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 June 30, 1997

                                       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)


                                 (908) 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 July 31,  1997,  9,985,655  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 -June 30, 1997 and
          December 31, 1996...............................................   3

          Consolidated Statements of Operations - For the six months
          ended June 30, 1997 and June 30, 1996...........................   4

          Consolidated Statement of Operations - For the three months
          ended June 30, 1997 and June 30, 1996...........................   5

          Consolidated Statements of Cash Flows - For the six months
          ended June 30, 1997 and June 30, 1996...........................   6

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

     Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations.........................   9

     Item 3.  Quantitative and Qualitative Disclosures about Market Risk..  13

PART II - OTHER INFORMATION

     Item 2.  Changes in Securities.......................................  14

     Item 4.  Submission of Matters to a Vote of Security Holders.........  14

     Item 5.  Other Information...........................................  14

     Item 6.  Exhibits and Reports on Form 8-K............................  15

SIGNATURES................................................................  16

<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM I - FINANCIAL STATEMENTS

                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                     June 30,       December 31,
ASSETS                                                                                 1997             1996
                                                                                   ============     ============
<S>                                                                                <C>              <C>
Current Assets:
  Cash and cash equivalents                                                        $  1,192,215     $  1,001,254
  Accounts receivable, net of allowance for doubtful accounts of $200,000             4,094,536        5,626,208
  Stock subscription receivable                                                         784,483          775,862
  Notes receivable - current                                                          6,679,553        1,274,773
  Inventory                                                                             917,125        1,182,517
  Costs and estimated earnings in excess of billings                                  1,790,542        1,655,754
  Bonding deposits                                                                        8,998           55,472
  Deferred income taxes                                                               2,649,000        2,609,000
  Due from officers                                                                     302,249          208,676
  Prepaid expenses and other current assets                                             850,000        1,884,977
                                                                                   ------------     ------------
     Total Current Assets                                                            19,268,701       16,274,493
Investment in Affiliate, at cost                                                      1,300,000        1,300,000
Notes Receivable - long term                                                          1,597,851        1,572,238
Deferred Issuance Costs, net                                                            192,499                -
Property, Plant and Equipment, net                                                    2,482,521        2,742,650
Other Assets                                                                            580,425          313,246
                                                                                   ------------     ------------
                                                                                   $ 25,421,997     $ 22,202,627
                                                                                   ============     ============
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Current portion of long-term debt                                                $    674,321     $    351,127
  Accounts payable and accrued expenses                                               6,956,813        7,105,827
  Billings in excess of costs and estimated earnings                                    169,283           86,496
                                                                                   ------------     ------------
     Total Current Liabilities                                                        7,800,417        7,543,450

Long-Term Debt                                                                          380,154          164,034

Minority Interest                                                                     1,034,483        1,034,483
                                                                                   ------------     ------------
      Total Liabilities                                                               9,215,054        8,741,967
                                                                                   ------------     ------------
Commitments and Contingencies

Stockholders' Equity:
  Convertible  preferred  stock,  authorized  1,000,000  shares $1.00 par value,
   issued and outstanding 300 shares in 1997 stated at conversion value
   of $10,000 per share                                                               3,000,000
   less unamortized beneficial conversion feature                                      (265,068)
                                                                                   ------------     ------------
                                                                                      2,734,932                -

  Common stock, authorized 20,000,000 shares $.001 par value, issued
   and outstanding 9,602,370                                                              9,603            9,603
  Additional paid-in capital                                                         26,469,054       25,359,465
  Retained earnings (deficit)                                                       (13,006,646)     (11,908,408)
                                                                                   ------------     ------------
                                                                                     16,206,943       13,460,660
                                                                                   ------------     ------------
                                                                                   $ 25,421,997     $ 22,202,627
                                                                                   ============     ============
</TABLE>


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


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

<TABLE>
<CAPTION>

                                                                Six Months Ended June 30,
                                                              1997                  1996
                                                           -----------          -----------
<S>                                                        <C>                  <C>
Revenue:
  Sale of equipment                                        $ 3,528,550          $   152,800
  Contract income                                            8,294,201           14,960,600
                                                           -----------          -----------
                                                            11,822,751           15,113,400
                                                           -----------          -----------
Cost of Sales:
  Direct job costs                                           7,380,087           10,018,263
  Cost of equipment sales                                      287,805               72,844
                                                           -----------          -----------
                                                             7,667,892           10,091,107
                                                           -----------          -----------

