10-Q
                                    Form 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended June 30, 1999   Commission File Number:0-29664

                            SOLUCORP INDUSTRIES LTD.

             (Exact Name of registrant as Specified in its Charter)

                Yukon                                    N/A
    (State or other jurisdiction of      I.R.S. Employer Identification Number)
     incorporation or organization)

                 250 West Nyack Road, West Nyack, New York       10994
               (Address of Principal Executive Offices)       (Zip Code)

       Registrant's telephone number, including Area Code: (914) 623 2333

               Securities registered pursuant to Section 12 (b) of the Act:
                                 --------------

               Securities registered pursuant to Section 12 (b) of the Act:

                           Common Stock (no par value)
                                 Title of Class

         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  twelve  (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
         ninety (90) days. Yes [X] No [ ]

         As of June 30, 1999,  there were 22,218,481  shares of the registrant's
         common stock, no par value, issued and outstanding.

         The aggregate market value of the voting stock held by  non-affiliates
         of the registrant: $21,597,905.


<PAGE>

                                     PAGE 2

                         PART 1 - FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

                             SOLUCORP INDUSTRIES LTD
                CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
                      (UNAUDITED - PREPARED BY MANAGEMENT)
                                (IN U.S. DOLLARS)


<TABLE>

<S>                                             <C>                 <C>         <C>            <C>

                                                     Three Months Ended         Six Months Ended
                                                     June 30,                   June 30,
                                                  -------------------------     --------------------------
                                                       1999          1998         1999               1998
                                                  -------------------------     --------------------------

Revenues
     Environmental clean-up and waste disposal     $1,277,260 $   481,412      $2,412,595          $986,563
     Training Institute                                 1,190         680           3,990             8,396
                                               --------------  ----------   -------------       -----------
                                                    1,278,450     482,092       2,416,585           994,959
                                               --------------  ----------   -------------       -----------
Cost of Sales and Revenue
         Environmental clean-up and waste disposal  1,862,553     410,588       2,396,784           855,710
         Training Institute                            65,220           0          65,470             2,964
         Inventory storage costs                            -      42,931          29,643           139,746
                                               --------------  ----------   -------------       -----------
                                                    1,927,773     453,519       2,491,897           998,420
                                               --------------  ----------   -------------       -----------
Gross Margin                                         (649,323)     28,573         (75,312)           (3,461)
Investment and Other Income (Expense)                 216,556    (483,140)        250,827          (419,594)
License fees                                          500,000     530,304       1,000,000         1,075,758
                                               --------------  ----------   -------------       -----------
                                                       67,233      75,737       1,175,515           652,703
                                               --------------  ----------   -------------       -----------
Expenses
Administrative and general                            556,627   1,116,168       1,497,516         1,769,072
Corporate development and marketing                     1,386     142,421           1,389           256,447
Depreciation and amortization                          75,059      88,155         149,926           157,671
Research and development                                    -           -               -                 -
                                               --------------  ----------   -------------       -----------
                                                      633,072   1,346,744       1,648,831         2,183,190
                                               --------------  ----------   -------------       -----------
Earnings (loss) from operations                      (565,839) (1,271,007)       (473,316)       (1,530,487)
                                               --------------  ----------   -------------       -----------
Earnings (loss) for the period                       (565,839) (1,271,007)       (473,316)       (1,530,487)
Deficit, beginning of period                      (16,705,424)(13,507,218)    (16,797,947)      (13,247,738)
                                               --------------  ----------   -------------       -----------
                                                 ($17,271,263)($14,778,225)   (17,271,263)      (14,778,225)
                                                   =========    =========      =========          =========
Earnings (loss) per share                              $(0.03)      ($0.01)        ($0.02)           ($0.08)
                                                   =========    =========      =========          =========


</TABLE>

The accompanying notes are an integral part of this statement.


                                     PAGE 3

                            SOLUCORP INDUSTRIES LTD.
                           CONSOLIDATED BALANCE SHEET
                                (IN U.S. DOLLARS)


<TABLE>

<S>                                                         <C>                      <C>

                                                               June 30,                 December 31,
                                                               1999                         1998
                                                              (Unaudited)
                                                            ---------------           -----------------
ASSETS
Current
         Cash                                                 $          -              $           -
         Accounts receivable (Note 2)                            1,365,939                  2,399,401
         License fees (Note 3)                                           -                     90,910
         Due from related parties (Note 5)                       1,798,600                  1,690,482
         Other receivables                                          64,345                     66,635
         Inventories (Note 6)                                    3,590,544                  1,538,560
         Prepaid expenses (Note 7)                               1,247,275                    247,238
                                                              ---------------           -----------------
                                                                 8,066,703                  6,033,226
Long-term investment (Note 8)                                      342,343                    265,421
Capital assets (Note 9)                                            230,274                    311,124
                                                              ---------------           -----------------
TOTAL ASSETS                                                   $ 8,639,320                $ 6,609,771
                                                                 =========                 ==========
LIABILITIES
Current
         Bank indebtedness                                   $     328,701              $      58,359
         Accounts payable and accrued liabilities                3,291,262                  1,708,195
         Customer deposits                                          77,854                     77,854
         Loans payable (Note 10)                                   996,775                    347,319
                                                              ---------------           -----------------
                                                                 4,694,592                  2,191,727
                                                              ---------------           -----------------
SHAREHOLDERS' EQUITY
Subscriptions received                                                   -                  1,161,901
Share capital (Note 11)                                         21,215,991                 20,054,090
Deficit                                                        (17,271,263)               (16,797,947)
                                                              ---------------           -----------------
                                                                 3,944,728                  4,418,044
                                                              ---------------           -----------------
TOTAL LIABILITIES AND
SHAREHOLDER'S EQUITY                                             8,639,320                  6,609,771
                                                                 =========                 ==========
Subsequent events (Note 13)
Contingencies (Note 15)
Commitments (Note 17)

</TABLE>

The accompanying notes are an integral part of this statement.

