SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-Q/A
                                 Amendment No. 1

(Mark one)

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

                  For the quarterly period ended March 31, 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                       (IRS Employer
     of incorporation or organization)                  Identification No.)
                                                


               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 May 12,  1998,  17,749,525  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 - March 31, 1998
           and December 31, 1997........................................     1

           Consolidated Statements of Operations - For the 
           three months ended March 31, 1998 and March 31, 1997.........     2

           Consolidated Statements of Cash Flows - For the 
           three months ended March 31, 1998 and March 31, 1997.........     3

           Notes to Consolidated Financial Statements...................     5

  Item 2.  Management's Discussion and Analysis of Financial 
           Condition and Results of Operations..........................     8

  Item 3.  Quantitative and Qualitative Disclosures about Market Risk...    12

PART II - OTHER INFORMATION

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

SIGNATURES ..............................................................   14


<PAGE>



                         PART I - FINANCIAL INFORMATION

ITEM I - FINANCIAL STATEMENTS

                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
                                  
                                                                            March 31,       December 31,
ASSETS                                                                        1998             1997
                                                                         ---------------  ----------------
<S>                                                                       <C>               <C>

Current Assets:
  Cash and cash equivalents                                                $  3,668,624     $     602,242
  Accounts receivable                                                         3,846,175         4,094,408
  Notes receivable - current                                                    116,457           116,457
  Inventory                                                                     582,517           582,517
  Costs and estimated earnings in excess of billings                            696,794           455,823
  Bonding deposits                                                                    -             9,157
  Due from officers                                                             424,299           369,541
  Prepaid expenses and other current assets                                   1,590,027         1,433,068
                                                                         ---------------  ----------------
     Total Current Assets                                                    10,924,893         7,663,213

Investments in and Advances to Unconsolidated Affiliates                      3,806,564         3,453,309
Investment in Affiliate, at cost                                              1,715,000         1,715,000
Notes Receivable - long term                                                  1,381,155         1,381,155
Debt Discount and Issuance Costs                                              1,493,044         4,610,166
Deferred Income Taxes                                                         4,570,000         4,170,000
Property, Plant and Equipment                                                 3,105,085         3,277,116
Other Assets                                                                    880,746           880,746
                                                                         ---------------  ----------------
                                                                         $   27,876,487   $    27,150,705
                                                                         ===============  ================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Current portion of long-term debt                                      $      577,322    $    3,566,393
  Accounts payable and accrued expenses                                       5,417,656         5,159,635
  Billings in excess of costs and estimated earnings                            133,155            86,604
                                                                         ---------------  ----------------
     Total Current Liabilities                                                6,128,133         8,812,632

Long-Term Debt                                                                  188,365           258,686
                                                                         ---------------  ----------------

     Total Liabilities                                                        6,316,498         9,071,318
                                                                         ---------------  ----------------

Commitments and Contingencies

Stockholders' Equity:
  Common stock, authorized 30,000,000 shares
   $.001 par value, issued and outstanding 17,634,525
   in 1998 and 14,513,073 in 1997                                                17,634            14,513
  Additional paid-in capital                                                 50,800,875        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 3,600 shares, 
    stated at conversion value of $10,000 per share
    less unamortized beneficial conversion feature of $3,226,000                374,000                 -

  Retained earnings (deficit)                                               (29,632,520)      (23,132,831)
                                                                          ---------------  ----------------
                                                                             21,559,989        18,079,387
                                                                          ---------------  ----------------

                                                                         $   27,876,487    $   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 Three Months Ended March 31,
                                                                       1998                1997
                                                                 -----------------     --------------
<S>                                                               <C>                   <C>    

Revenue:
  Contract income                                                    $5,168,758         $3,661,164
  Sale of equipment                                                           -             31,800
                                                                   -------------       ------------
                                                                      5,168,758          3,692,964
                                                                   -------------       ------------
Cost of Sales:                                                                -
  Direct job costs                                                    4,752,323          3,989,508
  Cost of equipment sales                                                     -             21,284
                                                                   -------------       ------------
                                                                      4,752,323          4,010,792
                                                                   -------------       ------------

Gross Profit (loss)                                                     416,435           (317,828)
                                                                   -------------       ------------

Operating Expenses:
  General and administrative expenses                                 3,847,615          2,167,654
  Depreciation and amortization                                         133,780            156,059
                                                                   -------------       ------------
                                                                      3,981,395          2,323,713
                                                                   -------------       ------------

Loss from Operations                                                 (3,564,960)        (2,641,541)

