The Company retains a portion of
certain expected losses related primarily to comprehensive general and
vehicle liability. The Company self insures the first $200,000 for each and
every general liability incident, which is reduced from $250,000 per
incident in the prior year. Above this retention is a corridor deductible
of $750,000 per occurrence, $1.25 million in aggregate compared to $1
million for the Company in the prior year. For the vehicle and workers'
compensation programs, the Company has a $250,000 deductible per occurrence
with a $1 million aggregate stop loss. The Company obtains excess coverage
on occurrence basis policies. Provisions for self-insured losses are
recorded based upon the Company's estimates of the aggregate self-insured
liability for claims incurred, resulting in a retention for a portion of
these expected losses.

      The ending accrued liability includes $150,000 for incurred but not
reported claims at June 30, 1998 and 1997. The current portion of the
ending liability of $500,000 at June 30, 1998 and 1997, is included in
accrued expenses in the consolidated balance sheets. The noncurrent portion
at the end of each period is included in accrued self-insurance liability.

      The Company and its subsidiaries are also defendants in various
lawsuits related to the self-insurance program and other business related
lawsuits which are not expected to have a material adverse effect on the
Company's financial position or results of operations.

      The Company currently self-insures health benefits provided to the
employees of the Company and its subsidiaries subject to a $75,000 cap per
claim. Provisions for losses expected under this program are recorded based
upon the Company's estimate of the aggregate liability for claims incurred.
The aggregate cost of providing the health benefits was $700,000, $492,000
and $547,000 for the years ended June 30, 1998, 1997 and 1996,
respectively.

      In conjunction with a restructuring transaction involving the Company
and Empire Energy Corporation, the parties agreed to share on a percentage
basis the self-insured liabilities and other business related lawsuits
incurred prior to June 30, 1994, including both reported and unreported
claims. The self-insured liabilities included under this agreement include
general, vehicle, workers' compensation and health insurance liabilities.
Under the agreement, the Company assumed 52.3% of the liability with Empire
Energy Corporation assuming the remaining 47.7%.


NOTE 7:     CONTINGENCIES

      The state of Missouri has assessed the Company approximately
$1,400,000 for additional state income tax for the years ended June 30,
1992 and 1993. An amount approximating one-half of the above assessment
could be at issue for the year ended June 30, 1994. The Company has
protested these assessments and is currently waiting for a response from
the Missouri Department of Revenue. It is likely that this matter will have
to be settled in litigation. The Company believes that it has a strong
position on this matter and intends to vigorously contest the assessment.

      In conjunction with the restructuring transaction, the Company and
Energy agreed to share on a percentage basis amounts incurred related to
federal and state tax audits for fiscal years June 30, 1994, and prior.

      The Company and its subsidiaries are presently involved in other
various state tax audits which are not expected to have a material adverse
effect on the Company's financial position or results of operations.


NOTE 8:     STOCK OPTIONS AND WARRANTS

STOCK OPTIONS

      The Company has established a Stock Option Plan for the benefit of
its employees, consultants and directors. Stock options may be either
incentive stock options or nonqualified stock options, with an option price
no less than the fair value of the Company's common stock on the date of
the grant. Options are granted for no more than a ten-year term and are
exercisable based on a written agreement between the administrator and
optionee.

      The table below summarizes transactions under the Company's stock
option plan:

                                                Number of Shares
                                                ----------------
     Balance, June 30, 1995 and 1996                 416,926
       Granted ($7.00 per share)                     276,200
       Forfeited                                     (21,000)
                                                  ----------
     Balance, June 30, 1997                          672,126
       Granted ($7.00 per share)                     104,000
       Forfeited                                    (192,100)
                                                  ----------
     Balance, June 30, 1998                          584,026
                                                  ==========

      Options outstanding at June 30, 1998, have a weighted-average
remaining contractual life of approximately 7 years with 212,336 options
currently exercisable at a price of $7.00 per share.

