SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

(Mark one)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                For the quarterly period ended September 30, 1998

                                       OR

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

               For the transition period from ________to________.


                           Commission File No. 0-23900


                             IDM ENVIRONMENTAL CORP.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)


          New Jersey                                       22-2194790
-------------------------------                 --------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

               396 Whitehead Avenue, South River, New Jersey 08882
               ---------------------------------------------------
                    (Address of principal executive offices)



                                 (732) 390-9550
               --------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)


              ----------------------------------------------------
              (Former name, former address and formal fiscal year,
                         if changed since last report)


     Check  whether  the issuer (1) filed all  reports  required  to be filed by
section 13 or 15(d) of the  Exchange  Act during the past 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
   ---   ---

     As of November  17, 1998,  25,828,174  shares of Common Stock of the issuer
were outstanding.


<PAGE>


                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
                    ----------------------------------------
                                      INDEX

                                                                         Page
                                                                        Number
                                                                        ------
PART I - FINANCIAL INFORMATION

   Item 1.  Financial Statements

            Consolidated Balance Sheets - September 30, 1998 
            and December 31, 1997.......................................   1

            Consolidated Statements of Operations - For the nine  
            months ended September 30, 1998 and September 30, 1997......   2

            Consolidated Statement of Operations - For the three months 
            ended September 30, 1998 and September 30, 1997.............   3

            Consolidated Statements of Cash Flows - For the nine months 
            ended September 30, 1998 and September 30, 1997.............   4

            Notes to Consolidated Financial Statements..................   6

   Item 2.  Management's Discussion and Analysis of Financial Condition 
            and Results of Operations...................................  11

   Item 3.  Quantitative and Qualitative Disclosures about Market Risk..  19

PART II - OTHER INFORMATION

   Item 1.  Legal Proceedings............................................ 19

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

SIGNATURES

<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

 
<TABLE>
                                                                                   September 30,     December 31,
                                                                                        1998             1997  
                                                                                   -------------     ------------
<S>                                                                               <C>                <C>

ASSETS                                                                                         
Current Assets:
     Cash and cash equivalents                                                    $   484,619     $   602,242
     Accounts receivable                                                            3,992,938       4,094,408
     Notes receivable - current                                                       108,805         116,457
     Inventory                                                                        582,517         582,517
     Costs and estimated earnings in excess of billings                               705,402         455,823
     Bonding deposits                                                                       -           9,157
     Due from officers                                                                481,872         369,541
     Prepaid expenses and other current assets                                      1,124,340       1,433,068
                                                                                  ------------     -----------
         Total Current Assets                                                       7,480,493       7,663,213

Investments in and Advances to Unconsolidated Affiliates                            2,507,233       3,453,309
Investment in Affiliate, at cost                                                    1,893,125       1,715,000
Notes Receivable - long term                                                        1,381,155       1,381,155
Debt Discount and Issuance Costs                                                      174,400       4,610,166
Deferred Income Taxes                                                               4,570,000       4,170,000
Property, Plant and Equipment                                                       3,269,788       3,277,116
Other Assets                                                                          880,746         880,746
                                                                                  ------------     -----------
                                                                                 $ 22,156,940    $ 27,150,705
                                                                                  ============     ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
     Current portion of long-term debt                                          $     341,913     $ 3,566,393
     Accounts payable and accrued expenses                                          6,311,894       5,159,635
     Billings in excess of costs and estimated earnings                                91,507          86,604
                                                                                  ------------     -----------
         Total Current Liabilities                                                  6,745,314       8,812,632

Long-Term Debt                                                                        125,495         258,686
                                                                                  ------------     -----------
         Total Liabilities                                                          6,870,809       9,071,318
                                                                                  ------------     -----------
Commitments and Contingencies

Stockholders' Equity:
     Common stock, authorized 75,000,000 shares $.001 par value, issued
      and outstanding 21,524,183 in 1998 and 14,513,073 in 1997                        21,524          14,513
     Additional paid-in capital                                                    54,664,941      38,497,705
     Convertible preferred stock, authorized 1,000,000 shares $1.00 par value
     Series B, Issued and outstanding 0 in 1998 and 270 shares in 1997,
       stated at conversion value of $10,000 per share                                      -       2,700,000
     Series C, Issued and outstanding 1,104 shares, stated at conversion
        value of $10,000 per share                                                  1,104,000               -
     Series RR, Issued and outstanding 1,200 shares, stated at conversion
        value of $10,000 per share less unamortized beneficial conversion
        feature of $200,000                                                         1,000,000               -
     Retained earnings (deficit)                                                  (41,504,334)    (23,132,831)
                                                                                  ------------     -----------
                                                                                   15,286,131      18,079,387
                                                                                  ------------     -----------
                                                                                 $ 22,156,940    $ 27,150,705
                                                                                  ============     ===========

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

</TABLE>

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

                                       1
<PAGE>

                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

 
<TABLE>
                                                                    For the Nine Months Ended September 30,
                                                                             1998             1997
                                                                      ----------------   --------------
<S>                                                                    <C>               <C>


Revenue:
     Contract income                                                    $14,547,358     $13,163,032
     Sale of equipment                                                            -          28,550
                                                                        ------------     -----------
                                                                         14,547,358      13,191,582
                                                                        ------------     -----------
Cost of Sales:
     Direct job costs                                                    15,843,676      12,311,445
     Cost of equipment sales                                                      -          22,413
                                                                        ------------     -----------
                                                                         15,843,676      12,333,858
                                                                        ------------     -----------
Gross Profit (loss)                                                      (1,296,318)        857,724
                                                                        ------------     -----------
Operating Expenses:
     General and administrative expenses                                  8,774,586       5,835,451
     Depreciation and amortization                                          483,328         539,412
                                                                        ------------     -----------
                                                                          9,257,914       6,374,863
                                                                        ------------     -----------
Loss from Operations                                                    (10,554,232)     (5,517,139)

Other Income (Expense)
     Interest income(Expense)                                            (4,418,305)       (252,674)
                                                                        ------------     -----------
Loss before Credit for Income Taxes                                     (14,972,537)     (5,769,813)

Credit for Income Taxes                                                    (400,000)     (1,000,000)
                                                                        ------------     -----------   
Net Loss                                                                (14,572,537)     (4,769,813)

Preferred Stock Dividends including $3,630,000 and $1,109,589
     amortization of  beneficial conversion feature in 1998 and 1997.
     Total amounts of $3,830,000 and $1,109,589 for 1998 and 1997         3,798,966       1,236,847
                                                                         ------------     ----------
Net Loss on Common Stock                                               ($18,371,503)    ($6,006,660)
                                                                         ============     ==========
Loss per Share:
     Basic Loss per share                                                    ($1.03)         ($0.59)
                                                                         ============     ==========
     Diluted Loss per share                                                  ($1.03)         ($0.59)
                                                                         ============     ==========
     Basic common shares outstanding                                     17,802,210      10,173,582
                                                                         ============    ===========
     Diluted common shares outstanding                                   17,802,210      10,173,582
                                                                         ============    ===========

----------------------------------------------------------------------------------------------------
</TABLE>

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


                                       2
<PAGE>

                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
 
                                                                           For the Three Months Ended September 30,
                                                                                       1998            1997
                                                                                   -----------      ----------
<S>                                                                                <C>              <C>

Revenue:
     Contract income                                                               $4,531,809      $5,368,831
     Sale of equipment                                                                      -               -
                                                                                   ------------    -----------
                                                                                    4,531,809       5,368,831
                                                                                   ------------    -----------
Cost of Sales: 
     Direct job costs                                                               4,349,328       4,931,358
     Cost of equipment sales                                                                -               -
                                                                                   ------------    -----------
                                                                                    4,349,328       4,931,358
                                                                                   ------------    -----------
Gross Profit (Loss)                                                                   182,481         437,473
                                                                                   ------------    -----------
Operating Expenses:
     General and administrative expenses                                            2,393,864       1,804,723
     Depreciation and amortization                                                    165,082         163,571
                                                                                   ------------    -----------
                                                                                    2,558,946       1,968,294
                                                                                   ------------    -----------
Loss from Operations                                                               (2,376,465)     (1,530,821)

Other Income (Expense):
     Interest income (expense)                                                        (95,621)       (290,208)
                                                                                   ------------    -----------
Loss before Credit  for Income Taxes                                               (2,472,086)     (1,821,029)

Credit for Income Taxes                                                                     -        (320,000)
                                                                                   ------------    -----------
Net Loss                                                                           (2,472,086)     (1,501,029)

Preferred Stock Dividends including $300,000 and $265,068
     amortization of beneficial conversion feature in 1998 and 1997.
     Total amount of $3,830,000 and $1,109,589 for 1998 and 1997                      351,923         312,785
                                                                                   ------------    -----------
Net Loss on Common Stock                                                          ($2,824,009)    ($1,813,814)
                                                                                   ============    ===========
Loss per Share:
     Basic Loss per share                                                              ($0.15)        ($0.16)
                                                                                   ============    ===========
     Diluted Loss per share                                                            ($0.15)        ($0.16)
                                                                                   ============    ===========
     Basic common shares outstanding                                               19,132,125      11,296,671
                                                                                   ============    ===========
     Diluted common shares outstanding                                             19,132,125      11,296,671
                                                                                   ============    ===========