Other Income (Expense)
  Interest income(Expense)                                           (3,176,686)            57,244
                                                                   -------------       ------------

Loss before Credit for Income Taxes                                  (6,741,646)        (2,584,297)

Credit for Income Taxes                                                (400,000)          (450,000)
                                                                   -------------       ------------

Net Loss                                                             (6,341,646)        (2,134,297)

Preferred Stock Dividends including $104,000 and $289,726 
amortization of  beneficial conversion feature in 1998 and 1997.
Total amounts of $3,330,000 and $1,109,589 for 1998 and 1997            158,043            316,767
                                                                   -------------       ------------

Net Loss on Common Stock                                            ($6,499,689)       ($2,451,064)
                                                                   =============       ============

Loss per Share:
  Basic Loss per share                                                   ($0.39)            ($0.26)
                                                                   =============       ============

  Diluted Loss per share                                                 ($0.39)            ($0.26)
                                                                   =============       ============

  Basic common shares outstanding                                    16,498,069          9,602,730
                                                                   =============       ============

  Diluted common shares outstanding                                  16,498,069          9,602,730
                                                                   =============       ============

</TABLE>

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




                                       2
<PAGE>

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

<TABLE>
                                                                                  For the Three Months Ended March 31,
                                                                                     1998                  1997
                                                                                 --------------        --------------
<S>                                                                             <C>                      <C>

Cash Flows from Operating Activities:
  Net loss                                                                       $ (6,341,646)          ($2,134,297)
                                                                                   
  Adjustments to reconcile net loss to net cash used in operating activities:
      Deferred income taxes                                                          (400,000)             (450,000)
      Depreciation and amortization                                                    172,031               138,351
      Amortization of debt discount and issuance costs                               3,083,742                     -
      Compensation cost of consultant stock options                                  1,871,400                     -
      Decrease (Increase) In:
        Accounts receivable                                                            248,233             2,892,733
        Notes receivable                                                                     -               (3,228)
        Costs and estimated earnings in excess of billings                           (240,971)             (195,756)
        Prepaid expenses and other current assets                                    (156,959)               139,752
        Bonding deposits                                                                 9,157                46,474

      Increase (Decrease) In:
        Accounts payable and accrued expenses                                          589,995             1,472,590
        Billings in excess of costs and estimated earnings                              46,551                71,350
                                                                                 --------------        --------------
          Net cash used in operating activities                                    (1,118,467)             (967,211)
                                                                                  --------------       --------------
                                                                              

Cash Flows from Investing Activities:
  Acquisition of property, plant and equipment                                               -              (31,987)
  Proceeds from disposal of property, plant and equipment                                    -                17,707
  Investment in and advances to unconsolidated affiliates                            (353,255)                     -
  Acquisition of other assets                                                                -             (173,147)
  Loans and advances to officers                                                      (54,758)              (46,801)
                                                                                 --------------        --------------
          Net cash used in investing activities                                      (408,013)             (234,228)
                                                                                 --------------        --------------

Cash Flows from Financing Activities:
  Net proceeds from convertible preferred stock issuance                             3,240,000             2,780,000
  Principal payments on long-term debt                                               (190,630)             (150,514)
  Long term debt borrowing                                                             156,238                     -
  Preferred stock dividends                                                           (54,043)              (27,041)
  Proceeds from exercise of stock options and warrants                               1,441,297                     -
                                                                                                       --------------
                                                                                 --------------
          Net cash provided by financing activities                                  4,592,862             2,602,445
                                                                                 --------------        --------------

Increase in Cash and Cash Equivalents                                                3,066,382             1,401,006

Cash and Cash Equivalents, beginning of period                                         602,242             1,001,254
                                                                                 --------------        --------------

Cash and Cash Equivalents, end of period                                         $   3,668,624          $  2,402,260
                                                                                 ==============        ==============


</TABLE>


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



                                       3
<PAGE>


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

<TABLE>
                                                                            For the Three Months Ended March 31,
                                                                                 1998               1997
                                                                             --------------     --------------
<S>                                                                        <C>                 <C>


Supplemental Disclosures of Cash Flow Information:

  Cash paid during the year for:

   Interest                                                                 $      214,374       $    47,118
                                                                             ==============     ==============
   Income taxes                                                                          -                 -
                                                                             ==============     ==============      
                                                                             
Supplemental Disclosure of Noncash Investing and Financing Activities:
  Conversion of convertible promissory notes to common stock                 $   3,025,000       $  2,828,037
                                                                             ==============     ==============
  Conversion of preferred stock to common stock                              $   2,700,000                  -
                                                                             ==============     ==============
  Beneficial conversion feature of convertible preferred stock               $   3,330,000       $  1,109,589
                                                                             ==============     ==============


</TABLE>


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



                                       4
<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 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.