      In 1996, the FASB adopted SFAS 123, Accounting for Stock-Based
Compensation. This Statement establishes an alternative fair value-based
method of accounting for stock-based compensation plans. The Company
applies Accounting Principles Board Opinion 25 and related Interpretations
in accounting for the plan, and no compensation cost has been recognized.
No fair value disclosures with respect to stock options are presented
because, in the opinion of management, such values do not have a material
effect.

COMMON STOCK PURCHASE WARRANTS

      In connection with the Company's restructuring, the Company attached
warrants to purchase common stock to the new issuance of 127/8% Senior
Secured Notes, due 2004. Each warrant represents the right to purchase one
share of the Company's common stock for $.01 per warrant. The warrants are
exercisable currently and will expire on July 15, 2004.

      The table below summarizes warrant activity of the Company:

                                                   Number      Exercise
                                                 of Shares       Price
                                                 ---------     --------
      Issued                                       175,536       $.01
                                                 ---------

      Balance at June 30, 1998 and 1997            175,536       $.01
                                                 =========


NOTE 9:     ADDITIONAL CASH FLOW INFORMATION (IN THOUSANDS)


                                               1998         1997       1996
NONCASH INVESTING AND FINANCING
ACTIVITIES

  Related party receivable from sale
    of retail service center                      --          --     $   662
  Note receivable from sale of retail
    service center                                --          --        $148
  Receivable from sale of retail
    service centers                               --          --       2,390
  Purchase contract obligations
    incurred for business acquisitions       $(7,115)    $(5,463)    $(1,111)
  Capital lease obligations incurred
    for  property and equipment              $  (328)         --     $  (757)

ADDITIONAL CASH PAYMENT INFORMATION
    Interest paid                            $11,406     $11,156     $10,216
    Income taxes paid (refunded), net        $  (842)    $ 3,361     $(1,647)


NOTE 10:    EMPLOYEE BENEFIT PLAN

      The Company has a defined contribution retirement plan covering
substantially all employees. Employees who elect to participate may
contribute a percentage of their salaries to the plan. The Company may make
contributions to the plan at the discretion of its Board of Directors. No
contributions to the plan were made by the Company during the years ended
June 30, 1998, 1997 or 1996.


NOTE 11:    OPERATING LEASES

      Noncancellable operating leases, which cover office space and various
equipment, expire in various years through 2004. These leases generally
contain renewal options for periods ranging from 1 to 5 years and require
the Company to pay all executory costs (property taxes, maintenance and
insurance).

    Future minimum lease payments (in thousands) at June 30, 1998, were:

            1999                                 $    721
            2000                                      428
            2001                                      307
            2002                                      152
            2003                                      106
            Thereafter                                 62
                                                 --------

            Future minimum lease payments        $  1,776
                                                 ========


NOTE 12:    RESTRUCTURING PROPOSAL COSTS

      During the year ended June 30, 1997, the Company was considering a
proposal to restructure its debt and equity. The Company abandoned the
proposal and has expensed the related costs of $910,000 and $1.9 million
during the years ended June 30, 1998 and 1997, respectively.


NOTE 13:    SIGNIFICANT ESTIMATES AND CONCENTRATIONS

      Generally accepted accounting principles require disclosure of
certain significant estimates and current vulnerabilities due to certain
concentrations. Those matters include the following:

ESTIMATES

      Significant estimates related to self-insurance, goodwill
amortization, litigation, collectibility of receivables and income tax
assessments are discussed in Notes 1, 6 and 7. Actual losses related to
these items could vary materially in the near-term from amounts reflected
in the financial statements.


NOTE 14:    DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

      At June 30, 1998 and 1997, the Company's financial instruments
consist of cash, trade receivables and payables, receivables from related
parties and long-term debt. The following methods were used to estimate the
fair value of financial instruments:

RECEIVABLES FROM RELATED PARTIES

      It was not practicable to estimate the fair value of receivables from
related parties. The amounts reflected in the balance sheet at June 30,
1998 and 1997, are short-term receivables generated from transactions
between the Company and various related parties.