<PAGE>

                                     PAGE 4

                             SOLUCORP INDUSTRIES LTD
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                      (UNAUDITED - PREPARED BY MANAGEMENT)
                                (IN U.S. DOLLARS)


<TABLE>

<S>                                                            <C>                <C>

                                                                    Six Months Ended
                                                                        June 30,
                                                              -----------------------------------
                                                                     1999          1998
                                                              -----------------------------------
CASH PROVIDED BY (USED IN)
     Operating activities
         Net profit (loss) for the period                      $   (473,316)     $ (1,530,487)
         Items not involving cash:
         Depreciation and amortization                         $    149,926           157,671
                                                              ---------------   --------------
         Funds provided (used) from operations                     (323,390)       (1,372,816)
         Non-cash working capital changes                          (492,218)          202,122
                                                              ---------------   --------------
             Cash provided by (used in) operating activities       (815,608)       (1,170,694)
                                                              ---------------   --------------
     Financing activities
         Issue of common shares                                           -         1,135,350
         Due from related parties                                  (108,118)          555,158
         Loans receivable                                                 -            10,021
         Loans payable                                              649,456            (1,845)
                                                              ---------------   --------------
              Cash provided by (used in) financing activities       541,338         1,698,684
                                                              ---------------   --------------
     Investment activities
         (Increase) decrease in capital assets                       80,850           (13,027)
         (Increase) decrease in deferred charges                          -          (500,000)
         (Increase) decrease in long-term investments               (76,922)           (8,854)
                                                              ---------------   --------------
     Increase (decrease) in cash position                          (270,342)            6,109
     Cash position, beginning of period                             (58,359)           26,646
                                                              ---------------   --------------
     Cash position, end of period                               $  (328,701)     $     32,755
                                                                  ==========        =========

</TABLE>

The accompanying notes are an integral part of this statement.


<PAGE>

                                     PAGE 5

                            SOLUCORP INDUSTRIES, LTD.
                          NOTES TO FINANCIAL STATEMENTS
                    THREE MONTHS ENDED JUNE 30, 1999 AND 1998

1.       Significant Accounting Policies

         BASIS OF PRESENTATION

         The consolidated  financial statements have been prepared in accordance
         with generally  accepted  principles for interim financial  information
         without  audit.   In  the  opinion  of  management,   all   adjustments
         (consisting of normal recurring  accruals)  considered  necessary for a
         fair presentation have been included (see also note 3). These unaudited
         statements should be read in  conjunction  with the audited  financial
         statements of the Company  and notes  thereto  included in the
         Company's  Report for the twelve months period ended December 31, 1998.
         The results of operations for the three  months  and six  months  ended
         June 30,  1999,  are not necessarily  indicative  of the results  which
         may be expected  for the full year ending December 31, 1999.

         FORWARD LOOKING STATEMENTS

         Certain  matters   discussed  herein  may  constitute   forward-looking
         statements  within the  meaning of the  Private  Securities  Litigation
         Reform Act of 1995 and, as such,  may involve risks and  uncertainties.
         These  forward-looking   statements  relate  to,  among  other  things,
         expectations of the business environment in which the Company operates,
         projections  of  future  performance,  perceived  opportunities  in the
         market and statements  regarding the Company's mission and vision.  The
         Company's  actual  results,  performance,  or  achievements  may differ
         significantly from the results,  performance, or achievements expressed
         or implied in such forward-looking statements.

(a)      Generally Accepted Accounting Principles

         The consolidated  financial statements have been prepared in accordance
         with  accounting  principles  generally  accepted in Canada,  which may
         differ in some respects from those in the United States.

(b)      Basis of Consolidation

         The  consolidated  financial  statements  include  the  accounts of the
         Company and its  subsidiaries.  At December  31,  1998,  the  Company's
         subsidiaries and its percentage equity in each are as follows:

                  BSM Industries (Canada), Inc.               100%
                  World Travel Plaza, Inc.                    100%
                  World Tec Equities, Inc.                    100%
                  EPS Environmental, Inc.                     100%
                  Environmental Training Institute, Inc.      100%
                           (incorporated in the USA)

(c)      Cash and Cash Equivalents

         For purposes of balance sheet  clarification and the statements of cash
         flows, the Company  considers all highly liquid  investments  purchased
         with an  original  maturity  of  three  (3)  months  or less to be cash
         equivalents.

<PAGE>

                                     PAGE 6

(d)      Estimates

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions   that  affect  the  reported  amount  of  assets  and
         liabilities  at the date of the financial  statements  and the reported
         amounts of revenue and expenses  during the  reporting  period.  Actual
         results could differ from those estimates.

(e)      Fair Value of Financial Instruments

         The carrying  amounts  reported in the balance sheets for cash and cash
         equivalents, accounts receivable, loans and other receivables, accounts
         payable and accrued  liabilities  and loans  payable  approximate  fair
         market  value  because of the  immediate  short-term  maturity of these
         financial accounts. The fair value of the long-term investments are not
         readily   determinable  due  to  uncertainties  in  their  realization,
         however, where available, the quoted market prices have been disclosed.