--------------------------------------------------------------------------------------------------------------
</TABLE>

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


                                       3
<PAGE>
                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
 
                                                                               For the Nine Months Ended September 30,
                                                                                     1998             1997         
                                                                                  ----------       -----------
<S>                                                                             <C>                 <C>

Cash Flows from Operating Activities:
     Net loss                                                                   ($14,572,537)     ($4,769,813)
     Adjustments to reconcile net loss to net cash used in operating activities:
         Deferred income taxes                                                      (400,000)      (1,000,000)
         Depreciation and amortization                                                479,656         539,412
         Amortization of debt discount and issuance costs                           4,357,013         206,849
         Compensation cost of consultant stock options                              1,871,400               -
         Decrease (Increase) In:
           Accounts receivable                                                        101,470        (963,182)
           Notes receivable                                                             7,652         (39,014)
           Costs and estimated earnings in excess of billings                        (249,579)      1,947,676
           Prepaid expenses and other current assets                                  308,728        (498,080)
           Bonding deposits                                                             9,157          46,474

         Increase (Decrease) In:
           Accounts payable and accrued expenses                                    1,573,327      (2,768,679)
           Billings in excess of costs and estimated earnings                           4,903          73,568
                                                                                   ------------     -----------
             Net cash used in operating activities                                 (6,508,810)     (7,224,789)
                                                                                   ------------     -----------
Cash Flows from Investing Activities:
     Acquisition of property, plant and equipment                                    (472,328)        (39,820)
     Proceeds from disposal of property, plant and equipment                                -          22,368
     Investment in and advances to unconsolidated affiliates                          946,076               -
     Acquisition of other assets                                                     (178,125)              -
     Loans and advances to officers                                                  (112,331)        (43,093)
                                                                                   ------------     -----------
         Net cash provided by (used in)  in investing activities                      183,292         (60,545)
                                                                                   ------------     -----------
Cash Flows from Financing Activities:
     Net proceeds from convertible notes issuance                                           -       2,780,000
     Net proceeds from convertible preferred stock issuance                         4,590,000       2,722,500
     Principal payments on long-term debt                                            (488,912)       (474,800)
     Long term debt borrowing                                                         156,238         938,993
     Preferred stock dividends                                                       (168,966)       (127,258)
     Proceeds from exercise of stock options and warrants                           2,119,535       5,693,015
                                                                                   ------------     -----------
         Net cash provided by financing activities                                  6,207,895      11,532,450
                                                                                   ------------     -----------
Increase (Decrease) in Cash and Cash Equivalents                                     (117,623)      4,247,116

Cash and Cash Equivalents, beginning of period                                        602,242       1,001,254
                                                                                   ------------     -----------
Cash and Cash Equivalents, end of period                                           $  484,619      $5,248,370
                                                                                   ============     ===========

---------------------------------------------------------------------------------------------------------------
</TABLE>

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

                                       4
<PAGE>


                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                   (Continued)


<TABLE>
 
                                                                          For the Nine Months Ended September 30,
                                                                                1998            1997     
                                                                             -----------     -----------
<S>                                                                          <C>             <C>

Supplemental Disclosures of Cash Flow Information:

     Cash paid during the year for:
         Interest                                                              $249,648       $231,707
                                                                               =========      =========
         Income taxes                                                                 -              -
                                                                               =========      =========
Supplemental Disclosure of Noncash Investing and Financing Activities:

     Conversion of convertible promissory notes to common stock              $3,025,000              -
                                                                              ==========      =========
     Beneficial conversion feature of debt discount on convertible notes              -      $4,718,750
                                                                              ==========      =========
     Conversion of preferred stock to common stock                           $5,496,000     $   300,000
                                                                              ==========      =========
     Beneficial conversion feature of convertible preferred stock            $3,830,000      $1,109,589
                                                                              ==========      =========

-------------------------------------------------------------------------------------------------------
</TABLE>

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


                                       5
<PAGE>

                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   INTERIM PRESENTATION

     The interim consolidated  financial statements are prepared pursuant to the
     requirements  for  reporting  on Form 10-Q.  These  statements  include the
     accounts  of IDM  Environmental  Corp.  and  all of its  wholly  owned  and
     majority owned  subsidiary  companies.  The December 31, 1997 balance sheet
     data was derived from audited financial statements but does not include all
     disclosures  required by  generally  accepted  accounting  principles.  The
     interim   financial   statements  and  notes  thereto  should  be  read  in
     conjunction  with  the  financial  statements  and  notes  included  in the
     Company's Form 10-K for the year ended December 31, 1997. In the opinion of
     management,  the interim financial  statements reflect all adjustments of a
     normal  recurring  nature necessary for a fair statement of the results for
     the interim periods presented. The current period results of operations are
     not necessarily indicative of results which ultimately will be reported for
     the full year ending December 31, 1998.

2.   CONTINGENCIES

     On August 15, 1996, the U.S.  Department of Labor,  Occupational Safety and
     Health  Administration  ("OSHA") issued three citations and notification of
     penalty in the  aggregate  amount of $147,000 on the Company in  connection
     with  the  accidental  death  of  an  employee  of  one  of  the  Company's
     subcontractors on the United  Illuminating  Steel Point Project job site in
     Bridgeport,  Connecticut.  A complaint was filed against the Company by the
     Secretary of Labor,  United  States  Department  of Labor on September  30,
     1996. A hearing was  conducted in the matter in April,  1997. In June 1998,
     the Company  received a copy of the written decision filed by OSHA's Review
     Commission.  The Commission vacated the first alleged wilful citation,  but
     affirmed each of the second and third wilful citations,  imposing a penalty
     in the amount of $70,000 for each citation. The Company strongly objects to
     the  Commission's  finding  on the basis  that it cannot  be  sustained  as
     matters  of fact or law and has filed a timely  Notice  of Appeal  with the
     OSHA Review  Commission for Discretionary  Review,  which body has accepted
     jurisdiction  of the  matter  on  administrative  appeal.  The  Company  is
     contesting the Citations and Notification of Penalty.

     Also in connection with this accidental  death, the employee's estate filed
     a complaint for wrongful death against the subcontractor and the Company on
     February 11, 1997.  The estate seeks  damages in the amount of $45 million.
     The Company is being  defended  by the  subcontractor's  insurance  carrier
     pursuant to the  subcontractor's  obligation  to defend and  indemnify  the
     Company with respect to the actions of its (subcontractor's)  employees and
     agents.  The Company will be fully  indemnified for any liability,  if any,
     for any potential  judgement or  settlement in this matter and,  therefore,
     the action is not expected to have any material effect.

     In November of 1996, a shareholder filed a class action lawsuit against the
     Company and certain directors and officers of the Company.  The suit, filed
     in the Superior  Court of New Jersey,  Middlesex  County,  as  subsequently
     amended in June  1997,  alleges  that the  Company  disseminated  false and
     misleading  financial  information to the investing public between March 8,
     1996 and November 18, 1996 and sought damages in an  unspecified  amount to
     compensate  investors who purchased  the Company's  securities  between the
     indicated dates, as well as the disgorgement of profits allegedly  received
     by some of the individual defendants from sales of common stock during that
     period.  A written  settlement  agreement has been executed by  plaintiff's
     counsel on behalf of the class. The matter was settled and finally resolved
     with the payment of $1,125,000 to the class. The entire  settlement sum was
     paid by the Company's  director's and officer's  ("D&O")  insurance  policy
     carrier pursuant to the obligations owed by the carrier under the Company's
     existing D&O policy.  The settlement covered the class period March 8, 1996
     to June 5, 1997. The settlement,  as expressly  reflected in the settlement
     documents,  has been made as a business accommodation only, and neither the
     Company, nor any director,  officer or employee of the Company has admitted
     or will  admit  any  wrong  doing  of any  kind.  With the  closing  of the
     settlement,  the action was  dismissed  with  prejudice and the Company and
     each of the  individuals  who have been named as  defendants  were released
     from any and all claims for the entire class period.


                                       6
<PAGE>


2.   CONTINGENCIES (Continued)

     In April of 1997, The Company and it's  subsidiary,  Global Waste & Energy,
     Inc., were named as co-defendants  in a cause of action styled  Enviropower
     Industries,  Inc. v. IDM Environmental  Corp., Global Waste & Energy, Inc.,
     et al filed in the Court of Queen's Bench of Alberta,  Judicial District of
     Calgary (Action No. 9701-04774). The plaintiff, Enviropower (formerly known
     as Continental  Waste  Conversion  International,  Inc.),  alleged that the
     license  granted  to  the  Company  to  utilize  and  market  Enviropower's
     proprietary  gasification  technology was granted without proper  corporate
     authority  due to the  lack of  shareholder  approval.  The  plaintiff  has
     asserted the  subsequent  employment by Global Waste & Energy of two former
     officers of Enviropower as a basis for its allegations.  Enviropower sought
     to have the license and all other  agreements  between  Enviropower and the
     Company  declared null and void in addition to seeking  damages for alleged
     lost profits and other  unspecified  damages.  In June of 1997, the Company
     filed a separate cause of action  against  Enviropower  seeking  injunctive
     relief  against  Enviropower,   seeking  to  enforce  the  agreements  with
     Enviropower and to collect  amounts owed to the Company by Enviropower.  On
     September 19, 1997, the Company was awarded an interim  injunction  against
     Enviropower  recognizing it's exclusive  rights to the licensed  technology
     throughout the pendency of the action and until further order of the court.
     Enviropower has since filed for protection under Canadian  bankruptcy laws,
     staying all proceedings between the Company and Enviropower. The Company is
     awaiting a  determination  by the Trustee for  Enviropower as to his intent
     with respect to liquidation of the bankruptcy  estate. The injunction order
     entered in the  Company's  favor  protecting  it's  exclusive  right to the
     technology remains in full force and effect.