Gross Profit                                                 4,154,859            5,022,293
                                                           -----------          -----------

Operating Expenses:
  General and administrative expenses                        4,030,728            3,590,010
  Depreciation and amortization                                375,841              382,245
                                                           -----------          -----------
                                                             4,406,569            3,972,255
                                                           -----------          -----------

Income (Loss) from Operations                                 (251,710)           1,050,038

Other Income:
  Interest income                                               37,534               15,871
                                                           -----------          -----------

Income (Loss) before Provision  (Credit)
 for Income Taxes                                             (214,176)           1,065,909

Provision (Credit) for Income Taxes                            (40,000)             212,000
                                                           -----------          -----------

Net Income (Loss)                                             (174,176)             853,909

Preferred Stock Dividends including $844,521
 amortization of beneficial conversion feature.
 Total amount of $1,109,589 being amortized
 over 180 days                                                 924,062
                                                           -----------          -----------

Net Income (Loss) on Common Stock                          $(1,098,238)         $   853,909
                                                           ===========          ===========

Earnings (Loss) per Share:
  Primary earnings (loss) per share                        $     (0.11)         $      0.12
                                                           ===========          ===========

  Fully diluted earnings (loss) per share                  $     (0.11)         $      0.12
                                                           ===========          ===========

  Primary common shares outstanding                          9,602,370            7,006,780
                                                           ===========          ===========

  Fully diluted common shares outstanding                    9,602,370            7,006,780
                                                           ===========          ===========
</TABLE>


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


                                       4
<PAGE>
                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                 Three Months Ended June 30,
                                                     1997            1996
                                                 -----------      ----------
<S>                                              <C>              <C>
Revenue:
  Sale of equipment                              $         -      $  152,800
  Contract income                                  3,557,787       7,478,755
                                                 -----------      -----------
                                                   3,557,787       7,631,555
                                                 -----------      ----------
Cost of Sales:
  Direct job costs                                 3,391,708       5,454,122
  Cost of equipment sales                                  -          72,844
                                                 -----------      ----------
                                                   3,391,708       5,526,966
                                                 -----------      ----------

Gross Profit                                         166,079       2,104,589
                                                 -----------      ----------

Operating Expenses:
  General and administrative expenses              1,863,074       1,937,227
  Depreciation and amortization                      219,782         171,084
                                                 -----------      ----------
                                                   2,082,856       2,108,311
                                                 -----------      ----------

(Loss) from Operations                            (1,916,777)         (3,722)

Other Income (Expense):
  Interest income (expense)                          (19,710)         13,046
                                                 -----------      ----------

Income (Loss) before Provision (Credit)
 for Income Taxes                                 (1,936,487)          9,324

Provision  (Credit) for Income Taxes                (340,000)          2,000
                                                 -----------      ----------

Net Income (Loss)                                 (1,596,487)          7,324

Preferred Stock Dividends including
 $554,795 amortization of beneficial
 conversion feature.  Total amount of
 $1,109,589 being amortized over 180 days            607,295
                                                 -----------      ----------

Net Income (Loss) on Common Stock                $(2,203,782)     $    7,324
                                                 ===========      ==========

Earnings (Loss) per Share:
  Primary earnings (loss) per share              $     (0.23)     $     0.00
                                                 ===========      ==========

  Fully diluted earnings (loss) per share        $     (0.23)     $     0.00
                                                 ===========      ==========

  Primary common shares outstanding                9,602,370       7,372,627
                                                 ===========      ==========

  Fully diluted common shares outstanding          9,602,370       7,372,627
                                                 ===========      ==========
</TABLE>