(f)      Inventory

         Inventory is valued at the lower of cost and net realizable value. Cost
         is determined on a first-in, first-out basis.

(g)      Long-term Investments

         Investments  are  recorded  at  cost  less a  provision  for  permanent
         impairment in value.

(h)      Capital Assets

         Capital assets are recorded at cost.  Amortization is provided over the
         estimated useful lives of the assets on the following basis:

                  Computer                           30% declining balance
                  Furniture and office equipment     20% declining balance
                  Leasehold improvements              5 years straight-line
                  Remediation equipment              30% declining balance
                  Patent costs                       10 years straight-line

(i)      Reporting Currency and Translation of Foreign Currency

         The  Company  has adopted  the United  States  dollar as its  reporting
         currency for its financial  statements  prepared  after March 31, 1996.
         The U.S. dollar is the currency of the primary economic  environment in
         which the Company conducts its business,  and is considered appropriate
         functional  currency for its  operations.  Accordingly,  the  financial
         statements  of the  Company  have been  translated  using the  temporal
         method with  translation  gains and losses  included  in the  earnings.
         Under this method,  the  operations of the Company have been  converted
         into U.S. dollars at the following rates of exchange:

         (i)        Monetary  assets and  liabilities  - at the rate of exchange
                    prevailing at the balance sheet date.

         (ii)       All other  assets and  liabilities  - at the  exchange  rate
                    prevailing at the time of the transactions

         (iii)      Revenue  and  expenses  -  at  the  average  exchange  rates
                    prevailing during the period


                                     PAGE 7

(j)      Share Issue Costs

         Share issue costs are charged directly to the deficit.

(k)      Revenue Recognition

         Revenue  from  on-site  remediation  projects is  recognized  using the
         percentage  of  completion  method of  accounting.  Under this  method,
         contract  revenue is  determined  by  applying  to the total  estimated
         income on each  contract,  a percentage  which is equal to the ratio of
         contract costs  incurred to date, to the most recent  estimate of total
         costs  which  will  have to be  incurred  upon  the  completion  of the
         contract. Costs and estimated earnings in excess of billings represents
         additional earnings over billings,  based upon percentage completed, as
         outlined  above.  Similarly,  billings in excess of costs and estimated
         earnings  represent  excess of amounts  billed over income  recognized.
         Provision for estimated losses on uncompleted contracts are made in the
         period in which such losses are  determined.  As at December  31, 1998,
         there were no on-site projects in progress.

         Revenue  from  in-line  remediation  projects is  recognized  using the
         completed  contract  method.  Under this method,  revenue is recognized
         when work is completed and invoiced.

         Revenue from license fees, option payments and royalties are recognized
         as they accrue in accordance with the terms of the relevant agreements.

(l)      Research and Development

         Research and development expenditures,  less related government grants,
         are charged to operations.

(m)      Earnings (Loss) Per Share

         The earnings  (loss) per share is computed  using the  weighted-average
         number of common shares outstanding during the period.

2.       Accounts Receivable
                                               June 30,         December 31,
                                                  1999             1998
                                           --------------      --------------
         Smart International Ltd.                 -             $ 2,006,984
         Other                              $1,478,013          $   804,156
                                           --------------      --------------
                                            $1,478,013          $ 2,811,140

         Allowance for bad debts            $( 112,074)         $(  411,739)
                                           --------------      --------------
                                            $1,365,939          $ 2,399,401
                                             ========             ========

<PAGE>

                                     PAGE 8

3.       License Fees

         By a letter  of intent  dated  June 4,  1997,  and an  agreement  dated
         September 15, 1997,  the Company  granted to Smart  International  Ltd.
         (Smart)  the right to  manufacture  chemicals  for the  Company and the
         right to exclusively engage in remediation  projects in China using the
         Company's  technology.  The agreement is for a ten-year term commencing
         June 1,  1997,  with an  option to renew  for a  further  10 years.  As
         consideration,  Smart  has  agreed  to pay  an  annual  license  fee of
         $2,000,000  per  year  plus a  royalty  of $5 per ton for  each  ton of
         processed  material in excess of 100,000  tons per contract  year.  The
         Company billed $1,000,000  towards the license fee for the period ended
         June 30,  1999.  Pursuant  to the  agreement  with Smart  which  allows
         payments  to be offset  against  amounts  owed to Smart  for  inventory
         purchases,  this  amount  is  included  in  the  deposit  on  inventory
         purchases, and reflected in the total value of $1,583,560 for available
         inventory recorded for the period. No royalties were payable.

         The  Company  believes  that it has been using the  proper  accounting
         method,  as  accepted  by  its  independent  auditor,  to  report  its
         relationship  with Smart  (See also notes 2 and 7b).  The staff of the
         Securities and Exchange Commission (the "Staff") has expressed concern
         about the propriety of the accounting method used by the Company.  The
         Company  disagrees with the Staff's  position.  If the Company were to
         disregard its relationship  with Smart (including the $1,000,000 Smart
         licensing  fee),  for the six month period  ended June 30,  1999,  its
         statement  of  operations  would  show a net  loss of  $1,473,316.  In
         addition,  on June 30, 1999,  the  Company's  balance sheet would have
         shown an inventory value of $2,590,544 and stockholders' equity in the
         amount of $2,944,728.