     In July of 1998, the Company,  it's  subsidiary,  Global Waste & Energy and
     certain  affiliates and officers were named as  co-defendants in a cause of
     action styled  Kasterka  Vrtriebs GmbH v. IDM  Environmental  Corp., et al,
     filed in the  Court of  Queen's  Bench of  Alberta,  Judicial  District  of
     Calgary.  The  plaintiff,  Kasterka,  has alleged that the Company and it's
     affiliates  breached a marketing  agreement  that had been entered  between
     Kasterka and  Enviropower.  The plaintiff  has alleged that the  defendants
     failed to supply the  required  plans and  specifications  relating  to the
     gasification  technology originally developed by Enviropower and that, as a
     result, Kasterka was unable to manufacture and market gasification units in
     the  territories  designated  in  the  marketing  agreement.  Kasterka  has
     asserted  a variety  of  claims  for  damages  in the  aggregate  amount of
     approximately  $42 million.  The Company believes the suit is without merit
     and intends to vigorously contest the cause of action.

     In  September  of 1998,  the Company was named as a defendant in a cause of
     action styled Balerna  Concrete  Corporation,  et al. v. IDM  Environmental
     Corp.,  et al, filed in the United States  District Court of  Massachusetts
     (Case No.  98CV11883ML).  The  plaintiffs  alleged  that the  Company,  and
     others,  engaged in a pattern of illegal  conduct to divert  funds from the
     plaintiffs  through the  operation of a concrete  finishing  business.  The
     plaintiffs  have  asserted  various  claims  under RICO,  common law fraud,
     conversion,  breach of  contract  and others  basis  seeking  damages in an
     amount to be  determined  by the court.  The Company  believes  the suit is
     without merit and intends to vigorously contest the cause of action.

3.   CONVERTIBLE  PREFERRED  STOCK  SERIES C,  "LOCK-UP  WARRANTS"  AND  "RELOAD
     WARRANTS"

     On  February  13,  1998,  the  Company  sold  3,600  shares  of Series C 7%
     Convertible Preferred Stock and 2,350,000 Four Year $5.00 Warrants (amended
     on June 2, 1998 to $3.75).  The securities  were issued to five  accredited
     investors.  The aggregate  sales price of such  securities was  $3,600,000.
     Commissions  totaling 10% were paid in connection  with the placement.  The
     securities  were offered  pursuant to  Regulation D. The offer was directed
     exclusively to a limited  number of accredited  investors  without  general
     solicitation or advertising and based on representations from the investors
     that such investors  were  acquiring for  investment  The  securities  bear
     legends  restricting  the resale  thereof.  The Series C Preferred Stock is
     convertible into Common Stock at the lesser of (i) $4.50 per share (amended
     on June 2, 1998 to $3.25) or (ii) 75% of the  average  closing bid price of
     the Common Stock during the five trading days prior to conversion. The Four
     Year $3.75 Warrants are exercisable for a four year period at the lesser of
     $3.75 per share or the lowest  conversion  price of the Series C  Preferred
     Stock.  Conversion  of the  Series C  Preferred  Stock and  exercise  of 


                                       7
<PAGE>

3.   CONVERTIBLE  PREFERRED  STOCK  SERIES C,  "LOCK-UP  WARRANTS"  AND  "RELOAD
     WARRANTS" (Continued)

     the Four Year $3.75  Warrants  was subject to the  issuance of a maximum of
     3,285,438  shares of Common Stock on conversion  unless the shareholders of
     the Company approved issuance beyond that level upon conversion. On June 2,
     1998, at the Annual  Stockholders'  Meeting,  the  shareholders  approved a
     proposal for the issuance of shares in excess of  3,285,438.  Further,  the
     Company has the right,  upon notice to the holders,  to redeem any Series C
     Preferred  Stock  submitted  for  conversion at a price of $2.75 or less of
     125% of the principal  amount of such Series C Preferred Stock plus accrued
     and unpaid dividends. The Series C Preferred Stock pays dividends at 7% per
     annum  payable  quarterly  and on  conversion  or at  redemption in cash or
     Common Stock, at the Company's option.

     On  February  11,  1998,  the  Company  issued  1,270,000  Three Year $4.50
     Warrants  (the  "Lock-Up  Warrants").  The Lock-Up  Warrants were issued to
     three accredited investors. The Lock-Up Warrants were issued in conjunction
     with the execution of Lock-Up  Agreements by the holders of $3.00  Warrants
     of the Company  whereby the holders of such  warrants  agreed not to resell
     any shares  underlying  those  warrants prior to July 30, 1998. The Lock-Up
     Warrants were offered  pursuant to Section 4(2) of the Securities  Exchange
     Act of 1933, as amended.  The offer was directed  exclusively  to a limited
     number of accredited  investors without general solicitation or advertising
     and based on  representations  from the investors  that such investors were
     acquiring for investment.  The Lock-Up Warrants are exercisable for a three
     year period at $4.50 per share.

     On June 2,  1998,  the  Company  issued  266,875  $6.00 and  266,875  $6.75
     Warrants (the "Reload  Warrants").  The $6.00  Warrants and $6.75  Warrants
     were issued as an inducement  for early  exercise by the holders of certain
     $3.00  Warrants and are  exercisable to the extent of one $6.00 Warrant and
     one $6.75 Warrant for each $3.00 Warrant  previously  exercised.  The $6.00
     Warrants  and  $6.75  Warrants  are  exercisable  for a period  of one year
     commencing  June 8, 1998 to  purchase  Common  Stock at $6.00 and $6.75 per
     share,  respectively.  Exercise of the $6.00 Warrants and $6.75 Warrants is
     subject  to the  restrictions  that  the  holders,  individually,  will not
     beneficially own in excess of 4.99% of the Company's Common Stock following
     any  exercise.  

4.   CONVERTIBLE PREFERRED STOCK SERIES RR

     On  August  11,  1998,  the  Company  sold  1,500  shares  of  Series RR 6%
     Convertible  Preferred  Stock. The securities were issued to one accredited
     investor.  The aggregate  sales price of such  securities  was  $1,500,000.
     Commissions  totaling 10% were paid in connection  with the placement.  The
     securities  were offered  pursuant to  Regulation D. The offer was directed
     exclusively to a single accredited investor without general solicitation or
     advertising  and  based on  representations  from the  investor  that  such
     investor was acquiring for investment.

     The Series RR  Preferred  Shares are  convertible  into Common Stock at the
     lesser of (i) $2.25 per share or (ii) 75% of the average  closing bid price
     of the Common Stock during the five trading days prior to  conversion.  The
     Preferred  Shares pay an annual dividend of 6% payable  semi-annually or on
     conversion  or at  redemption  in cash or Common  Stock,  at the  Company's
     option.


                                       8
<PAGE>

5.   EARNINGS PER SHARE

     The Company is calculating earnings per share to comply with the recent SEC
     staff  position  on  accounting  for  securities   issued  with  beneficial
     conversion features.  This accounting requires that the Company reflect the
     difference  between the market price of the Company's  common stock and the
     applicable  conversion  rate  on  the  convertible  preferred  stock  (note
     payable) as a dividend  (interest  expense) at the issue date and  amortize
     from the issue  date of the  convertible  security.  Earnings  per share as
     reported for each of the periods ended  September 30, 1997 and 1998 reflect
     the following:

     --   The beneficial  conversion feature of the Series B preferred stock was
          $1,109,589  and was amortized as a dividend over a 180 day period from
          February 12, 1997, the issue date of the convertible preferred stock.

     --   The beneficial  conversion feature of the Company's  convertible notes
          and related  warrants was  $4,818,750  and was recorded as  additional
          interest  expense  from  August  13,  1997,  the  issue  date  of  the
          convertible  notes,  to March 4, 1998,  the date the last  convertible
          note was converted into common stock.

     --   The beneficial  conversion feature of the Series C preferred stock and
          related  warrants was  $3,330,000 and was amortized as a dividend from
          the issue date,  February  13, 1998,  to June 22,  1998,  the date the
          Registration Statement of the underlying stock was declared effective.

     --   The beneficial conversion feature of the series RR preferred stock was
          $500,000  and is being  amortized  as a  dividend  from the issue date
          August 11,  1998,  to November  12,  1998,  the date the  Registration
          Statement of the underlying stock was declared effective.

6.   STOCKHOLDERS' EQUITY

     In June of 1998,  the Company  amended  its  Certificate  of  Incorporation
     increasing the number of authorized  shares of common stock from 30 million
     to 75 million shares.