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


                                       5
<PAGE>
                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                      For the Six months Ended June 30,
                                                                         1997                   1996
                                                                      ------------         ------------
<S>                                                                   <C>                      <C>
Cash Flows from Operating Activities:
  Net Income (Loss)                                                   $  (174,176)         $   853,909
  Adjustments to reconcile net income (loss) to net cash
   used in operating activities:
    Deferred Taxes                                                        (40,000)             237,608
    Depreciation and amortization                                         306,475              382,245
    Decrease (Increase) In:
      Accounts receivable                                               1,531,672           (1,161,808)
      Inventory                                                           265,392                    -
      Notes receivable                                                 (5,439,014)            (207,554)
      Costs and estimated earnings in excess of billings                 (134,788)            (917,408)
      Bonding deposits                                                     46,474              383,163
      Recoverable income taxes                                                                  19,275
      Prepaid expenses and other current assets                         1,034,977               84,216

    Increase (Decrease) In:
      Accounts payable and accrued expenses                              (149,014)          (2,108,564)
      Billings in excess of costs and estimated earnings                   82,787             (725,543)
                                                                      -----------          -----------
        Net cash  (used in)  operating activities                      (2,669,215)          (3,160,461)
                                                                      -----------          -----------

Cash Flows from Investing Activities:
  Acquisition of property, plant and equipment                            (36,552)            (538,523)
  Proceeds from disposal of property, plant and equipment                  17,707
  Acquisition of other assets                                            (267,179)
  Loans and advances to officers                                          (93,573)            (179,355)
                                                                      -----------          -----------
        Net cash (used in) investing activities                          (379,597)            (717,878)
                                                                      -----------          -----------
Cash Flows from Financing Activities:

  Long Term Debt borrowing                                                763,710
  Net proceeds from convertible preferred stock issuance                2,780,000
  Principal payments on long-term debt                                   (224,396)            (197,521)
  Issuance of common stock upon exercise of stock options                                    6,913,388
  Dividends on preferred stock                                            (79,541)
                                                                      -----------          -----------
        Net cash provided by financing activities                       3,239,773            6,715,867
                                                                      -----------          -----------

Increase in Cash and Cash Equivalents                                     190,961            2,837,528

Cash and Cash Equivalents, beginning of period                          1,001,254               83,286
                                                                      -----------          -----------

Cash and Cash Equivalents, end of period                              $ 1,192,215          $ 2,920,814
                                                                      ===========          ===========
Supplementary Disclosures of Cash Flow Information:

Cash paid during the period for:
  Interest expense                                                    $   122,994          $    24,833
                                                                      ===========          ===========
  Income taxes
                                                                      ===========          ===========

 Supplemental Disclosure of Noncash Investing and
  Financing Activities:
   Property, plant and equipment financing                                     --          $   163,605
                                                                      ===========          ===========
   Conversion of convertible promissory notes to
    common stock                                                                           $ 2,157,457
                                                                      ===========          ===========
</TABLE>


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


                                       6
<PAGE>
                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


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, 1996 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, 1996. 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, 1997.

2.   NOTES RECEIVABLE

     The Company entered into a sale agreement with a German company dated as of
     March 28,  1997 for the sale of certain  power  generating  equipment  (the
     "equipment")  for a  total  purchase  price  of  six  million  ($6,000,000)
     dollars.  The $3.5  million  sale,  net of the $2.5  million  to our  joint
     venture  partner,  less our inventory  carrying cost of  approximately  $.3
     million generated a gross margin of $3.2 million.  The payment terms of the
     sale agreement included an initial payment of $600,000 and four installment
     payments of $1,350,000  each plus interest at 5.6246 % payable on September
     28 and  December  28,  1997 and  March 28 and  June 28,  1998.  The debt is
     collateralized by a security interest in the equipment.  Prior to the sale,
     the  equipment  was owned  jointly  by the  Company  and its joint  venture
     partner,  UPE. The Company agreed to purchase UPE's  ownership  interest in
     the equipment for two million five hundred thousand ($2,500,000) dollars.

3.   CONTINGENCIES

     On August 15, 1996, the U.S.  Department of Labor,  Occupational Safety and
     Health  Administration  ("OSHA") issued a willful citation and notification
     of penalty in the 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. The Company
     is contesting the Citations and Notification of Penalty.