     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 seeks  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.

     Prior to the oral  argument  before  the  Court on  defendants'  motion  to
     dismiss  the  amended  complaint,  the  parties  reached  an  agreement  in
     principle  to settle all  claims,  subject to notice to the class,  hearing
     before  the  Court  and  Court  approval.  It  is  contemplated  that,  for
     settlement  purposes only, the parties will stipulate to a settlement class
     consisting  of  all  persons  (excluding   defendants)  who  purchased  the
     Company's  securities from March 8, 1996 through June 5, 1997, and that the
     action will be dismissed and appropriate releases provided in consideration
     for a payment to the stipulated  settlement class by the Company's insurer.
     Management expects that the matter will be fully resolved in 1998.

     On April 1, 1997,  Enviropower  Industries Inc., formerly Continental Waste
     Conversion Inc.  ("Enviropower"),  commenced an action in court in Calgary,
     Alberta (Action No.  9701-04774)  against IDM Environmental  Corp.,  Global
     Waste & Energy Inc., formerly  Continental Waste Conversion  International,
     Inc., a Delaware Corporation ("Global Delaware"),  Global Waste and Energy,
     Inc., formerly Continental Waste Conversion  International Inc., an Alberta
     Corporation  ("Global  Alberta")  together  with two  former  officers  and
     directors of Enviropower who are now employed by Global  Alberta.  IDM owns
     90% of the issued and outstanding shares of Global Delaware. Global Alberta
     is a wholly owned subsidiary of Global Delaware.  The action arose from the
     agreements  entered into between  Enviropower  and IDM on or about July 19,
     1996 (the "Agreements"),  which provided, among other things, for the grant
     to Global  Alberta of  Enviropower's  right,  title and interest in certain
     worldwide  marketing and sales agreements and to an exclusive,  irrevocable
     license  granted to Global  Delaware to market and use  certain  technology
     outside Canada in connection  with the  environmentally  safe conversion of
     certain domestic  industrial and agricultural  solid waste into energy (the
     "Technology").  Enviropower  is seeking to set aside the  Agreements on the
     alleged basis that its shareholders did not approve the transaction.



                                       5
<PAGE>



                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

2.   CONTINGENCIES (Continued)

     In  addition,  Enviropower  is  claiming  damages  for loss of its right to
     market and use the  Technology  outside of Canada  resulting  in an alleged
     estimated loss of $30 million.  Enviropower also seeks  indemnification for
     liabilities allegedly incurred by Global Alberta in the name of Enviropower
     in the amount of $363,000,  a  declaration  that all profits,  interest and
     benefits  arising  from the  Agreements  be paid to  Enviropower,  punitive
     damages of $1  million,  costs and  interest  plus such  further  and other
     relief  as is more  particularly  set out in the  Statement  of  Claim.  At
     present,  while  Enviropower  has filed a Notice to Produce  documents  and
     Notice to Select an Officer on May 30, 1997,  it has not advanced the claim
     in any respect  subsequent  to that time, in large part due to its apparent
     insolvency.   On  March  20,  1998,  Enviropower  filed  an  assignment  in
     bankruptcy.

     IDM,  Global  Alberta and Global  Delaware are  vigorously  defending  this
     matter. Currently, an application for security for costs is scheduled to be
     heard in April  1998.  IDM seeks an Order  compelling  Enviropower  to post
     security  for  the  costs  it  will  likely  incur  in  defending   against
     Enviropower's  frivolous  claim.  If the court orders that security must be
     posted and if  Enviropower  fails to do so, an Order to dismiss  the action
     will probably be entered.  The Company believes this claim is without merit
     and intends to continue to vigorously contest it.