     During  the  nine  month  period  ended  September  30,  1998,  convertible
     securities  were  converted  resulting  in the  issuance of common stock as
     follows:

     --   the remaining 270 shares of Series B Convertible  Preferred Stock were
          converted,  resulting  in the  issuance of an  aggregate  of 1,359,441
          shares of common stock.

     --   the  remaining  $3,025,000  of 7%  Convertible  Notes were  converted,
          resulting  in the  issuance of an  aggregate  of  1,152,669  shares of
          common stock.  Debt discount of $4,205,886 was amortized as additional
          interest expense on the convertible  notes during the six months ended
          June 30, 1998. The unamortized  balance of deferred  issuance costs of
          $260,223  were  charged  to paid in  capital  upon  conversion  of the
          convertible notes to common stock.

     --   2,496 shares of Series C Convertible  Preferred  Stock were converted,
          resulting  in the  issuance of an  aggregate  of  2,921,792  shares of
          common  stock.   $167,495  of  unamortized   deferred  issuance  costs
          associated with these  conversions was charged to paid in capital upon
          the conversion of the convertible preferred stock to common stock.

     --   300 shares of Series RR Convertible  Preferred  Stock were  converted,
          resulting in the issuance of 681,689  shares of common stock.  $27,878
          of  unamortized   deferred   issuance  costs   associated  with  these
          conversions  was charged to paid in capital upon the conversion of the
          convertible preferred stock to common stock.


                                       9
<PAGE>

6.   STOCKHOLDERS' EQUITY (Continued)

     --   686,662 Class A Warrants were  exercised  resulting in net proceeds to
          the Company of $1,484,417;  288,750 Three Year Warrants were exercised
          resulting in net proceeds to the Company of $629,063; and, 2,027 stock
          options were exercised resulting in proceeds to the Company of $4,054.

7.   CONSULTANT STOCK OPTIONS

     During the nine months  ended  September  30,  1998,  the  Company  granted
     immediately exercisable options to consultants to purchase 1,220,000 shares
     of common  stock at the market price of the  Company's  common stock at the
     date of grant.  The  Company  recorded a non-cash  compensation  expense of
     $1,871,400  during the first quarter in connection  with the grant of those
     options.

8.   SUBSEQUENT EVENTS

     Due from Officers
     -----------------

     From  time to time the  Company  has made  loans  and  advances  to the two
     principal shareholders,  directors and officers of the Company.  Subsequent
     to September 30, 1998, Frank Falco,  Chairman of the Board of Directors and
     Chief Operating Officer of the Company,  paid the Company  $490,000,  which
     represented  payment  in full  of all  amounts  due  from  officers  to the
     Company.

     Amendment of Warrants
     ---------------------

     Subsequent to September 30, 1998, the Company and certain  warrant  holders
     agreed to amend the terms of certain $3.00 Warrants,  Lock-Up  Warrants and
     Reload  Warrants to reduce the exercise price of those warrants for certain
     warrant  holders who had  indicated  a  willingness  to exercise  currently
     outstanding  warrants.  Pursuant to such  agreement,  the exercise price of
     those  warrants was reduced to $0.33 per share until December 31, 1998, and
     $1.00  thereafter,  and the Company obtained the right to call the warrants
     for redemption.

     In total,  the exercise  prices were reduced on 1,176,513 of the three year
     $3.00 Warrants  associated with the August 1997  convertible note issuance,
     670,000 of the three year $4.50 Lock-Up  warrants,  157,500 of the one year
     $6.00 Reload Warrants, and 157,500 of the $6.75 Reload Warrants.

     Conversion of Preferred Shares
     ------------------------------

     Subsequent to September 30, 1998, as of November 19, 1998, shares of Series
     C Preferred Stock and Series RR Preferred Stock were converted as follows:

     --   the  remaining  1,104 shares of Series C Convertible  Preferred  Stock
          were converted, resulting in the issuance of an aggregate of 3,485,682
          shares of common stock

     --   350 shares of Series RR Convertible  Preferred  Stock were  converted,
          resulting  in the  issuance of an  aggregate  of  1,302,634  shares of
          common stock

     Loans by Warrant Holders
     ------------------------

     Subsequent  to September 30, 1998,  the holders of certain $3.00  Warrants,
     Lock-Up  Warrants and Reload Warrants  loaned $671,023 to the Company.  The
     loans may be credited against the exercise price of those Warrants.

                                       10
<PAGE>


Item 2. Management's  Discussion and Analysis Of Financial Condition And Results
Of Operations.

This report contains  forward-looking  statements  within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of Securities  Exchange Act of
1934.  Actual  results  could  differ  materially  from those  projected  in the
forward-looking  statements  as a result of the risk  factors  set forth in this
report.

Three Months ended September 30, 1998 Compared with Three Months ended September
30, 1997

The Company's total revenues  decreased by  approximately  15.6% from $5,369,000
for the quarter ended  September  30, 1997 to  $4,532,000  for the quarter ended
September 30, 1998. The decrease in contract  service revenues in 1998 from 1997
is primarily  attributable  to a decrease in volume of projects  from our Boston
office which  produced  revenues of  approximately  $1 million  during the third
quarter of 1997 as compared to  approximately  $100,000 for the third quarter of
1998.

Direct  job costs  decreased  by  approximately  11.8% from  $4,931,000  for the
quarter ended  September 30, 1997 to $4,349,000 for the same period in 1998. The
decrease in job costs was  primarily  attributable  to the  reduction in project
volume  from our Boston  office.  The primary  elements of such  decrease in job
costs were job salaries and materials and supplies.

While  total  revenues   decreased  by  15.6%  for  the  quarter,   general  and
administrative expenses increased 32.6% from $1,805,000 during the quarter ended
September 30, 1997 to $2,394,000 during the same period in 1998. The increase in
general and administrative  expense was primarily attributable to (1) a $154,000
audit  refund of  workers  compensation  insurance  which  reduced  general  and
administrative  expense in 1997, (2) a $250,000 increase in professional fees in
1998 as compared to the same period in 1997, and (3) increased  salary  expense,
office  expense  and  travel and  entertainment  expenses  related to  increased
activity on foreign projects.

In addition to its  operating  income and  expenses,  the Company  reported  net
interest expense of $96,000 for the quarter ended September 30, 1998 as compared
to net interest expense of $290,000 for the same period in 1997. The decrease in
net interest  income/expense  was  attributable to $206,000 in interest  expense
recorded  on the  convertible  notes and related  warrants in 1997.  This amount
represented  the  amortization  of  the  beneficial  conversion  feature  of the
convertible notes and warrants.

As a result of the  foregoing,  the  Company  reported  a loss  before  taxes of
$2,472,000 and a net loss of $2,472,000 for the quarter ended September 30, 1998
as compared to a loss before taxes of  $1,821,000  and a net loss of  $1,501,000
for the same quarter in 1997.

The net loss  attributable  to common stock was increased by the preferred stock
dividends  totaling  $52,000  in 1998 and  $48,000  in 1997,  and an  accounting
"deemed  dividend"  of $300,000  and  $265,000 in 1998 and 1997 arising from the
amortization  of the beneficial  conversion  feature of the Company's  Preferred
Stock.  The Company is  calculating  earning per share to comply with the recent
SEC  staff  position  on  accounting  for  securities   issued  with  beneficial
conversion  features.  This  accounting  requires  that, the Company 
reflect the
difference  between  the  market  price of the  Company=s  common  stock and the
applicable  conversion rate on the convertible  preferred stock as a dividend at
the  issue  date (the  beneficial  conversion  feature  totaled  $3,830,000  and
$1,109,589 in 1998 and 1997,  respectively) and amortize the dividend over a 180
day period from the issue date for the Series B Preferred  Stock and to the date
the registration statement became effective for the Series RR Preferred Stock.

Nine Months ended  September 30, 1998 Compared with Nine Months Ended  September
30, 1997

Total revenues  increased by  approximately  10.3% from $13,192,000 for the nine
months  ended  September  30, 1997 to  $14,547,000  for the same period in 1998.
Contract service income increased during the period by 10.5% from $13,163,000 in
1997 to  $14,547,000  in 1998.  The increase in contract  service income for the
nine months was primarily attributable to an increase in volume of projects from
our Oak Ridge office which  produced  revenues  during the first half of 1998 of
approximately $2 million greater than in the first half of 1997. The increase in
revenues  from Oak  Ridge  projects  was  partially  offset by the  decrease  in
revenues from our Boston office in the third quarter of 1998.

Surplus  equipment  revenues  decreased  from  $29,000 in the nine months  ended
September 30, 1997 to $0 for the same period in 1998.


                                       11
<PAGE>

Direct job costs increased by approximately  28.7% from $12,311,000 for the nine
months ended  September 30, 1997 to $15,844,000 for the same period in 1998. The
increase in job costs was primarily  attributable to unforeseeable  developments
on the Company's  Boston State  Hospital and East Dam projects which resulted in
negative  gross  margin  from those  projects of $1.9  million  dollars on total
contract  revenues of $4.8 million  dollars in the second  quarter of 1998.  The
primary  elements of such  increase in job costs were job  salaries and material
and supplies.

