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, 1999

                                       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 Identification No.)
 of incorporation or organization)


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


                                 (732) 390-9550
              ---------------------------------------------------
              (Registrant's telephone number, including area code)


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


     Check  whether  the issuer (1) filed all  reports  required  to be filed by
section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been  subject to such  filing  requirements  for the past 90 days.
Yes  X   No
    ---    ---

     As of August 13, 1999,  3,311,085 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, 1999 and
           December 31, 1998.............................................   3

           Consolidated Statements of Operations - For the six
           months ended June 30, 1999 and 1998...........................   4

           Consolidated Statements of Operations - For the three
           months ended June 30, 1999 and 1998...........................   5

           Consolidated Statements of Cash Flows - For the six
           months ended June 30, 1999 and 1998 ..........................   6

           Notes to Consolidated Financial Statements....................   8

 Item 2.  Management's Discussion and Analysis of Financial Condition
          and Results of Operations......................................  12

 Item 3.  Quantitative and Qualitative Disclosures about Market Risk.....  18

PART II - OTHER INFORMATION

 Item 2.  Changes in Securities..........................................  18
 Item 4.  Submission of Matters to a Vote of Security Holders............  18
 Item 6.  Exhibits and Reports on Form 8-K...............................  19

SIGNATURES  . . . . . . .................................................  19


<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


<TABLE>

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

ASSETS

Current Assets:
     Cash and cash equivalents                                                  $       9,307   $     384,292
     Accounts receivable                                                            2,668,756       2,572,951
     Notes receivable - current                                                       179,198         367,198
     Inventory                                                                        582,517         582,517
     Costs and estimated earnings in excess of billings                               922,035       1,900,336
     Prepaid expenses and other current assets                                      1,212,175         906,137
                                                                                    ---------       ---------
         Total Current Assets                                                       5,573,988       6,713,431

Investments in and Advances to Unconsolidated Affiliates                            1,666,717       2,454,521
Investment in Affiliate, at cost                                                    1,853,125       1,853,125
Debt Discount and Issuance Costs                                                      -                16,124
Property, Plant and Equipment                                                       2,475,241       3,133,404
Other Assets                                                                          979,925         979,925
                                                                                   ----------      ----------
                                                                                $  12,548,996    $ 15,150,530
                                                                                   ==========      ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
     Current portion of long-term debt                                          $     414,485   $     622,794
     Accounts payable and accrued expenses                                          7,561,885       6,578,070
     Billings in excess of costs and estimated earnings                               455,906               -
     Due to Officers                                                                  313,904               -
                                                                                   ----------       ---------
         Total Current Liabilities                                                  8,746,180       7,200,864

Long-Term Debt                                                                         28,709          64,544
                                                                                   ----------       ---------
         Total Liabilities                                                          8,774,889       7,265,408
                                                                                   ----------       ---------
Commitments and Contingencies

Stockholders' Equity:
     Common stock, authorized 7,500,000 shares $.01 par value, issued
      and outstanding 3,180,295 in 1999 and 2,947,298 in 1998                          31,803          29,473
     Additional paid-in capital                                                    57,512,892      57,215,536
     Convertible preferred stock, authorized 1,000,000 shares $1.00 par value
       Series RR, Issued and outstanding 215 shares in 1999 and in 1998,
       stated at a conversion value of $1,000 per share                               215,000         215,000

     Retained earnings (deficit)                                                  (53,985,588)    (49,574,887)
                                                                                   ----------      ----------
                                                                                    3,774,107       7,885,122
                                                                                   ----------      ----------
                                                                                $  12,548,996    $ 15,150,530
                                                                                   ==========      ==========
</TABLE>

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


                                       3
<PAGE>


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

<TABLE>

                                                                  For the Six Months Ended June 30,
                                                                        1999             1998
                                                                   -------------    -------------
<S>                                                                <C>              <C>


Revenue:
     Contract income                                                 $ 4,575,816     $10,015,549
                                                                               -               -
                                                                      ----------      ----------
                                                                       4,575,816      10,015,549
                                                                      ----------      ----------
Cost of Sales:
     Direct job costs                                                  5,141,760      11,494,348