4.       Loans Receivable

         Nil

5.       Due From Related Parties

         Advances, primarily to directors and employees related to directors in
         the  amount  of  $1,798,600  (December  31,  1998 -  $1,690,482),  bear
         interest at 8.5% and have no specific term of repayment. These advances
         were secured by  marketable  securities  (market  value at December 31,
         1998 - approximately $50,000).  During the quarter ended June 30, 1999,
         the Company  received  repayments  of $14,980  from the proceeds of the
         sale of the  marketable  securities and $25,600 direct from the related
         parties.  Additional  advances  of  $40,851  were  made to the  related
         parties and interest of $36,556 was charged for the current quarter. As
         at June 30, 1999,  the value of the remaining  security has remained at
         approximately  $50,000.  Management  expects  that  the  value  of  the
         security  will recover and that the amounts due,  including the current
         accrued interest, will be fully recovered.

6.       Inventories
                                                 June 30,        December 31,
                                                    1999                1998
                                             --------------     --------------
         Raw chemicals                        $3,585,480          $1,515,550
         Blended chemicals                         3,035              16,056
         Goods for resale                          2,029               6,954
                                             --------------      --------------
                                              $3,590,544          $1,538,560
                                                ========            ========


                                     PAGE 9


7.       Prepaid Expenses
                                                   June 30,         December 31,
                                                      1999              1998
                                               --------------     --------------
         Consulting agreements (Note 7a)          $      0         $    5,041
         Rental expense                              8,961             36,360
         Deposit on inventory purchases (Note 7b)1,000,000            201,900
         Other                                     238,314              3,937
                                               --------------     --------------
                                               $ 1,247,275        $   247,238
                                                 ========            ========

         Deposit On Inventory Purchases

         Pursuant to the agreement  with Smart,  the Company may offset  license
         fee payments against amounts owed to Smart for inventory purchases. Due
         to the anticipated,  and now realized,  increased requirement for large
         volumes of chemical  reagents  for  remediation  projects in 1999,  the
         Company  has offset  Smart's  fees as  deposits  on current  and future
         inventory.


<PAGE>

                                    PAGE 10

8.    Long-term Investments

<TABLE>

<S>                                                                           <C>              <C>
                                                                               June 30,        December 31,
                                                                                  1999             1998


      (a) Shares of Earthworks Industries Inc. accrued (see Note 10).           46,598              46,598

      (b) Convertible  debenture from Travel Plaza Developments,  Inc.
          (Travel Plaza). The Company elected on December 28, 1994, to
          convert the Cdn $50,000  debenture  into  250,000  shares of
          Travel Plaza. Final regulatory  approval for this conversion
          from the Alberta Stock Exchange is still pending  subject to
          their acceptance of a financing arrangement and the approval
          of minority  shareholders.  On August 21, 1996,  pending the
          finalization  of the  required  financing  to  complete  the
          project,  construction  was  temporarily  suspended  and the
          stock of Travel Plaza has been halted from  trading.  Due to
          these uncertainties,  the Company has written this down to a
          nominal value.

      (c) Convertible loan to Cortina Integrated Waste Management, Inc.,
          a subsidiary of Earthworks Industries,  Inc. (public company),
          due  September 5, 2000,  with  interest at 15% per annum.  The
          Company is  entitled  to convert  all or a portion of the loan
          into shares of Earthworks Industries, Inc. at any time. During
          the term of this  loan,  the  Company  has the right to offset
          royalty  payments due to Earthworks  Industries,  Inc. against
          the loan balance.                                                    295,744             218,821

      (d) A 25% interest in John Beech remediation Limited
          (no market value).

      (e) 70,000 shares of Global Technologies, Inc. (Note 10).                      0                  0
                                                                           $   342,343         $  265,421
                                                                              ========          =========

</TABLE>

9.       Capital Assets
                                                June 30,            December 31,
                                                   1999                1998
                                           --------------         --------------
         Computers                         $     24,047                 $24,047
         Furniture and office equipment         121,292                 121,292
         Remediation equipment                  448,703                 454,327
         Leasehold improvements                  15,927                  15,927
         Incorporation costs                        688                     688
         Patent costs                            70,583                  70,583
                                           --------------         --------------
                                           $    681,240              $  686,864
         Less: Accumulated amortization         450,966                 375,740
                                           --------------         --------------
                                            $   230,274              $  311,124
                                               ========               =========


<PAGE>

                                    PAGE 11

10.      Loans Payable

<TABLE>

<S>                                                         <C>            <C>

                                                                June 30,     December 31,
                                                                   1999           1998
                                                           -------------   --------------
                                                             (Unaudited)

IDM  Environmental   Corp.,   10.25%,   payable  in  monthly
installments of $22,008,  including  principal and interest,
maturing on July 1, 1998,  secured by the Company's treasury
stock, 100,500 shares of Earthworks  Industries,  Inc. (Note
8a) and 70,000 shares of Global Technologies, Inc. (Note 8e)
held as investments by the Company. The Company has not made
any payments and IDM  liquidated  all of the  collateral and
applied the proceeds towards the loan.                        $ 206,277        $ 206,277

Global Technologies, Inc., due on demand ($100,000 Cdn).         65,308           65,308

         London Venture Capital Corp.                           725,190           60,734

         Other                                                        0           15,000
                                                          --------------   --------------
                                                            $   996,775    $     374,319
                                                               =========        =========