     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,  alleges that the
     Company  disseminated  false and  misleading  financial  information to the
     investing  public  between  March 27, 1996 and  November 18, 1996 and seeks
     damages in an unspecified amount to compensate  investors who purchased the
     Company's  common  stock  between  the  indicated  dates  as  well  as  the
     disgorgement  of profits  allegedly  received by the individual  defendants
     from sales of common stock during that period.  The Company  believes  this
     action is without merit and intends to vigorously contest this matter.

     On February  11,  1997 the  Company  was served  with a lawsuit  naming the
     Company as a  co-defendant  in a wrongful death cause of action arising out
     of the accidental death of an employee of a subcontractor.  The suit, filed
     in the Federal  District  Court for the  Northern  District of Indiana,  is
     based on the same facts as gave rise to the  aforementioned  administrative
     proceeding  instituted  by OSHA.  Management  believes that the suit, as it
     relates to the Company, is without merit, and intends to vigorously contest
     this claim.  In addition  the  Company  has  insurance  in place to protect
     against such events.


                                        7
<PAGE>
     On April 1, 1997  Continental  Waste  Conversion,  Inc.  ("CWC")  commenced
     litigation against the Company and two of its subsidiaries,  Global Waste &
     Energy,  Inc., Delaware and Global Waste & Energy,  Inc., Alberta,  and the
     two principal  officers of Global Alberta.  CWC alleges that the agreements
     entered into whereby CWC granted to Global  Delaware  the  exclusive  world
     wide rights (excluding Canada) to the proprietary Kocee Gas Generator waste
     treatment  technology  in exchange  for a 10%  interest in Global  Delaware
     should be voided  because  amongst  other claims CWC did not obtain  proper
     approvals and the  transaction was not consummated on an arms length basis.
     Their claim alleges the loss of revenues estimated at $30 million. Prior to
     the closing,  the Company  obtained the legal opinion of CWC's counsel that
     states "CWC has full power,  without  limitation  in any way, to enter into
     the agreements, and all necessary corporate steps and proceedings have been
     taken  so that  the  agreements  are  properly  granted  and  executed  and
     delivered as binding  obligations of CWC". The Company  believes this claim
     is without merit and intends to vigorously contest this claim.

4.   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 as a dividend
     at the issue date (the beneficial  conversion feature totaling  $1,109,589)
     and is  amortizing  the  dividend  over a 180 day period from  February 12,
     1997, the issue date of the convertible preferred stock.

5.   SUBSEQUENT EVENTS

     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 "Three Year Warrants").

     The Convertible  Notes are  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 Three
     Year  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 Three Year Warrants
     is subject to the issuance of a maximum of 1,997,130 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 1,997,130  shares,  the holders of Convertible Notes and
     Three Year Warrants remaining outstanding if and when 1,997,130 shares have
     been issued  will have the right to demand  redemption  of the  Convertible
     Notes at 125% of the principal balance outstanding and to demand redemption
     of the Three Year  Warrants at the pre-tax  profit such holders  would have
     realized had the Three Year Warrants been exercised at the time  redemption
     is  demanded.  Further,  the  Company  has 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 pay interest at 7% payable  quarterly and on
     conversion  or at  redemption  in cash or Common  Stock,  at the  Company's
     option.


                                        8
<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.