3.   AMENDMENT TO FINANCIAL STATEMENTS

     The  Company  has amended the  previously  reported  earnings  per share to
     comply with the recent SEC staff  position on  accounting  for  convertible
     debt securities issued with beneficial  conversion features.  The SEC staff
     believes that any discount  resulting from an allocation of proceeds to the
     beneficial conversion features increases the effective interest rate of the
     security and should be reflected as a charge to interest  expense.  Because
     the security has been issued with beneficial  conversion  terms,  the staff
     has  presumed  that  the  stated  maturity  date of the  instrument  is not
     substantive and that, therefore, the amortization period should be from the
     date the security is issued to the date it first  becomes  convertible.  If
     the security is converted prior to full  amortization of the discount,  the
     staff  believes  that the  unamortized  portion of the  discount  should be
     charged to interest expense in the period of conversion.  The SEC staff has
     objected to accounting that fails to account for a beneficial conversion as
     discussed herein and has concluded that the affected  financial  statements
     should be restated in those  circumstances.  Based on such position and the
     full  conversion  during  the  quarter  of  the  Company's  outstanding  7%
     Convertible  Notes,  the Company has amended its  financial  statements  to
     reflect an  increase in  interest  expense for the period from  $194,525 to
     $3,176,686 and an accompanying  increase in the previously reported loss of
     $2,982,161.  This  amount  had  previously  been  reported  as a charge  to
     additional  paid-in  capital.  As a  result  of the  increase  in  interest
     expense,  the basic  loss per share  increased  from  $0.21 per  share,  as
     previously reported, to $0.39 per share.

4.   CONVERTIBLE PREFERRED STOCK SERIES C AND "LOCK-UP 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.  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  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.
     The Series C Preferred Stock is convertible into Common Stock at the lesser
     of (i) $4.50 per share or (11) 75% of the average  closing bid price of the
     Common Stock during the five  trading  days prior to  conversion.  The Four
     Year $5.00 Warrants are exercisable for a four year period at the lesser of
     $5.00 per share or the lowest  conversion  price of the Series C  Preferred
     Stock.  Conversion of the Series C Preferred Stock and exercise of the Four
     Year $5.00  Warrants is 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 Four Year $5.00 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 Four Year $5.00  Warrants at the
     pre-tax  profit such  holders  would have  realized had the Four Year $5.00
     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 or $2.75 of 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.





                                        6
<PAGE>



                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


4.   CONVERTIBLE PREFERRED STOCK SERIES C AND "LOCK-UP WARRANTS" (Continued)

     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  securities  bear legends  restricting  the
     resale  thereof.  The Lock-Up  Warrants  are  exercisable  for a three year
     period at $4.50 per share.

5.   STOCKHOLDERS' EQUITY

     During the quarter ended March 31, 1998, the remaining 270 shares of Series
     C Convertible Preferred Stock were converted,  resulting in the issuance of
     an aggregate of 1,359,441 shares of common stock.

     Additionally,   during  the  quarter,   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  $3,042,842  was
     amortized as additional  interest  expense on the convertible  notes during
     the  quarter  ended March 31,  1998.  The  unamortized  balance of deferred
     issuance  costs of $260,223 was charged to paid in capital upon  conversion
     of the convertible  notes to common stock. The unamortized  balance of debt
     discount was $1,163,044 at March 31, 1998.

     During the quarter  ended March 31,  1998,  658,462  Class A Warrants  were
     exercised   resulting  in  net  proceeds  to  the  Company  of  $1,439,297.
     Additionally,  during the  quarter,  1,000  stock  options  were  exercised
     resulting in proceeds to the Company of $2,000.

6.   CONSULTANT STOCK OPTIONS

     During the quarter ended March 31, 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 quarter in connection with the grant of those options.



                                       7
<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.

Material Changes in Results Of Operations

The Company's total revenues  increased by approximately 40% from $3,693,000 for
the quarter ended March 31, 1997 to  $5,169,000  for the quarter ended March 31,
1998.  Contract  service  income  increased  during  the  quarter  by  41%  from
$3,661,000  in 1997 to  $5,169,000  in 1998.  The  increase in contract  service
revenues in 1998 over 1997 is attributable to an increase of  approximately  one
million dollars in our project in our Oak Ridge office.

Direct job costs increased by approximately  19% from $3,990,000 for the quarter
ended March 31,  1997 to  $4,752,000  for the same  period in 1998.  The primary
elements  of such  increase  in job costs were job  salaries  and  material  and
supplies. The increase in job costs was attributable to the increase in contract
service revenues during the quarter.

While  total   revenues   increased  by  40%  for  the   quarter,   general  and
administrative  expenses  increased  77.5 % from  $2,168,000  during the quarter
ended March 31, 1997 to $3,848,000  during the same period in 1998. The increase
in general and  administrative  expense was attributable to $1.9 million expense
recorded  in  February,  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.