</TABLE>

<PAGE>

11.      Share Capital

         a)       Authorized:
                  200,000,000 common shares of no par value

         b)       Issued:


<TABLE>

<S>                                   <C>           <C>           <C>           <C>


                                       6-Month Period Ended        6-Month Period Ended
                                            June 30, 1999              June 30, 1998
                                             (Unaudited)                (Unaudited)
                                       Shares        Amount         Shares       Amount
                                       ------------------------------------------------
Balance, beginning                     19,528,640    $20,054,640    18,652,497   $18,135,240
--------------------------------------------------------------------------------------------
Issued pursuant to
Stock options                                                          271,000       568,850
Private placement                       2,689,841      1,161,901
Shares for debt settlement
Warrants                                                                36,557        63,975
Finders agreement
Conversion of debentures
Employment agreement
License agreement                                                      190,550       500,000
Consulting agreement
                                       --------------------------   -------------------------
                                                                       498,107   $ 1,132,825
Allotted for cash                                                        1,443         2,525
Allotted for debt settlement
Less unpaid shares to be returned
                                       --------------------------   -------------------------
Balance, ending                        22,218,481    $21,215,991    19,152,047   $19,270,590
                                       ==========================   =========================

</TABLE>

c)       During the three-month  period ended June 30, 1999, no stock options
         were  granted  by  the  Company  to  employees,   directors  and  other
         associated individuals.
         At June 30, 1999, stock options were outstanding as follows:

         Shares                Exercise Price                Expiration Date
--------------------------------------------------------------------------------
                250,000            $1.38                   December 21, 1999
                 47,500            $1.75                       July 13, 2000
                 71,500            $1.75                  September 12, 2000
                 47,000            $1.75                     January 6, 2002
              1,638,329            $1.75                        June 9, 2002
                872,210            $1.20                    November 4, 2002
                431,000            $1.20                   February 19, 2003
              1,985,000            $1.20                     October 6, 2003


<PAGE>

     d)   During the  six-month  period ended June 30, 1999,  no warrants were
          issued and outstanding warrants remained as follows:

     Shares               Exercise Price                 Expiration Date
--------------------------------------------------------------------------------
            155,443          $1.75-$2.00                   June 25, 1999
            750,000                $2.75              September 10, 2000
             25,000                $4.00                   April 4, 2001
            300,000                $7.50                    June 3, 2002

      e)  At June  30,  1999,  1,675,000  common  shares  were  held  in  escrow
          (December 31, 1998 - 1,675,000). Pursuant to an escrow agreement dated
          April 30, 1998, these shares were subject to release on or before June
          22, 1998,  in the event that the Company  attained  certain  cash-flow
          targets.  Since  these  cash-flow  targets  were not  achieved,  these
          escrowed shares are in the process of being canceled.

12.      Income Taxes

         At  December  31,  1998,  the  Company  had   accumulated   tax  losses
         aggregating approximately $13,100,000, which may be carried forward and
         applied  against taxable income in future years up to 2003. The Company
         does not record the income tax benefit of these losses.

13.      Subsequent Events

         As previously reported, since May 1, 1998, the Staff of the Securities
         and  Exchange  Commission  had been  investigating  the affairs of the
         Company.  Recently,  the Staff advised the Company that it intended to
         recommend  to the  Commission  that it institute  enforcement  actions
         against the Company and various individuals associated with it seeking
         various  forms of relief.  The Company and the persons  involved  have
         made a  submission  to the SEC arguing  that the relief  sought is not
         necessary or  appropriate  but offering to consent to some but not all
         of the relief  contemplated.  The Staff has indicated that it will not
         recommend that the Commission accept the offer. The Commission has not
         yet considered the matter or decided whether to institute  enforcement
         actions.

<PAGE>

                                    PAGE 14

14.      Segmented Information

<TABLE>

        <S>                                      <C>           <C>        <C>

                                                  US Services              Consolidated Totals
                                                  & Products    Canada          Total
                                                  ------------ ----------   --------------------
         (a) Six Months Ended June 30, 1999:
                           (Unaudited)
              Revenue                             $2,416,585 $       0        $2,416,585
              License Fees                           500,000         0           500,000
              Cost of Sales                        2,491,897         0         2,491,897
              Operating earnings (loss)              424,688         0           424,688
              Administrative and general           1,443,158    54,358         1,497,516
              Corporate development and marketing      1,386         3             1,389
              Amortization                           147,519     2,407           149,926

              Segmented gain (loss)              $  (667,375)$( 56,768)       $ (724,143)
                                                  ----------  ---------        ---------
              Unallocated:
              Investment and other income            250,827         0           250,827
                 ------------------
              GAIN (LOSS) FOR THE PERIOD            (416,548)  (56,768)       $ (473,316)
               -----------------
              IDENTIFIABLE ASSETS                 $8,032,618 $ 606,702        $8,639,320
                                                   ========= ==========       ==========

         (a) Six Months Ended June 30, 1998:
                           (Unaudited)
             Revenue                              $  994,959 $       0        $  994,959
             License Fees                          1,075,758         0         1,075,758
              Cost of Sales                        1,020,358         0         1,020,358
              Operating earnings (loss)            1,050,359         0         1,050,359
              Administrative and general           1,677,370    91,702         1,769,072
              Corporate development and marketing    202,655    53,792           256,447
              Amortization                           151,311     6,360           157,671