Second Quarter of 1997 Compared with Second Quarter of 1996

The Company's total revenues  decreased by  approximately  53.4% from $7,632,000
for the quarter ended June 30, 1996 to $3,558,000 for the quarter ended June 30,
1997.  Contract  service  income  decreased  during  the  quarter  by 52.4% from
$7,479,000  in 1996 to  $3,558,000  in 1997.  The  decrease in contract  service
income and total revenues is attributable to three reasons.  First,  the Company
is being more  selective  in bidding only jobs with an  acceptable  gross profit
margin. During 1996, the Company took on a number of contracts with lower profit
margins in order to penetrate  certain strategic  markets.  While the Company is
currently  working on fewer contracts than it did last year, each of the current
contracts has higher  anticipated  gross profit  percentages  than the contracts
performed during the first half of 1996. Second, the Company had no revenue from
any plant relocation  projects in the current quarter versus  approximately  one
million dollars in the comparable quarter last year. Third, the Company recorded
a reserve of one  million  dollars  reversing  previously  booked  revenues as a
result of disputes in connection with the Company's  contract 96-026 (the "Davy"
contract).  Based on the best  information  available at the time the  Company's
first quarter report was filed,  the Company  anticipated that the Davy contract
would  break  even.  The  Company had  estimated  total  contract  costs of $2.8
million.  The contract value was $1.8 million and the Company had submitted $0.6
million in contract  change  orders and  expected to submit an  additional  $0.4
million in change  orders.  Since that date, the Company has had a "falling out"
with its joint  venture  partner who in trying to get another  contract with the
same  customer did not submit the  additional  change  orders.  Since the change
orders have not been approved by the customer, the Company has reversed this one
million  dollars in  contract  revenue in the  current  quarter.  The Company is
vigorously  pursuing  collection of these amounts from both the customer and its
joint  venture  partner.  The  Company  has liened  the job site and  expects to
ultimately  recover  this money.  Surplus  equipment  and scrap  sales  revenues
decreased 100% from $153,000 in 1996 to none in 1997.

Direct  job costs  decreased  by  approximately  37.8% from  $5,454,000  for the
quarter  ended June 30,  1996 to  $3,392,000  for the same  period in 1997.  The
primary  elements of such  decrease in job costs were job  salaries and material
and  supplies.  The  decrease in job costs was  attributable  to the decrease in
contract service revenues during the quarter.  The reason why contract  revenues
decreased  52.4% and direct job costs decreased only 37.8% during the quarter is
primarily attributable to the reversal of one million dollars in revenues on the
Davy contract  discussed above.  Without this reversal the reduction in contract
revenues  would  have been a more  comparable  39.1%.  Cost of  equipment  sales
decreased from $73,000 in 1996 to $0 in 1997.

General and  administrative  expenses  decreased 3.8% from $1,937,000 during the
quarter  ended June 30, 1996 to $1,863,000  during the same period in 1997.  The
decrease in general and  administrative  expense  was  attributable  to an audit
refund of $92,000 on workers compensation insurance.

In addition to its  operating  income and  expenses,  the Company  reported  net
interest  income/(expense)  of ($20,000)  for the quarter ended June 30, 1997 as
compared to net  interest  income of $13,000  for the same  period in 1996.  The
decrease in net interest income/expense was primarily attributable to $41,000 in
interest expense for our Canadian subsidiary which commenced  operations July of
1996.

As a result of the  foregoing,  the  Company  reported  a loss  before  taxes of
$1,936,000  and a net loss of $1,596,000  for the quarter ended June 30, 1997 as
compared to income  before taxes of $9,000 and net income of $7,000 for the same
quarter in 1996. The net loss  attributable to common stock was increased by the
preferred  stock  dividends   ($52,000)  and  an  accounting  "deemed  dividend"
($555,000) arising from amortization of the beneficial conversion feature of the
Company's Series B 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



                                        9
<PAGE>
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  totaling
$1,109,589)  and is amortizing  the dividend over a 180 day period from February
12, 1997, the issue date of the convertible preferred stock.

Six Months Ended June 30, 1997 Compared with Six Months Ended June 30, 1996

Total revenues  decreased by  approximately  21.8% from  $15,113,000 for the six
months ended June 30, 1996 to $11,823,000 for the same period in 1997.  Contract
service income  decreased during the period by 44.6% from $14,961,000 in 1996 to
$8,294,000 in 1997.  See the quarterly  comparison for discussion of the factors
contributing to the decrease.

Surplus equipment  revenues  increased 95.7% from $153,000 in 1996 to $3,529,000
in 1997. The increase in surplus equipment revenues was attributable to the sale
of four  generators  to a German  company in the first  quarter for  $3,500,000.

Direct job costs decreased by  approximately  26.3% from $10,018,000 for the six
months ended June 30, 1996 to  $7,380,000  for the same period in 1997.  See the
quarterly  comparison  for a  discussion  of  the  factors  contributing  to the
decrease in direct job costs.

Cost of equipment  sales increased from $73,000 in 1996 to $288,000 in 1997. The
increase  in  cost of  equipment  sales  was  attributable  to the  sale of four
generators to a German company.