                                                                       5,141,760      11,494,348
                                                                      ----------      ----------
Gross Profit (Loss)                                                     (565,944)     (1,478,799)
                                                                      ----------      ----------
Operating Expenses:
     General and administrative expenses                               3,555,908       6,380,722
     Depreciation and amortization                                       227,439         318,246
     Equity in net loss of unconsolidated partnerships                     8,711               -
                                                                      ----------      ----------
                                                                       3,792,058       6,698,968
                                                                      ----------      ----------
Loss from Operations                                                  (4,358,002)     (8,177,767)

Other Income (Expense):
     Interest income (expense)                                           (45,173)     (4,322,684)
                                                                      ----------      ----------
Loss before Provision (Credit) for Income Taxes                       (4,403,175)    (12,500,451)

Provision (Credit) for Income Taxes                                            -        (400,000)
                                                                      ----------      ----------
Net Loss                                                              (4,403,175)    (12,100,451)

Preferred Stock Dividends including amortization of beneficial
     conversion feature of $0 in 1999 and $3,330,000 in 1998.              7,526       3,447,043
                                                                      ----------      ----------
Net Loss on Common Stock                                            $ (4,410,701)   $(15,547,494)
                                                                      ==========      ==========
Loss per Share:
     Basic Loss per share                                           $      (1.45)   $      (9.08)
                                                                      ==========      ==========
     Diluted Loss per share                                         $      (1.45)   $      (9.08)
                                                                      ==========      ==========
     Basic common shares outstanding                                   3,034,835       1,712,623
                                                                      ==========      ==========
     Diluted common shares outstanding                                 3,034,835       1,712,623
                                                                      ==========      ==========

</TABLE>

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


                                       4
<PAGE>


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


<TABLE>

                                                                       For the Three Months Ended June 30,
                                                                               1999            1998
                                                                             ---------      ----------
<S>                                                                        <C>            <C>

Revenue:
     Contract income                                                        $ 2,146,938   $ 4,846,791

                                                                              2,146,938     4,846,791
                                                                             ----------    ----------
Cost of Sales:
     Direct job costs                                                         2,865,758     6,742,025

                                                                              2,865,758     6,742,025
                                                                             ----------    ----------
Gross Profit (Loss)                                                            (718,820)   (1,895,234)
                                                                             ----------    ----------
Operating Expenses:
     General and administrative expenses                                      1,735,034     2,533,107
     Depreciation and amortization                                               99,924       184,466
                                                                             ----------    ----------
                                                                              1,834,958     2,717,573
                                                                             ----------    ----------
Loss from Operations                                                         (2,553,778)   (4,612,807)

Other Income (Expense):
     Interest income (expense)                                                  (30,286)   (1,145,998)
                                                                              ----------    ----------
Loss before Credit for Income Taxes                                          (2,584,064)   (5,758,805)

Credit for Income Taxes                                                               -             -
                                                                              ----------    ----------
Net Loss                                                                     (2,584,064)   (5,758,805)

Preferred Stock Dividends including amortization of beneficial
     conversion feature of $0 in 1999 and $3,226,000 in 1998.                     3,763     3,289,000
                                                                              ----------    ----------
Net Loss on Common Stock                                                   $ (2,587,827)  $(9,047,805)
                                                                              ==========    ==========
Loss per Share:
     Basic Loss per share                                                  $      (0.83)  $     (5.10)
                                                                              ==========    ==========
     Diluted Loss per share                                                $      (0.83)  $     (5.10)
                                                                              ==========    ==========
     Basic common shares outstanding                                          3,101,998      1,774,749
                                                                              ==========    ==========
     Diluted common shares outstanding                                        3,101,998      1,774,749
                                                                              ==========    ==========

</TABLE>

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


                                       5
<PAGE>


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

<TABLE>

                                                                          For the Six Months Ended June 30,
                                                                              1999            1998
                                                                           -----------     ----------
<S>                                                                      <C>              <C>

Cash Flows from Operating Activities:
     Net loss on Common Stock                                            $(4,410,701)  $(15,547,494)
     Adjustments to reconcile net loss to net cash used in
     operating activities:
         Deferred income taxes                                                     -       (400,000)
         Depreciation and amortization                                       282,996        325,649
         Amortization of debt discount and beneficial conversion feature      16,124      7,636,786
         Dividend on convertible preferred stock                               7,526        117,043
         Compensation cost of consultant stock options                             -      1,871,400
         Equity in net loss of unconsolidated affiliates                       8,711              -