              Segmented loss                      $ (980,977)$(151,854)      $(1,132,831)
                                                  ----------  --------         ----------
              Unallocated:
              Other income(expense)                 (521,039)        0      $   (521,039)
              Investment and other Income             66,445                      66,445
                   ------------------
              LOSS FOR THE PERIOD                                           $ (1,587,425)
                                                                                ---------
              IDENTIFIABLE ASSETS                 $7,108,528  $497,748      $  7,606,276
                                                   =========  ========         ==========

</TABLE>

<PAGE>

                                    PAGE 15

15.      Contingencies

a)       Legal Proceedings

         As  previously  disclosed,  the  Company  is party to a number of legal
         proceedings.  Except as set forth below, no material  developments have
         occurred in any of these  proceedings since the filing of the Company's
         Annual Report on Form 10-KSB for the year ended December 31, 1998.

          On May 19, 1999 the Company  announced that it had settled its lawsuit
          which  it  commenced  against  Tristate  Restoration  Company  and its
          principals  in May 1998 in the U.S.  District  Court,  District of New
          Jersey. The settlement was completed by the payment of $180,000 to the
          Company by the  Tristate  Defendants  in June 1999 in  exchange  for a
          complete release of all claims among the parties,  their subsidiaries,
          affiliates,  employees,  agents and assigns.

          In the lawsuit between the Company and KBF Pollution Management,  Inc.
          ("KBF"),  the Company  filed a Third  Party  Complaint  against  KBF's
          principals,  Lawrence  Kreisler  and Kevin  Kreisler  and  against P&K
          Partnership  Limited  Liability  Company  ("P&K") and its  principals,
          Herman  Kong  and  Fred  Wesson.   The  Third  Party  Complaint  seeks
          substantial  damages  emanating  from,  among other things,  the Third
          Party  Defendants'  conspiracy to circumvent  the Licensing  Agreement
          between  the  Company  and  KBF  and  related  misrepresentations  and
          falsehoods. The Court has denied a motion to dismiss on jurisdictional
          and other grounds made by P&K and Messrs.  Kong and Wesson.  Pre-trial
          discovery is about to proceed.

          As previously reported, since May 1, 1998, the Staff of the Securities
          and  Exchange  Commission  had been  investigating  the affairs of the
          Company.  Recently,  the Staff advised the Company that it intended to
          recommend  to the  Commission  that it institute  enforcement  actions
          against the Company and various individuals associated with it seeking
          various  forms of relief.  The Company and the persons  involved  have
          made a  submission  to the SEC arguing  that the relief  sought is not
          necessary or  appropriate  but offering to consent to some but not all
          of the relief  contemplated.  The Staff has indicated that it will not
          recommend that the Commission accept the offer. The Commission has not
          yet considered the matter or decided whether to institute  enforcement
          actions.


16.      Related Party Transactions

         During the six months ended June 30, 1999, the Company paid  consulting
         fees and salaries of $137,960  (June 30, 1998 - $414,811) to directors,
         former  directors  and/or  private  companies  controlled  by directors
         and/or individuals related to directors.

17.      Commitments

         a) The Company has a lease for a building it presently  occupies in New
         York which requires the following payments:

                  1999                               $ 144,000
                  2000                               $ 144,000
                  2001                               $ 144,000
                  2002 and subsequent               $   24,000

         b)  The  Company  has  entered  into  numerous  non-exclusive  finder's
         agreements  with third  parties to promote  the  Company's  remediation
         process for soil and industrial wastes. The Company will pay between 1%
         and 7% commission  on gross  revenues  generated by the third  parties.
         These agreements expire within one and two years.

         c) The Company entered into a finder's  agreement with a third party to
         raise capital for the Company through private  placements.  The Company
         will pay a 5%  commission  on private  placements  raised  directly  or
         indirectly by the third party.  The agreement  expires on September 27,
         2000, with an option to renew for another five years.

         d) The Company has agreed to pay royalties to  Earthworks  Industries,
         Inc.  (Earthworks),  a Canadian public company,  based on Cdn $1/tonne
         (metric  ton)  of soil  remediated  in  Canada  or the  United  States
         ($1/tonne will be U.S.  dollars if soil is remediated in the USA). The
         Company  will receive one share in  Earthworks  for each $1 of royalty
         paid,  to a maximum of 200,000  shares,  in minimum  blocks of 50,000.
         These shares are accrued as the soil is  remediated.  An additional $1
         (Cdn or  U.S.)  will be paid  for each  tonne  of soil  remediated  on
         contracts  resulting from the efforts of  Earthworks.  The Company has
         the right to offset royalty payments against the convertible loan from
         Cortina Integrated Waste Management, Inc. (Note 8c).


<PAGE>

                                    PAGE 16

         e) In October  1995,  the Company  entered into an exclusive  licensing
         agreement  with a  United  Kingdom  company  for  the  utilization  and
         marketing  of  the  Company's  remediation   technology  for  soil  and
         industrial  wastes  in  the  U.K.  The  agreement  required  an  annual
         licensing fee and a royalty per ton of soil or waste  remediated.  This
         agreement will be superseded by a new agreement,  dated August 1, 1997,
         when the U.K.  company  obtains an official  listing on the Alternative
         Investment   Market.   The  Company   also  granted  an  option  for  a
         twelve-month  period  to  the  U.K.  company  for a  similar  licensing
         agreement  related  to  various  European  territories.   Consideration
         received for granting  the option was  $200,000.  On December 10, 1997,
         the U.K.  company  advised its  intention to exercise the option and to
         proceed  with  agreements  for France,  Hungary,  Poland and  Portugal.
         Accordingly,  the option payment received is included in licensing fees
         for the period ended December 31, 1997.