The  Company is a  subcontractor  to the prime  contractor  on the Boston  State
Hospital project. The Company, in turn,  subcontracted with Dockside Dismantling
Corporation  ("Dockside").  Dockside  defaulted  on it's  subcontract  with  the
Company and  abandoned the work for which it was, and remains,  responsible.  In
addition,  on or about May 27, 1998,  the project  owner's  consulting  engineer
notified  the  Company  of the  claim of  certain  work  deficiencies  for which
Dockside and, derivatively,  the Company are allegedly responsible.  The Company
has estimated the additional costs to complete and to correct Dockside's work to
be in excess of $1.2  million  dollars and  recorded job costs in this amount in
it's  financial  statements  for the second quarter of 1998. The Company made an
immediate  claim against the bond ($500,000  performance  and $500,000  payment)
provided  by  Dockside's  surety  company.  The surety  company  has  disclaimed
coverage and the issue of the  enforceability  of the bond is now the subject of
litigation pending in Federal Court in the Commonwealth of Massachusetts.  Trial
is now scheduled in the matter for February 1999. The Company expects to receive
payment for and recognize revenues for the work performed in subsequent periods.
These revenues have not been recognized in the financial statements.

With respect to the East Dam project,  upon transition from the north end to the
south  end  of  the  dam,  the  estimated  drill  footage  of  the  project  was
substantially  reduced compared to the bid package for the project. As a result,
the total estimated revenues from the project was reduced from approximately $20
million to approximately $15 million. The impact on the financial statements for
the second quarter was approximately a negative $700,000 in gross margin.  While
the  project is still  expected  to show a profit,  increased  costs  during the
second  quarter for  unapproved  change  orders and a revised  estimate of lower
revenues decreased the expected gross margin  significantly.  In accordance with
conservative  accounting  principles,  all  costs  have been  recognized,  while
expected revenues from unapproved change orders and claims will be recognized in
subsequent periods when they are received. The Company submitted a claim on this
project in excess of ten million dollars.

The cost of equipment sales decreased from $22,000 in 1997 to $0 in 1998.

General and  administrative  expenses increased 50.4% from $5,835,000 during the
nine months ended  September  30, 1997 to  $8,775,000  during the same period in
1998.  The  increase  in  general  and  administrative   expense  was  primarily
attributable to a $1.9 million expense recorded in the first quarter of 1998 for
options granted to consultants to purchase  1,220,000  shares of common stock of
the Company at the market price of the company's common stock at the date of the
grant and  increase in expenses  during the third  quarter of 1998 as  discussed
above.

The Company  reported an increase in interest expense from $253,000 for the nine
months ended  September 30, 1997 to $4,418,000  for the same period in 1998. The
increase was  attributable  to  $4,169,000 in interest  expense  recorded on the
convertible notes and warrants in 1998. This amount represented the amortization
of the beneficial conversion feature of the convertible notes and warrants.

As a result of the  foregoing,  the  Company  reported  a loss  before  taxes of
$14,973,000  and a net loss after tax of  $14,573,000  for the nine months ended
September  30, 1998 as compared to a loss before taxes of  $5,770,000  and a net
loss after taxes of $4,770,000 for the same period in 1997.

The net loss attributable to common stock was increased by $169,000 and $127,000
in preferred  stock  dividends and $3,630,000 and $1,110,000 of  amortization of
the  beneficial  conversion  feature  of  preferred  stock  in  1998  and  1997,
respectively.


                                       12
<PAGE>

Material Changes in Financial Condition, Liquidity and Capital Resources.

At September 30, 1998,  the Company had working  capital of  approximately  $0.7
million,  including a cash balance of $0.5  million.  This compares to a working
capital  deficit of $1.1  million and a cash balance of $0.6 million at December
31, 1997. The increase in working  capital and decrease in cash is  attributable
to (1) the conversion to common stock of $3,025,000 in notes payable  classified
as a current  liability at December 31, 1997, (2) the receipt of net proceeds of
$3,240,000 from the Series C Preferred  Stock,  (3) the receipt of $1.35 million
of net proceeds from the issuance of the Series RR Preferred  Stock, and (4) the
receipt of $2.1 million from the exercise of warrants and stock  options,  which
was offset by the loss for the period.

Approximately  $0.7 million of working  capital  consisted of unbilled costs and
estimated earnings on ongoing projects. Such amounts are expected to be received
during 1998 as projects  progress  with all such  amounts  being  payable to the
Company by the completion of such projects.

Also included in the Company's working capital balance at September 30, 1998 was
$0.6 million of surplus  equipment  inventory  (net of a $0.9 million  valuation
reserve)  held for sale  which  gross  inventory  level  was  identical  to that
reported at December 31, 1997.  The  inventory  reflects the  Company's  sale of
substantially all of its surplus equipment inventory,  other than generators, to
UPE in  connection  with the  formation of a marketing  alliance with UPE during
1995. The Company's remaining inventory consists of nineteen (19) generator sets
with a total  electrical  capacity  of 242,500  kilowatts  per hour  (KWH).  The
estimated  market price of the Company's  generator  inventory is twelve million
dollars.  Twelve (12) of the  generators are steam driven and range in size from
12,500  kilowatts to 33,000  kilowatts  (KW).  Seven (7) of the  generators  are
diesel  driven  and  range in size from  1,000 to 9,000  kilowatts  (KW).  These
generator sets should not be considered as obsolete or outdated  inventory since
its design and  technology  has not changed  much over the years.  They are very
long lead items (15-18 months), experience and project specific and as such they
are not to be compared with  disposable  items.  It is the  Company's  intent to
incorporate this inventory in future projects.

The Company had  available at December 31, 1997,  approximately  $19,775,000  of
operating loss carry-forwards that may be applied against future taxable income.
$2,350,000 of such losses expire in the year 2010 , $9,225,000 in the year 2011,
and the balance the following  year.  Based on the reported loss to date it will
take approximately $13.4 million dollars in future taxable income to recover the
reported  deferred tax asset of  $4,570,000  at September 30, 1998. In assessing
the  realizability of deferred tax assets,  management  considers  whether it is
more likely than not that some portion or all of the deferred tax assets will be
realized.  The ultimate realization of deferred tax assets is dependent upon the
generation  of future  taxable  income  during the  periods  in which  temporary
differences  become  deductible  and the net  operating  losses  can be  carried
forward.  In determining  such projected  future taxable income,  management has
considered the Company's  historical results of operation,  the current economic
environment  with the Company's core industries and future  business  activities
which the company has positioned  itself.  Management  believes the company will
realize  taxable  income  in  future  years.  However,  based  on the  Company's
substantial  losses over the past three years, the current contract  commitments
in the backlog,  and carry forward  limitations  governed by state,  federal and
foreign tax  agencies,  management  believes it is more likely than not that the
Company  will not  realize  its  entire net  deferred  tax  asset.  A  valuation
allowance of $6,757,000 has been established by management as a reduction of the
Company's deferred tax assets of $11,327,000.  Management  believes that the net
deferred tax asset will be realized  through  future taxable  income,  primarily
from the substantial revenue to be derived from projects such as the El Salvador
Power  Project   and/or  the  Greifswald   Nuclear  Plant   Decommissioning/Site
Revitalization Project. Management believes that the income generated from these
projects  will be more than  sufficient  to realize  the  deferred  tax asset at
September 30, 1998.

The  Company's  accounts  receivable  increased by 2.5% from 1997 to 1998.  Such
increase in accounts  receivable  was  attributable  to the decrease in revenues
during the period. Accounts receivable as a percentage of quarterly revenues was
88.1%  and  76.3% in 1998 and  1997,  respectively.  Year-end  receivables  as a
percentage of fourth quarter revenue increased  substantially from 53.0% in 1994
to 103.5% in 1995 and 88% in 1996. The ratio dropped to 53% at December 31, 1994
because  the  Company  received  a  $4,184,000  payment on a major  contract  on
December 23, 1994. If this payment had been  received  after year end, the ratio
would have been a more comparable 98.4%.


                                       13
<PAGE>

Unbilled revenue as a percentage of quarterly contract income was 0% at December
31, 1993, 31% at December 31, 1994, 56% at December 31, 1995 and 26% at December
31,  1996,  11% at December  30, 1997,  and 13% at  September  30,  1998.  Also,
accounts   payable  have  constantly   decreased  since  1994  whereas  accounts
receivable  and  unbilled  revenues  have  increased  substantially  during this
period. Prior to going public in April 1994, most of the Company's revenues were
generated in the private sector. Many of these contracts had substantial initial
mobilization  payments and  generated  positive cash flow during the life of the
contract. Since then the Company has been successful,  as a result of its growth
strategy,  in obtaining a number of government  contracts at major Department of
Energy and  Department  of Defense  sites.  This work was  obtained  as a direct
result  of  opening  three new  regional  offices.  The  experience  with  these
contracts has been negative cash flows until we near contract  completion.  This
is due to the requirement  that we submit a schedule and a schedule of values at
the beginning of the job and bill according to the percent complete of each item
in the schedule of values - not the costs we have incurred. Our jobs of any size
are at a risk of being front end cost  loaded  when there is little  progress to
report (i.e., we cannot bill until the structure is demolished).  The Company is
aware of this  problem  and is trying to  remedy it by  maximizing  mobilization
costs in the schedule of values,  requiring  subcontractors  to bill on the same
basis and aggressively negotiating better (less front end cost loaded) schedules
of values.