In addition to its  operating  income and  expenses,  the Company  reported  net
interest  expense of $3,177,000 for the quarter ended March 31, 1998 as compared
to net interest  income of $57,000 for the same period in 1997.  The decrease in
net interest  income/expense  was attributable to $3,106,000 in interest expense
recorded on the  convertible  notes in 1998.  This amount  represented  both the
amortization of the beneficial  conversion  feature of the convertible notes and
warrants and the write-off of the  unamortized  balance of the notes at the time
of conversion  since all of the $3,025,000 in notes payable at December 31, 1997
were converted during the first quarter.
 
As a result of the  foregoing,  the  Company  reported  a loss  before  taxes of
$6,742,000  and a net loss of $6,342,000 for the quarter ended March 31, 1998 as
compared to a loss before taxes of $2,584,000  and a net loss of $2,134,000  for
the same quarter in 1997.

The net loss  attributable  to common stock was increased by the preferred stock
dividends  $54,000  in 1998 and  $29,000  in  1997,  and an  accounting  "deemed
dividend"   of  $104,000  and  $290,000  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  $3,330,000  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 four years
for the Series C Preferred Stock.

Material Changes in Financial Condition, Liquidity and Capital Resources.

At March 31,  1998,  the  Company  had  working  capital of  approximately  $4.8
million,  including a cash balance of $3.7  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 cash is  attributable  to the
conversion  to common  stock of  $3,025,000  in notes  payable  classified  as a
current  liability  at  December  31,  1997 and the  receipt of net  proceeds of
$3,240,000 from the Series C Preferred  Stock which was partially  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.



                                       8
<PAGE>



Also included in the  Company's  working  capital  balance at March 31, 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 March 31, 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 Miravalle
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 March
31, 1998.

The  Company's  accounts  receivable  decreased by 6.1% from 1997 to 1998.  Such
decrease in accounts  receivable was  attributable to normal  seasonal  business
activity.  Accounts  receivable  as a  percentage  of  quarterly  revenues was a
comparable 74% and 87% 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%.

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 March 31,  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.



                                       9
<PAGE>



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).

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 $2.7 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 March 31, 1998,  the
Company had loaned $2.8  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 March 31, 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.

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 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 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 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 March 31,
1998, all of the Convertible Notes had been converted  resulting in the issuance
of 1,152,669 shares of common stock.


                                       10
<PAGE>


The value,  totaling  $4,718,750,  of the discounted  conversion  feature on the
notes  and the  value of the  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 is being amortized over the period from the date of issuance
to the date the notes were  first  convertible,  January  8,  1998,  and for the
warrants to July 30, 1998.  During 1997,  $600,000 was amortized and recorded as
interest expense.  During 1998, $3,043,000 was charged to interest expense.

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.  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 or (ii) 75% of the  average
closing  bid price of the Common  Stock  during the five  trading  days prior to
conversion.  The Four Year $5.00 Warrants are exercisable for a four year period
at the lesser of $5.00 per share or the lowest  conversion price of the Series C
Preferred Stock.  Conversion of the Series C Preferred Stock and exercise of the
Four Year $5.00  Warrants is 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 Four Year $5.00 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 Four Year $5.00  Warrants at the pre-tax  profit such
holders would have realized had the Four Year $5.00  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 or $2.75 of 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 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 January 8, 1998,  the Company made a $300,000  payment  representing  its one
half share of the capital of Seven Star International  Holding, Inc. ("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.

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 March 31, 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.



                                       11
<PAGE>


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 an initial  agreement  with two  subsidiaries  of
Caterpillar,  Inc.  pursuant to which it is anticipated  that  Caterpillar  will
participate as an equity investor 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 Caterpillar.  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 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,  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.

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 March 31,  1998,  the Company  was  on-site on projects  with a total left in
value of services yet to be performed  of $27 million.  The largest  projects on
which the  Company  was  on-site at March 31,  1997 were the East Dam project in
Southern California with an approximate value of services to be performed of $12
million and Bechtel Jacobs with an approximate value of services to be performed
of $8 million.  Both contracts are expected to be fully  completed by the end of
1998.

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 and Los Alamos,  New
Mexico offices 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.

                                       12
<PAGE>


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 Miravalle 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 May 15, 1998, had entered into preliminary agreements
with  respect  to the  development  and  operation  of  (i) a  100-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.

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 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits
 
          27. Financial Data Schedule

     (b)  Reports on Form 8-K

          None



                                       13
<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:   June 11, 1998                    By: /s/ Joel Freedman
                                             -------------------------
                                             Joel Freedman, President


Dated:   June 11, 1998                    By: /s/ Michael B. Killeen
                                             -------------------------
                                             Michael B. Killeen, Principal
                                             Financial and Accounting Officer