18.      Economic Dependence

         During  the  three-month  period  ended  June  30,  1999,  revenues  of
         $1,278,450  were  earned  from four  customers,  of which  $757,565  is
         included in accounts receivable.

         License fees of $1,000,000 (June 30, 1998 - $1,075,758) were recognized
         as disclosed in Note 3.

19.      Reconciliation to United States Generally Accepted Accounting
         Principles

         As  discussed  in  Significant  Accounting  Policies  (Note  1),  these
         consolidated  financial  statements  are  prepared in  accordance  with
         accounting principles generally accepted in Canada.

         Differences   in  accounting   principles  as  they  pertain  to  these
         consolidated financial statements are as follows:

         Marketable Securities

         Under GAAP, the accounting  for  marketable  securities  depends on the
         classification of securities as held to maturity,  trading or available
         for sale. The  classification  would be based on  management's  intent.
         Marketable  securities included in long-term investments (Note 8) would
         be  classified  as being  available  for sale.  Under U.S.  GAAP,  such
         securities  would be recorded at fair value,  with any changes recorded
         in a separate  component of  shareholder's  equity.  Realized  gains or
         losses would be recorded on the income  statements.  At March 31, 1999,
         the effect on the  presentation  of long-term  investment for U.S. GAAP
         purposes would not be material.

20.      Uncertainties - Year 2000 Computer Issue

         The effect of the Year 2000  Issue on the  Company  may be  experienced
         before,  on, or after  January  1,  2000,  and,  if not  satisfactorily
         addressed,  the impact on operations and financial  reporting may range
         from minor errors to significant systems failure which could affect the
         conduct of normal business  operations.  The Company's  services do not
         utilize  equipment  or systems  that depend on computer  software.  The
         Company's  accounting systems are personal computer based and presently
         utilize  off-the-shelf   accounting  software.  The  Company  plans  to
         purchase software  upgrades from software vendors,  and these purchases
         are not expected to have a material impact on the Company's  results of
         operations.  It is not possible,  at the present time, to be certain of
         all aspects of the Year 2000 Issue  affecting  the  Company,  including
         those related to he efforts of customers,  suppliers, or third parties,
         will be satisfactorily resolved.


<PAGE>

                                    PAGE 17

SOLUCORP INDUSTRIES LTD.
Schedule of Administrative and General Expenses (U.S. Dollars)
Six-month Periods Ended June 30, 1999 & 1998

<TABLE>

<S>                                          <C>            <C>       <C>            <C>


                                                          June 30,                       June 30,
                                                            1999                           1998
                                            ------------------------------------
-------------
                                                U.S.         Canada      Total             Total
                                            ------------- ----------  ----------         ---------
Advertising and promotion                    $   11,112           -     11,112         $       -
Automobile                                       16,441           -     16,441            18,387
Bad debts                                             -           -          -            86,600
Bank charges and interest                        30,153         230     30,383            10,691
Consulting and management fees                  137,960           -    137,960           414,811
Equipment Leasing                                24,085           -     24,085                 -
Foreign exchange (gain) loss                     19,678           -     19,678            52,901
Insurance                                        71,855           -     71,855            20,261
Investor and public relations                     3,791           -      3,791                 -
Legal, accounting and audit                     254,309           -    254,309           336,270
Office, printing and related                    200,455       3,978    204,433           169,172
Rent                                              5,971       3,497      9,468            63,497
Salaries and wages                              580,544      43,108    623,652           507,526
Telephone                                        79,175       3,635     82,810            41,298
Transfer and filing fees                              -           -          -               401
Travel                                            7,629           -      7,629            47,257
                                            -------------  --------- ----------       -------------
                                             $1,443,158 $    54,358 $1,497,516        $1,769,072
                                               ========    ========  =========          ========


</TABLE>

<PAGE>

                                    PAGE 18

Item 2:  Management's Discussion and Analysis of Results of Operations
         and Financial Conditions

         The  following  discussion  should  be read  in  conjunction  with  the
         consolidated financial statements and notes thereto.

Results of Operations

         Six Months Ended June 30,  1999,  Compared to the Six Months Ended June
30, 1998.

         Aggregate revenue (environmental  clean-ups and waste disposal projects
and  Training   Institute  fees)  increased  to  $2,416,585  from  $994,959;   a
significant  increase of $1,421,626,  or 142.88%, for the six-month period ended
June 30, 1999. This resulted  primarily from increased  remediation  activity as
projects that were initially obtained during 1998 reached their on-site start-up
and operational  phases.  The Company is pleased with this positive trend. There
can be no assurance that this trend will be maintained.

         Cost of sales  increased  to  $2,491,897  representing  an  increase of
$1,493,477, or 149.58%, over the comparable 1998 period's $998,420 when revenues
were  significantly  lower. As the period  entailed costs  associated with large
project  start-ups and  simultaneous  running,  for which  invoicing will not be
completed  until the third quarter of 1999,  and high  inventory  purchase costs
incurred in preparation for these  projects,  the Company views this result as a
positive indicator of progress.