Initially the Company tried to increase  payment terms to vendors by paying them
after the Company  received  our  payment.  This method was  unsuccessful.  Many
vendors put the Company on a COD basis and its D&B rating weakened because D&B's
file showed  "increased  slowness in the company's  payment  record." This lower
rating  hurt the  Company in attempts  to  establish  credit  with new  vendors.
Because IDM is trying to establish  good  relationships  with its  vendors,  the
company  is now  paying  its  vendors  within  terms to  fifteen  days  late and
attempting  to improve its D&B "paydex  rating." The paydex rating of 60 is much
worse than the average of the lower  quartile for the industry of 68 (median for
the industry is 75).

Other items impacted the Company's  cash flows during 1998. The Company  carried
out  several  non-cash  transactions  and  transactions  with  subsidiaries  not
reflected in the Company's cash flow statements. Among the non-cash transactions
entered into during 1998 were (1) the  conversion of $3.0 million of convertible
preferred  stock into common stock and (2) the  conversion of $3.025  million of
convertible notes payable to common stock. Transactions with subsidiaries during
1998 related principally to the capitalization of various subsidiaries formed to
deploy the Company's Kocee Gas Generator technology.  At September 30, 1998, the
Company had loaned $3.3  million to its 90% owned  subsidiary,  Global Waste and
Energy, Inc. Such loan is repayable on demand with interest at 9.25%.

The  Company  requires  substantial  working  capital  to  support  its  ongoing
operations.  As is common in the environmental  services  industry,  payment for
services  rendered by the Company are  generally  received  pursuant to specific
draw  schedules  after  services  are  rendered.  Thus,  pending  the receipt of
payments for services  rendered,  the Company must  typically  fund  substantial
project costs,  including  significant  labor and bonding costs,  from financing
sources  within and outside of the Company.  Certain  contracts,  in  particular
those with United States governmental agencies, may provide for payment terms of
up to 90 days or more and may  require the  posting of  substantial  performance
bonds which are generally not released until completion of a project.

Prior to the  completion  of the  Company's  public  offering,  operations  were
historically funded through a combination of operating cash flow, term notes and
bank lines of credit. Following the public offering, the Company paid off all of
its then existing bank debt. At September 30, 1998, the Company had no bank debt
and no  significant  long-term  debt and was  funding  its  operations  entirely
through cash on hand and operating cash flow.

In February of 1997, the Company sold 300 shares,  or $3.0 million,  of Series B
Convertible  Preferred  Stock to  provide  funding  for the  Company's  East Dam
project and other projects on which the Company  commenced work during the first
half of 1997. The Series B Preferred  Shares were  convertible into Common Stock
commencing  91 days  after  issuance  at the  lesser of (i) 120% of the  average
closing  price of the Common Stock over the five  trading-day  period  preceding
closing ($2.67) or 82% of the average closing price of the Common Stock over the
five trading-day  period preceding  conversion for conversion  occurring between
the 91st and 120th day following closing, (ii) 110% of the average closing price
of the Common Stock over the five trading-day  period preceding closing ($2.475)
or  79% of  the  average  closing  price  of the  Common  Stock  over  the  five
trading-day  period preceding  conversion for conversion  occurring  between the
121st and 150th day following  closing,  (iii) 100% of the average closing price
of the Common Stock over the five trading-day  period preceding closing ($2.225)
or  76% of  the  average  closing  price  of the  Common  Stock  over  the  five
trading-day  period preceding  conversion for conversion  occurring  between the
151st and 180th day  following  closing,  and (iv) 100% of the  average  closing
price of the Common Stock over the five  trading-day  period  preceding  closing
($2.225) or 73% of the average  closing  price of the Common Stock over the five
trading-day period preceding conversion for conversion occurring on or after the
181st day following  closing.  The Series B Preferred  Shares paid a 7% dividend
payable on conversion or at redemption in cash or Common Stock, at the Company's
option.  As of March 31, 1998, all of the  Convertible  Preferred Stock had been
converted resulting in the issuance of 1,552,366 shares of common stock.


                                       14
<PAGE>

On August 13, 1997, the Company  completed a private  placement of $3,025,000 of
7% Convertible Notes (the "Convertible Notes") and 2,675,000 three year Warrants
(the "$3.00 Warrants"). The Convertible Notes were convertible into Common Stock
at the  lesser of (i) $2.75 per  share or (ii) 75% of the  average  closing  bid
price of the Common Stock during the five trading days prior to conversion.  The
$3.00  Warrants are  exercisable  for a three year period at the lesser of $3.00
per share or the lowest conversion price of the Convertible Notes. Conversion of
the  Convertible  Notes and  exercise of the $3.00  Warrants  was subject to the
issuance of a maximum of 1,997,130  shares of Common Stock on conversion  unless
the  shareholders  of the  Company  approved  issuances  beyond  that level upon
conversion.  Shareholder  approval  of  issuances  beyond  1,997,130  shares was
received on November 4, 1997. Further, the Company had the right, upon notice to
the holders, to redeem any Convertible Notes submitted for conversion at a price
of $2.75 or less at 125% of the principal amount of such Convertible  Notes. The
Convertible  Notes paid interest at 7% payable quarterly and on conversion or at
redemption in cash or Common Stock, at the Company's option. In the event that a
registration  statement covering the shares underlying the Convertible Notes had
not been declared effective within 90 days or 180 days after the issuance of the
Convertible  Notes, the interest rate on the Convertible Notes would increase to
18% and 24%, respectively,  from those dates until such a registration statement
became effective.  The registration  statement was declared effective in January
9, 1998. The amount of additional  interest expense was $54,500. As of September
30,  1998,  all of the  Convertible  Notes had been  converted  resulting in the
issuance of 1,152,669 shares of common stock.

The value,  totaling  $4,718,750,  of the discounted  conversion  feature on the
Convertible  Notes and the value of the $3.00 Warrants has been accounted for as
additional   interest   via  a  debit  to  debt   discount   and  a  credit   to
paid-in-capital.  The debt discount has been  calculated  as the fixed  discount
from the market at the date of sale based upon the common stock's  trading price
of $4 per share on August  13th.  This  interest  was being  amortized  over the
period from the date of issuance  to the date the  Convertible  Notes were first
convertible, January 8, 1998 and for the $3.00 Warrants to June 30, 1998. During
1997,  $600,000 was  amortized  and recorded as interest  expense.  During 1998,
$4,118,750 was charged to interest expense.

On February 13, 1998,  the Company sold 3,600 shares of Series C 7%  Convertible
Preferred  Stock (the "Series C Preferred  Stock") and 2,350,000 Four Year $5.00
Warrants (amended on June 2, 1998 to $3.75)(the "$3.75 Warrants"). The aggregate
sales price of such  securities was  $3,600,000.  Commissions  totaling 10% were
paid in  connection  with  the  placement.  The  Series  C  Preferred  Stock  is
convertible  into Common Stock at the lesser of (i) $4.50 per share  (amended on
June 2,  1998 to  $3.25)  or (ii) 75% of the  average  closing  bid price of the
Common  Stock  during  the five  trading  days  prior to  conversion.  The $3.75
Warrants are exercisable for a four year period at the lesser of $3.75 per share
or the lowest  conversion price of the Series C Preferred  Stock.  Conversion of
the Series C Preferred  Stock and exercise of the $3.75  Warrants was subject to
the  issuance of a maximum of  3,285,438  shares of Common  Stock on  conversion
unless the shareholders of the Company have approved  issuance beyond that level
upon  conversion.  In the absence of  shareholder  approval of  issuances  above
3,285,438  shares,  the holders of Series C Preferred  Stock and $3.75  Warrants
remaining  outstanding if and when  3,285,438  shares have been issued will have
the right to demand  redemption  of the Series C  Preferred  Stock at $1,250 per
share plus accrued  dividends and to demand  redemption of the $3.75 Warrants at
the pre-tax  profit such holders would have realized had the $3.75 Warrants been
exercised  at the time  redemption  is  demanded.  Further,  the Company has the
right,  upon  notice to the  holders,  to redeem  any Series C  Preferred  Stock
submitted  for  conversion  at a price of $2.75 or less at 125% of the principal
amount of such Series C Preferred Stock plus accrued and unpaid  dividends.  The
Series C Preferred Stock pays dividends at 7% per annum payable quarterly and on
conversion or at redemption in cash or Common Stock, at the Company's option. On
June 2, 1998, at the Annual Stockholders  Meeting,  the shareholders  approved a
proposal for the issuance of shares in excess of 3,285,438.  As of September 30,
1998,  2,496 of the  shares  of  Series C  Preferred  Stock  had been  converted
resulting in the issuance of an aggregate of 2,921,792  shares of Common  Stock.
Subsequent to September 30, 1998, as of November 19, 1998,  the remaining  1,104
shares of Series C Preferred  Stock were converted  resulting in the issuance of
3,485,682 shares of Common Stock.