General and  administrative  expenses increased 11.0% from $3,590,000 during the
six months ended June 30, 1996 to $4,031,000 during the same period in 1997. The
increase was primarily  attributable to the $249,000 in expenses recorded by the
Company's  90% owned  subsidiary,  Global  Waste & Energy  Inc.  and a  $279,000
increase in professional fees.

The Company reported an increase in net interest  income/(expense)  from $16,000
for the six months  ended June 30,  1996 to $38,000 for the same period in 1997.
The increase was  attributable to increased  interest income due to $2.8 million
in funds from the convertible preferred stock issuance during February 1997.

As a result of the  foregoing,  the  Company  reported  a loss  before  taxes of
$214,000  and a net loss after tax of $174,000 for the six months ended June 30,
1997 as compared to income before taxes of $1,066,000 and net income after taxes
of $854,000 for the same period in 1996.

The net loss  attributable to common stock was increased by $79,000 in preferred
stock dividends and $845,000 amortization of the beneficial conversion feature.

Material Changes in Financial Condition, Liquidity and Capital Resources.

At June 30, 1997, the Company had a backlog totaling  approximately  $44 million
compared to a backlog of approximately $52 million at June 30, 1996. The largest
component of the Company's backlog at June 30, 1997 was $15 million for the East
Dam project.

In addition to its existing  backlog,  the Company is presently  bidding on, and
intends to bid on numerous projects to replace revenues from projects which will
be completed  during 1997 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 three  regional  offices  opened by the  Company  during  1994 and 1995.  In
addition,  the Company has submitted  proposals on several  large  international
plant relocation projects. The Company's regional offices,  particularly the Oak
Ridge, Tennessee, Los Alamos, New Mexico, and Boston,  Massachusetts offices are
strategically located in areas having a high concentration of prospective public
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  projects  at these  locations  combined  with its proven
expertise  and  resources  will enhance the  Company's  chances of  successfully
bidding on substantial new projects.

The  Company  had  working  capital  of $  11,468,000,  including  cash and cash
equivalents  balances of $1,192,000  at June 30, 1997.  This compares to working
capital of $8,731,000 and a cash balance of $1,001,000 at December 31, 1996. The
increase in working capital is primarily  attributable to the $3 million sale of
Series B Convertible Preferred Stock in February 1997.


                                       10
<PAGE>
Quarter-end  receivables  as a  percentage  of second  quarter  income was 89.8%
(before the reversal of Davy contract revenue) in 1997 compared to 101.9% in the
same period of 1996.  Year-end  receivables  as a percentage  of fourth  quarter
income increased  substantially from 53.0% in 1994 to 103.5% in 1995 and 157% in
1996.  This ratio was 82% at  December  31,  1993.  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%.

Unbilled revenue as a percentage of quarterly contract income has increased from
0% at December  31, 1993,  to 31% at December  31, 1994,  to 56% at December 31,
1995, and to 44% at December 31, 1996 and 46% at June 30, 1997.  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) schedule 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 a growing company and 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).

Inventory of $917,000 at June 30, 1997 decreased from $1,182,000 at December 31,
1996.  The  decrease  in  inventory  at June 30,  1997 was  attributable  to the
Company's entering into a sale agreement with a German company dated as of March
28, 1997 for the sale of certain power  generating  equipment (the  "equipment")
for a total  purchase  price of six million  ($6,000,000)  dollars.  The payment
terms of the sale  agreement  required an initial  payment of $600,000  and four
installment  payments of  $1,350,000  each plus  interest at 5.6246 % payable on
September 28 and  December 28, 1997 and March 28 and June 28, 1998.  The debt is
collateralized by a security  interest in the equipment.  Prior to the sale, the
equipment was owned jointly by the Company and its joint venture  partner,  UPE.
The Company agreed to purchase UPE's ownership interest in the equipment for two
million five hundred thousand (US$2,500,000) dollars.