LONG-TERM DEBT

      Fair value of long-term debt is estimated based on the trading prices
of the Company's primary debt issuance. The fair value of the other debt
approximates carrying value as other debt consists of multiple mortgage
obligations and debentures with interest rates approximating rates
currently available to the Company.

LONG-TERM DEBT (CONTINUED)

      The carrying amounts and fair values of these financial instruments
at June 30 are as follows (in thousands):


                                     1998                      1997
                              -------------------       -------------------
                              Carrying      Fair        Carrying      Fair
                               Amount       Value        Amount       Value
                              --------      -----       --------      -----
  Financial Assets:
    Cash                      $    897    $    897     $    965    $    965

  Financial Liabilities:
    Senior Secured
      Notes due 2004          $119,248    $109,392     $113,139    $121,476
    Other long-term debt      $ 22,573    $ 22,573     $ 12,835    $ 12,835


NOTE 15:    BUSINESS ACQUISITIONS

      During the year ended June 30, 1998, the Company acquired four LP gas
operations through two asset purchase and two stock purchase transactions
for a total of $12.1 million, of which $5.1 million was paid in cash with
the remainder in mortgage obligations and the assumption of certain
liabilities. During the year ended June 30, 1997, the Company acquired six
LP gas operations through five asset purchase transactions and one stock
purchase transaction for a total of $9.5 million, of which $5.1 million was
paid in cash with the remainder in mortgage obligations and the assumption
of certain liabilities. Each of these acquisitions has been accounted for
as a purchase by recording the assets acquired and the liabilities assumed
at their estimated fair values at the acquisition date. Amounts paid above
these fair values are recorded as excess of cost over fair value of net
assets acquired. The consolidated operations of the Company include the
operations of the acquirees from the acquisition dates. Unaudited pro forma
consolidated operations assuming the purchases were made at the beginning
of the previous and current years are shown below:

                                               1998          1997
                                                  (In Millions)

         Net sales                            $  87.2      $ 108.7

         Net income (loss)                    $  (9.9)     $   2.7

      The pro forma results are not necessarily indicative of what would
have occurred had the acquisitions been on those dates, nor are they
necessarily indicative of future operations.



      Independent Accountants' Report on Financial Statement Schedules



Board of Directors and Stockholders
All Star Gas Corporation
Lebanon, Missouri


In connection with our audit of the consolidated financial statements of
ALL STAR GAS CORPORATION for each of the three years in the period ended
June 30, 1998, we have also audited the following financial statement
schedules. These financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statement schedules based on our audits of the basic
financial statements. The schedules are presented for purposes of complying
with the Securities and Exchange Commission's rules and regulations and are
not a required part of the consolidated financial statements.

In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic consolidated financial statements taken
as a whole, present fairly, in all material respects, the information
required to be included therein.


                                              /s/ BAIRD, KURTZ & DOBSON




Springfield, Missouri
August 28, 1998





              SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  YEARS ENDED JUNE 30, 1998, 1997 AND 1996
                               (IN THOUSANDS)


                      Balance at   Charges to    Amount              Balance
                      Beginning    Costs and    Written              at End
Description            of Year      Expenses      Off       Other    of Year
-----------           ----------   ----------   -------     -----    -------
Valuation accounts
deducted from
assets to which
they apply - for
doubtful accounts
receivable:
   June 30, 1998        $899         $342        $475     $96(A)       $844
                                                          $(18)(B)
   June 30, 1997        $722         $483        $369     $83(A)       $899
                                                          $(20)(B)
   June 30, 1996        $800         $889        $820     $(147)(B)    $722

(A)   Allowance for doubtful accounts receivable established with respect
      to the acquisition of retail service centers.

(B)   Related to accounts receivable which were sold in conjunction with
      the disposition of retail service centers.