On February 11, 1998,  the Company  issued  1,270,000  Three Year $4.50 Warrants
(the "Lock-Up  Warrants").  The Lock-Up Warrants were issued in conjunction with
the  execution  of Lock-Up  Agreements  by the holders of $3.00  Warrants of the
Company  whereby  the holders of such  warrants  agreed not to resell any shares
underlying  those  warrants  prior to July 30,  1998.  The Lock-Up  Warrants are
exercisable  for a three year  period at $4.50 per share.  On June 2, 1998,  the
Company  approved the issuance of 266,875 $6.00 and 266,875 $6.75  Warrants (the
"Reload  Warrants").  The Reload Warrants were issued as an inducement for early
exercise by the holders of certain  $3.00  Warrants and are  exercisable  to the
extent of one  $6.00  Warrant  and one  $6.75  Warrant  for each  $3.00  Warrant
previously exercised.  The $6.00 Warrants and $6.75 Warrants are exercisable for
a period of one year  commencing  June 8, 1998 to purchase Common Stock at $6.00
and $6.75 per share,  respectively.  Exercise  of the $6.00  Warrants  and $6.75
Warrants is subject to the restrictions that the holders, individually, will not
beneficially  own in excess of 4.99% of the Company's Common Stock following any
exercise.  

                                       15
<PAGE>

On August 11, 1998,  the Company  sold 1,500 shares of Series RR 6%  Convertible
Preferred  Stock.  The securities  were issued to one accredited  investor.  The
aggregate sales price of such securities was  $1,500,000.  Commissions  totaling
10% were paid in connection with the placement.  The Series RR Preferred  Shares
are  convertible  into Common Stock at the lesser of (i) $2.25 per share or (ii)
75% of the average closing bid price of the Common Stock during the five trading
days prior to conversion.  Conversion of the Preferred  Shares is subject to the
issuance of a maximum of 3,600,000  shares of Common Stock on conversion  unless
the  shareholders  of the Company have approved  issuance beyond that level upon
conversion.  In the absence of shareholder approval of issuances above 3,600,000
shares,  the  holders of  Preferred  Shares  remaining  outstanding  if and when
3,600,000  shares have been issued will have the right to demand  redemption  of
the Preferred Shares at 120% of the principal balance outstanding.  Further, the
holder  of the  Preferred  Shares  has the  right to  demand  redemption  of any
Preferred Shares remaining outstanding in the event that (1) the Company carries
out a placement of common stock or securities  convertible  into common stock on
or before the effective  date of a  registration  statement to be filed covering
the shares  underlying  the  Preferred  Shares and (2) the holder  elects not to
exercise  its right of first  refusal with  respect to such  securities.  In the
event the holder  exercises its redemption right in connection with a subsequent
offering,  the Company is obligated to redeem the remaining Preferred Shares for
(1) cash in an amount equal to 125% of the principal  balance  outstanding  plus
accrued  dividends  and (2) in the event the  Company's  common stock is trading
above $3.25 at the time of  redemption,  the  issuance of up to 461,539 two year
warrants  exercisable  at $3.25 per share.  The  Preferred  Shares pay an annual
dividend of 6% payable  semi-annually  or on conversion or at redemption in cash
or Common Stock, at the Company's  option.  As of September 30, 1998, 300 of the
shares of Series RR Preferred Stock had been converted resulting in the issuance
of an aggregate of 681,689  shares of Common Stock.  Subsequent to September 30,
1998, as of November 19, 1998,  an additional  350 shares of Series RR Preferred
Stock were  converted  resulting in the  issuance of 1,302,634  shares of Common
Stock.

Subsequent to September 30, 1998, the Company and certain warrant holders agreed
to amend the terms of  certain  $3.00  Warrants,  Lock-Up  Warrants  and  Reload
Warrants to reduce the  exercise  price of those  warrants  for certain  warrant
holders  who had  indicated a  willingness  to  exercise  currently  outstanding
warrants.  Pursuant to such agreement,  the exercise price of those warrants was
reduced to $0.33 per share until  December 31, 1998, and $1.00  thereafter,  and
the Company obtained the right to call the warrants for redemption.

In total,  the exercise  prices were reduced on 1,176,513 of the $3.00 Warrants,
670,000 of the $4.50 Lock-Up warrants, 157,500 of the $6.00 Reload Warrants, and
157,500 of the $6.75 Reload  Warrants.  Subsequent  to September  30, 1998,  the
holders of certain $3.00 Warrants,  Lock-Up  Warrants and Reload Warrants loaned
$671,023 to the Company. The loans may be credited against the exercise price of
those Warrants.

Also  subsequent  to September 30, 1998,  Frank Falco,  Chairman of the Board of
Directors and Chief Operating Officer of the Company, paid the Company $490,000,
which  represented  payment  in full of all  amounts  due from  officers  to the
Company.

Other than funds provided by operations and the potential  receipt of funds from
the exercise of outstanding  warrants,  the Company  presently has no sources of
financing  or  commitments  to provide  financing.  A total of  370,000  Class A
Warrants  issued in connection  with the Company's  initial public offering were
outstanding and exercisable at September 30, 1998. Such warrants are exercisable
to purchase two shares of common  stock each for a price of $9.00,  or $4.50 per
share.  The warrants are exercisable  until April of 1999 unless earlier called.
The Company may call the  warrants if the closing bid price of the common  stock
equals  or  exceeds  $9.00  for a period of  twenty  consecutive  trading  days.
Exercise  of the  warrants  would  provide  gross  proceeds  to the  Company  of
approximately  $3.3  million and result in the  issuance of 0.7 million  shares.
There can be no assurance,  however,  when, if ever,  any or all of the warrants
will be exercised. 

In  addition  to funds used to  support  ongoing  operations,  the  Company  has
utilized funds to make various strategic investments during 1998. Funds utilized
for  strategic  investments  during 1998 have been  principally  invested in (1)
Seven Star International  Holding, Inc. ("7 Star"), (2) Kortman Polonia, and (3)
Vision 2000 initiatives.

                                       16
<PAGE>

On January 8, 1998,  the Company made a $300,000  payment  representing  its one
half share of the capital of 7 Star. 7 Star is a joint  venture  between IDM and
Jin Xin and is incorporated  in The British Virgin  Islands.  7 Star has entered
into a license agreement with Life International Products, Inc. ("Life") for the
right to  process,  produce,  promote  and sell  Life  products  in the  Peoples
Republic of China (including Hong Kong),  Taiwan,  Indonesia and Singapore.  The
license  agreement  requires a minimum  royalty of  $400,000  for the first year
which was paid upon execution of the license agreement.

In November of 1998,  the Company paid $500,000 to acquire  Kortman  Polonia,  a
Polish company with substantial real estate holdings.  The Company has initiated
discussions  with various real estate  developers and major U.S.  retailers with
respect to the sale of various  real estate  tracts held by Kortman  Polonia and
the development and leasing of the remaining tracts.

In addition to its  funding  requirements  to support  ongoing  operations,  the
Company has committed  substantial  capital  resources to  implementation of the
Company's strategic  initiative known as "Vision 2000." The focus of Vision 2000
is to position the Company as a leading  participant in the global energy market
and in the nuclear facility  decommissioning and site revitalization market. The
development and initial  implementation of Vision 2000 initiatives have required
substantial  capital  expenditures  on the Company's part and can be expected to
continue  to  require  substantial  capital   expenditures  in  the  future.  In
particular,  the Company's first energy project,  the Miravalle Power Project in
El Salvador,  is expected to cost  approximately $55 million to develop and will
require substantial funding beyond that which the Company can presently provide.
The Company has entered into discussions with several potential equity investors
in the Miravalle  Power Project.  The Company is also in discussion with a major
project financing source with respect to the provision of debt financing for the
balance  of the cost  above the  contributions  of the  Company  and its  equity
partner. The Company's ability to successfully bring the Miravalle Power Project
on line and  implement  its  other  Vision  2000  initiatives  is  substantially
dependent  upon its ability to secure  project  financing  and other  financing.
While the Company believes that it will be able to attract adequate financing to
develop the Miravalle  Power  Project and its other  anticipated  projects,  the
Company has no definitive  commitments  to provide  financing for those projects
and there is no assurance  that such  financing  will be  available.  Other than
funding Vision 2000  initiatives and the Company's  bonding and other job costs,
the Company does not  anticipate  any  substantial  demands on the  liquidity or
capital resources of the Company during the following twelve months.

Management  believes  that the  Company's  working  capital,  combined  with the
expected  receipt of funds from the  resolution  of  certain  change  orders and
litigation,  is sufficient to meet the Company's  anticipated  needs, other than
project  financing  requirements  discussed  above,  for at least the  following
twelve  months,  including  the  performance  of all  existing  contracts of the
Company.  However,  as the Company is presently  pursuing bids on multiple large
projects  and there is no assurance as to the timing or amount of the receipt of
funds from  change  orders,  litigation  or other  sources,  the  Company may be
required  to seek  new bank  lines of  credit  or  other  financing  in order to
facilitate  the  performance  of jobs.  While the Company is conducting  ongoing
discussions with various potential lenders with a view to establishing available
bank lines of credit if and when needed to support  future  growth,  the Company
presently has no commitments from any bank or other lender to provide  financing
if such financing becomes necessary to support growth.