The Company's  inventory  consists of fifteen (15)  generator  sets with a total
electrical  capacity of 212,500  kilowatts per hour (KWH).  The estimated market
price of the Company's generator  inventory is ten million dollars.  Twelve (12)
of the  generators  are steam driven and range in size from 12,500  kilowatts to
33,000  kilowatts (KW).  Three (3) 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 two (2) 15,000 KW
generator  sets (steam  driven) in the  Company's  pending El Salvador  waste to
energy project.  In future projects,  the Company will try to use the balance of
the 15,000 KW generator sets and the 12,500 KW and 33,000 KW sets.

At June 30, 1997,  the Company's only long term debt was $380,000 in installment
debt secured by job equipment.

During the quarter  ended June 30, 1997,  the Company made  additional  loans of
$277,000  repayable  upon  demand with  interest at 9.25% to its ninety  percent
owned subsidiary,  Global Waste & Energy, Inc. ("Global Delaware"). In addition,
IDM,  through a wholly-owned  subsidiary of Global Delaware  ("Global  Alberta")
loaned  $160,000  (Canadian)  to  Continental  Waste  Conversion,  Inc.  ("CWC")
repayable  in 18  consecutive  installments  commencing  January  1,  1997  with


                                       11
<PAGE>
interest  at 7.5%  per  annum.  As of the date of this  report,  CWC has made no
payment and the loan is  delinquent.  On April 1, 1997 CWC commenced  litigation
against the  Company and two of its  subsidiaries,  Global  Delaware  and Global
Alberta,  and the two principal officers of Global Alberta. CWC alleges that the
agreements  entered  into whereby CWC granted to Global  Delaware the  exclusive
world wide rights  (excluding  Canada) to the  proprietary  Kocee Gas  Generator
waste  treatment  technology  in exchange for a 10% interest in Global  Delaware
should  be  voided  because  amongst  other  claims  CWC did not  obtain  proper
approvals and the transaction was not consummated on an arms length basis. Their
claim  alleges  the loss of  revenues  estimated  at $30  million.  Prior to the
closing,  the Company  obtained the legal  opinion of CWC's  counsel that states
"CWC  has  full  power,  without  limitation  in any  way,  to  enter  into  the
agreements, and all necessary corporate steps and proceedings have been taken so
that the agreements  are properly  granted and executed and delivered as binding
obligations  of CWC".  The  Company  believes  this claim is  without  merit and
intends to vigorously contest this claim.

Other than  funding 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.

Since 1994,  the Company has  consistently  generated  negative  operating  cash
flows.  The  primary  reason  for  this  was  due to  the  Company's  policy  of
successfully bidding new work at lower than normal margins in order to penetrate
strategic markets serviced by the Company's newly opened regional  offices.  Now
that the Company is established  in these markets,  the Company has been bidding
work at normal margins. Management of the Company believes, based on the current
backlog of work and expected work to be awarded based on bids outstanding,  that
future operating cash flows will be positive.

As a result of the Company's  negative  operating  cash flows,  the Company has,
from time to time, sought additional  capital to support  operations and growth.
During  the  first  half of 1997,  the  Company  sold  300  shares  of  Series B
Convertible  Preferred  Stock for $3.0 million.  The Series B Preferred Stock is
convertible  into Common Stock at a price based on the lesser of a predetermined
percentage  of the market  price at closing or a  predetermined  discount to the
market  price of the Common  Stock over the five  trading-day  period  preceding
conversion.  The current conversion price of the Series B Preferred Stock is the
lesser of $2.225 or 73% of the average  closing  price of the Common  Stock over
the five trading-day period preceding  conversion.  The Series B Preferred Stock
pays a 7% dividend  payable on  conversion  or at  redemption  in cash or Common
Stock, at the Company's  option.  Conversions are subject to the Company's right
to redeem at  $12,200  per share any Series B  Preferred  Shares  submitted  for
conversion at a price of $1.80 per share or less. In  conjunction  with the sale
of the Series B Preferred  Stock,  the Company  undertook to file a registration
statement  covering the resale by the holders of Common Stock issuable  pursuant
to the terms of the  Series B  Preferred  Stock.  Pursuant  to the terms of such
undertaking,  the Company is  obligated to pay to the holders two percent of the
face  amount of the  preferred  stock per  month,  payable  in cash or in Common
Stock,  commencing  approximately  May 15, 1997 until the required  registration
statement becomes effective.