          The  Company  reported a Gross  Margin Loss of $75,312 for the current
period,  which  was an  increase  versus  the  loss of  $3,461  recorded  in the
six-month period ended June 30, 1998. While the Company is not pleased with this
loss in the  context  of the  increased  revenues  in 1999,  it  notes  that the
currently  non-billable  project work and high costs  associated  with inventory
purchases and legal expenses have limited its profitability. In addition, the
Company believes that project costs do not yet reflect the full economy of scale
potential for operations at this stage of its development.

         Investment  and other income  increased to $250,827 from  $(419,594) in
the comparable  period in 1998, a increase of $670,421.  This increase  resulted
primarily  from an  equivalent  change to the income  received  from interest on
related  party loans and a  settlement  payment  from the  Tristate  Restoration
Company,  Inc.  lawsuit which was resolved  during the past quarter (see Notes 5
and 15a).

         Selling,  general and administrative expenses (SG&A) decreased $534,359
or 24.4%, to $1,648,831 in the six-month period ended June 30, 1999,  versus the
1998 comparable period's $2,183,190. While significant contributions to the 1999
expenses  were made by legal  costs  incurred  by the Company in relation to the
Legal Proceedings  detailed in Note 15a, the Company is pleased by the budgetary
and economic restraint which the 1999 period reflects.

         For the six-month  period ended June 30, 1999, the Company is reporting
a loss  from  operations  of  $473,316,  versus  a  loss  of  $1,530,487  in the
comparable period of 1998. Although this loss is disappointing,  the significant
improvement  of  $1,057,171  or 69.1%,  is viewed as a further  indicator of the
Company's  achievements in overcoming the large abnormal expenses experienced in
the 1999 period,  which are discussed above. The Company views these expenses as
an  aberration  which  obscures a true  perspective  on the growth and  progress
achieved in the first half of 1999.

<PAGE>

Liquidity and Capital Resources

         At June 30, 1999, the Company had a working  capital of $3,372,111,  a
decrease of  $469,388 or 12.2% from the  $3,841,499  reflected  at December  31,
1998. Within the current liabilities, significant increases occurred in accounts
payable,  accrued  expenses  and  loans  payable  as a result of  preparing  for
projects which commenced during the first half of 1999.

                                    PAGE 19

         The Company has financed its operations  through revenues received from
MBS sales, projects and related revenues. Extraordinary expenses associated with
the Legal  Proceedings  detailed in Note 15a are being financed through the sale
of the Company's  securities  pursuant to its stock option plan,  and to certain
private  investors.  The Company expects to continue to provide for its cash and
capital  needs in this manner  until  operations  are  sufficient  to meet these
needs.

Cash Flows

         During the six-month period ended June 30, 1999, the Company  increased
its cash  overdraft  position  $270,342  versus an  overdraft  cash  position of
$58,359  in the  comparable  period in 1998.  In the  current  period,  cash was
provided mainly from sales revenues, and from non-interest bearing demand loans.
Cash-flow  further  reflects  the  out-flow of monies  required to finance  work
currently in progress for which  revenues and profits will not be fully realized
until later in 1999.

Other

         In anticipation  of  significantly  increased  remediation in 1999, the
Company has been  progressively  increasing  its  inventory of the main chemical
ingredient  in  MBS  since  mid-1998,  as the  chemical  has a  relatively  long
lead-time prior to availability.  Although several major projects have commenced
in 1999, this build-up of inventory is still the primary reason for the value of
inventory  increasing  $45,000  to a total of  $1,583,560  from  the  $1,538,560
recorded at December 31, 1998. The Company  believes that demand for product for
contracts  already issued,  in process and pending in 1999 will result in a need
exceeding full utilization of the currently held inventory.

Year 2000 Issue

         The effect of the Year 2000  Issue on the  Company  may be  experienced
before, on, or after January 1, 2000, and, if not satisfactorily  addressed, the
impact on  operations  and  financial  reporting  may range from minor errors to
significant  systems  failure which could affect the conduct of normal  business
operations.  The  Company's  services do not utilize  equipment  or systems that
depend on computer  software.  The  Company's  accounting  systems are  personal
computer based and presently  utilize  off-the-shelf  accounting  software.  The
Company plans to purchase  software  upgrades from software  vendors,  and these
purchases are not expected to have a material impact on the Company's results of
operations.  It is not  possible,  at the  present  time,  to be  certain of all
aspects of the Year 2000 Issue affecting the Company, including those related to
the efforts of customers,  suppliers,  or third parties,  will be
satisfactorily resolved.

         Certain  matters   discussed  herein  may  constitute   forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 and, as such, may involve risks and  uncertainties.  These  forward-looking
statements  relate  to,  among  other  things,   expectations  of  the  business
environment in which the Company  operates,  projections of future  performance,
perceived  opportunities  in the market and  statements  regarding the Company's
mission and vision. The Company's actual results,  performance,  or achievements
may  differ  significantly  from  the  results,   performance,  or  achievements
expressed or implied in such forward-looking statements.

<PAGE>


                                    PAGE 20

                          PART II -- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         See Note 15 for details.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         (a)      None

         (b)      None

         (c)      None

         (d)      Not Applicable

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None

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

         None

ITEM 5.  OTHER

         None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

              (a)      The following exhibits are filed as part of this report:

                  Financial Data Schedule

                                   SIGNATURES

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

Dated:   August 19, 1999               SOLUCORP INDUSTRIES LTD.

                                    By: /s/ PETER MANTIA


                                        Peter Mantia - President