                                       17
<PAGE>

Year 2000 Issues

The Company recognizes the need to ensure that its operations,  as well as those
of third parties with whom the Company conducts business,  will not be adversely
impacted by Year 2000  software  failures.  Software  failures due to processing
errors  potentially  arising  from  calculations  using the year 2000 date are a
known  risk.  The  Company  is  addressing  this  risk to the  availability  and
integrity  of  financial  systems and the  reliability  of  operational  systems
through  a   combination   of  actions   including  a  review  of  all  software
applications, desktop equipment network, and telecommunications products used by
the Company to determine if they are Year 2000 compliant.  The Company will also
send  questionnaires  to its major  customers and suppliers to assess their Year
2000  readiness,  review all contacts for year 2000  liability  and will develop
remediation  and  contingency  plans where  appropriate.  The Company expects to
complete this work by this end of the second quarter 1999.

The  Company's  costs of  achieving  Year  2000  compliance  to date  have  been
immaterial  to financial  position,  results of  operations  or cash flows.  The
Company does not anticipate that additional  amounts incurred in connection with
its Year 2000 compliance program will be material to its financial  condition or
results of operations.

Due to the uncertainties  involved, the Company cannot predict the impact of the
Year 2000 on its operations. Achieving Year 2000 compliance is dependent on many
factors,  some of which are not within the Company's control,  including without
limitation,  the continuity of service  provided by the  government,  utilities,
transportation industry and other service providers. Should one of these systems
fail, or should the Company's internal systems or the internal systems of one or
more significant vendors or suppliers fail to achieve Year 2000 compliance,  the
Company's business and its results of operations could be adversely affected.

Certain Factors Affecting Future Operating Results

This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934.  The Company's  actual results could differ  materially  from those set
forth in the forward- looking statements.  Certain factors that might cause such
a difference  include the  following:  possible  fluctuations  in the growth and
demand for energy in markets in which the Company may seek to  establish  energy
production   operations;   intense   competition  for  establishment  of  energy
production operations in growing economies;  currency,  economic,  financing and
other risks  inherent in  establishing  energy  operations  in foreign  markets;
uncertainty  regarding the rate of growth in demand for nuclear  decommissioning
and site  revitalization  services;  continued delays in awarding and commencing
contracts;   delays  in  payment  on  contracts   occasioned  by  dealings  with
governmental and foreign entities;  changes in accepted remediation technologies
and  techniques;  fluctuations  in operating  costs  associated  with changes in
project specifications and general economic conditions; substantial fluctuations
in revenues resulting from completion and replacement of contracts and delays in
contracts; economic conditions affecting the ability of prospective customers to
finance projects; and other factors generally affecting the timing and financing
of projects.  In addition to the foregoing,  the following  specific factors may
affect the Company's future operating results.

At September 30, 1998,  the Company was on-site on projects with a total left in
value of services yet to be performed  of $15  million.  The largest  project on
which the  Company  was on-site at  September  30,  1998 was the Bechtel  Jacobs
project with an approximate value of services to be performed of $6 million. The
contract is expected to be fully completed by early 1999.

In addition to its existing  contracts,  the Company is presently bidding on, or
proposes to bid on, numerous projects in order to replace revenues from projects
which will be completed  during 1998 and to increase the total dollar  volume of
projects under contract.  Management  anticipates that the Company's  efforts to
bid on and secure new  contracts  will  focus on  projects  which can be readily
serviced from the regional offices opened by the Company during 1994 and 1995 as
well as certain  large  international  plant  relocation  projects  and  nuclear
decommissioning  projects  which the Company  intends to pursue.  The  Company's
regional   offices,   particularly  the  Oak  Ridge,   Tennessee   office,   are
strategically  located  in areas  having  a high  concentration  of  prospective
governmental and private remediation sites. While bidding to perform services at
such sites is expected to be highly  competitive,  management  believes that the
Company's  existing  presence  on  adjacent  projects  combined  with its proven
expertise  and  resources  will  allow the  Company to  successfully  bid on and
perform substantial additional projects based out of its regional offices.

In addition to remediation and plant relocation projects on which the Company is
presently  bidding or  negotiating,  the Company  during 1997 entered the energy
production and services market. The Company expects to begin energy projects and
nuclear decommissioning  projects at various prospects by as early as the second
half of 1998.  In addition  to the El Salvador  Power  Project,  the  Greifswald
Nuclear Plant  Decommissioning and Site  Revitalization  Project and the Georgia
Power Project  described in the Company's  Form 10-K for the year ended December
31, 1997, the Company,  through September 30, 1998, had entered into preliminary
agreements  with respect to the  development  and operation of (i) a 200-ton per
day  industrial  waste  processing  and energy  production  facility  in Taipei,
Taiwan;  and (ii) a 1,750 ton per day municipal and  industrial  waste-to-energy
power plant in Szczecin, Poland.

While the Company  anticipates that entry into the energy production and nuclear
facilities   decommissioning  and  site   revitalization   market  will  provide
significant  opportunities for sustainable growth in both revenues and operating
profits,  entry into those markets requires  substantial capital commitments and
involves   certain   risks.    Undertaking   energy   production   and   nuclear
decommissioning  projects can be expected to require capital  expenditures of as
little as several  million  dollars  to  hundreds  of  millions  of dollars  per
project.  The Company does not currently have the necessary capital resources to
undertake such ventures without third party financing.  The Company  anticipates
that it will take on equity  partners  and seek third  party debt  financing  to
finance  substantial  portions of the  projects  which it expects to  undertake.
While the Company has been successful in attracting substantial partners in both
its El  Salvador  energy  project  and its German  nuclear  decommissioning/site
revitalization  project,  the Company has no commitments from potential partners
and  financing  sources to provide  funding for future  projects and there is no
assurance  that such partners and financing  sources will be available,  or will
provide  financing on acceptable terms, if and when the Company commences future
projects.


                                       18
<PAGE>

Impact of Inflation

Inflation has not been a major factor in the Company's business since inception.
There can be no assurances that this will continue.  However,  it is anticipated
that any  increases in costs to the Company can be passed on to its customers in
the form of higher prices.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

         Not Applicable.

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings

     On September  28, 1998,  the Superior  Court of New Jersey,  Law  Division,
Middlesex County, entered an Order finally approving a binding settlement in the
action captioned Arthur Goldberg, et al. vs. IDM Environmental Corp., et al. The
matter was settled and finally  resolved  with the payment of  $1,125,000 to the
class action  plaintiffs.  The entire  settlement  sum was paid by the Company's
director's  and  officer's   ("D&O")   insurance   policy  carrier  pursuant  to
obligations  owed by the carrier  under the Company's  existing D&O policy.  The
settlement  covers  the  class  period  March  8,  1996  to June  5,  1997.  The
settlement,  as expressly reflected in the settlement  documents,  was made as a
business  accommodation only, and neither the Company nor any director,  officer
or employee of the Company  admitted any wrongdoing of any kind.  With the final
approval  of the  settlement,  the action was  dismissed  on the merits and with
prejudice,  and the Company and each of the individual  defendants were released
from any and all claims for the entire class period.

     In July of 1998, the Company,  it's  subsidiary,  Global Waste & Energy and
certain affiliates and officers were named as co-defendants in a cause of action
styled Kasterka  Vrtriebs GmbH v. IDM  Environmental  Corp., et al, filed in the
Court of Queen's Bench of Alberta,  Judicial District of Calgary. The plaintiff,
Kasterka,  has alleged that the Company and it's affiliates breached a marketing
agreement that had been entered between Kasterka and Enviropower.  The plaintiff
has  alleged  that the  defendants  failed  to  supply  the  required  plans and
specifications  relating to the gasification  technology originally developed by
Enviropower and that, as a result, Kasterka was unable to manufacture and market
gasification  units in the  territories  designated in the marketing  agreement.
Kasterka has asserted a variety of claims for damages in the aggregate amount of
approximately  $42 million.  The Company  believes the suit is without merit and
intends to vigorously contest the cause of action.

     In  September  of 1998,  the Company was named as a defendant in a cause of
action styled Balerna Concrete  Corporation,  et al. v. IDM Environmental Corp.,
et al, filed in the United  States  District  Court of  Massachusetts  (Case No.
98CV11883ML).  The plaintiffs alleged that the Company, and others, engaged in a
pattern of illegal  conduct to divert  funds  from the  plaintiffs  through  the
operation of a concrete finishing business. The plaintiffs have asserted various
claims under RICO, common law fraud,  conversion,  breach of contract and others
basis seeking  damages in an amount to be  determined by the court.  The Company
believes the suit is without merit and intends to  vigorously  contest the cause
of action.

Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits

          Exhibit No.     Description
          -----------     ------------
             10.1       Form of Amended and Restated Three Year $3.00 Warrant
             10.2       Form of Amended and Restated Three Year $4.50 Lock-Up 
                        Warrant
             10.3       Form of Amended and Restated One Year $6.00 and $6.75 
                        Reload Warrants
             27.1       Financial Data Schedule

     (b)  Reports on Form 8-K

          None 

                                       19
<PAGE>

                                   SIGNATURES

     In accordance  with the  requirements  of the Exchange Act, the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                       IDM ENVIRONMENTAL CORP.


Dated: November 20, 1998               By:   /S/ Joel Freedman
                                          ----------------------------------
                                             Joel Freedman, President


Dated: November 20, 1998               By:   /S/ Michael B. Killeen 
                                          -----------------------------------
                                             Michael B. Killeen, Principal
                                             Financial and Accounting Officer