Subsequent to the end of the quarter,  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 "Three Year  Warrants").  The
Convertible  Notes are 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 Three Year  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 Three Year  Warrants is subject to the  issuance of a
maximum  of  1,997,130   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 1,997,130
shares,  the  holders of  Convertible  Notes and Three Year  Warrants  remaining
outstanding if and when 1,997,130 shares have been issued will have the right to
demand  redemption of the  Convertible  Notes at 125% of the  principal  balance
outstanding  and to demand  redemption of the Three Year Warrants at the pre-tax
profit  such  holders  would  have  realized  had the Three Year  Warrants  been
exercised  at the time  redemption  is  demanded.  Further,  the Company has 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 pay interest at 7% payable  quarterly
and on conversion  or at  redemption  in cash or Common Stock,  at the Company's
option.


                                       12
<PAGE>
Management believes that the Company's working capital following its August 1997
Convertible Note placement is sufficient to meet the Company's anticipated needs
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,  the Company may be required to seek new bank
lines of credit or other  financing in order to facilitate  the  performance  of
jobs if the volume and size of projects being performed by the Company increases
substantially.  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.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

     Not applicable.


                                       13
<PAGE>
                           PART II - OTHER INFORMATION


Item 2. Changes in Securities

     (a)  On August 13, 1997,  the Company  sold  $3,025,000  of 7%  Convertible
          Notes and 2,675,000 Three Year Warrants.

     (b)  The securities were issued to sixteen accredited investors.

     (c)  The  aggregate   sales  price  of  such   securities  was  $3,025,000.
          Commissions totaling 10% were paid in connection with the placement.

     (d)  The  securities  were offered  pursuant to Regulation D. The offer was
          directed  exclusively  to a  limited  number  of  accredited  investor
          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.

     (e)  The Convertible  Notes are 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
          Three Year  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 Three Year  Warrants  is subject to the  issuance  of a maximum of
          1,997,130 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
          1,997,130  shares,  the  holders of  Convertible  Notes and Three Year
          Warrants remaining  outstanding if and when 1,997,130 shares have been
          issued  will have the right to demand  redemption  of the  Convertible
          Notes  at 125% of the  principal  balance  outstanding  and to  demand
          redemption  of the Three Year  Warrants  at the  pre-tax  profit  such
          holders would have realized had the Three Year Warrants been exercised
          at the time  redemption  is  demanded.  Further,  the  Company has 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 pay
          interest at 7% payable quarterly and on conversion or at redemption in
          cash or Common Stock, at the Company's option.

Item 4. Submission of Matter to a Vote of Security Holders

     (a)  On  June  9,  1997,  an  annual   meeting  of   shareholders   of  IDM
          Environmental Corp. was held.

     (b)  The following  directors were elected (by the vote  indicated) at such
          meeting:

               Frank Patti        7,201,386   For      142,496 Against

     (c)  In addition to the election of directors as noted above, the following
          matters were voted upon at such meeting:

          (i)  Approval of amendment to Certificate of Incorporation to increase
               the number of authorized  shares of common stock from  20,000,000
               shares to 30,000,000  shares  (6,552,449  For,  184,879  Against,
               7,850 Abstain)

          (ii)Approval  of  issuances  of  shares  in  excess  of  1,915,000  in
               connection with Series B Convertible  Preferred Stock  (1,914,067
               For, 202,104 Against, 3,850 Abstain)

Item 5. Other Information

     On July 11,  1997,  Mori Aaron  Schweitzer  resigned  as a director  of the
     Company.


                                       14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits

          Exhibit No.                     Description
          -----------     ------------------------------------------------------
             10.1         Form of Convertible Note due January 31, 1999
             10.2         Form of Three Year Warrant

     (b)  Reports on Form 8-K

          None.


                                       15
<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:   August 19, 1997                    By:  /s/ Joel Freedman
                                               ---------------------------------
                                               Joel Freedman, President


Dated:   August 19, 1997                    By:  /s/ Michael B. Killeen
                                               ---------------------------------
                                               Michael B. Killeen, Principal
                                               Financial and Accounting Officer


                                       16