     Decrease (Increase) In:
         Accounts receivable                                                 (95,805)    (1,206,756)
         Notes receivable                                                    188,000          7,652
         Costs and estimated earnings in excess of billings                  978,301        301,352
         Prepaid expenses and other current assets                          (306,038)        19,068
         Bonding deposits                                                          -          9,157

     Increase (Decrease) In:
         Accounts payable and accrued expenses                               836,903        208,928
         Billings in excess of costs and estimated earnings                  455,906        780,964
                                                                           ---------      ---------

             Net cash used in operating activities                        (2,038,077)    (5,876,251)
                                                                           ---------      ---------
Cash Flows from Investing Activities:
     Acquisition of property, plant and equipment                                  -       (472,328)
     Disposal of property, plant and equipment                               375,167              -
     Investment in and advances from (to) unconsolidated affiliates          779,093        990,813
     Acquisition of other assets                                                   -       (178,125)
     Loans and advances from (to) officers                                   313,904        (74,958)
                                                                           ---------      ---------
         Net cash provided by in investing activities                      1,468,164        265,402
                                                                           ---------      ---------
Cash Flows from Financing Activities:
     Net proceeds from convertible preferred stock issuance                        -      3,240,000
     Long term debt borrowing                                                      -        156,238
     Short term borrowing                                                    400,000              -
     Principal payments on long-term debt                                   (239,636)      (340,146)
     Proceeds from exercise of stock options and warrants                     34,564      2,072,415
                                                                           ---------      ---------
         Net cash provided by financing activities                           194,928      5,128,507
                                                                           ---------      ---------
Net (Decrease) in Cash and Cash Equivalents                                 (374,985)      (482,342)

Cash and Cash Equivalents, beginning of period                               384,292        602,242
                                                                           ---------      ---------
Cash and Cash Equivalents, end of period                                 $     9,307     $  119,900
                                                                           =========      =========
</TABLE>


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

                                       6
<PAGE>

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


<TABLE>

                                                                         For the Six Months Ended June 30,
                                                                               1999            1998
                                                                            ---------        ---------
<S>                                                                         <C>            <C>

Supplemental Disclosures of Cash Flow Information:

 Cash paid during the year for:
  Interest                                                                  $ 46,146     $   231,205
                                                                             =======         =======
  Income taxes                                                              $      -     $         -
                                                                             =======         =======
Supplemental Disclosure of Noncash Investing and Financing Activities:

  Repayment of stockholder's loan through issuance of common stock          $265,122     $         -
                                                                             =======         =======
  Conversion of convertible promissory notes to common stock                $      -     $ 3,025,000
                                                                             =======       =========
  Conversion of preferred stock to common stock                             $      -     $ 2,700,000
                                                                             =======       =========
  Beneficial conversion feature of convertible preferred stock              $      -     $ 3,330,000
                                                                             =======       =========


</TABLE>




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

                                       7
<PAGE>

                    IDM ENVIRONMENTAL CORP. AND SUBSIDIARIES
              NOTES TO UNAUDITED 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 it's  wholly  owned  and
     majority owned  subsidiary  companies.  The December 31, 1998 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, 1998. 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, 1999.

2.   CONTINGENCIES

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

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

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


                                       8
<PAGE>


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


2.   CONTINGENCIES (Continued)

     In  September  of 1998,  the Company was named as a defendant in a cause of
     action styled Balerna  Concrete  Corporation,  et al. v. IDM  Environmental
     Corp.,  et al, filed in the United States  District Court of  Massachusetts
     (Case No.  98CV11883ML).  The  plaintiffs  alleged  that the  Company,  and
     others,  engaged in a pattern of illegal  conduct to divert  funds from the
     plaintiffs  through the  operation of a concrete  finishing  business.  The
     plaintiffs  have  asserted  various  claims  under RICO,  common law fraud,
     conversion,  breach of  contract  and others  basis  seeking  damages in an
     amount  expected  to exceed  $450,000.  The  Company  believes  the suit is
     without merit and intends to vigorously contest the cause of action.

3.   CONVERTIBLE PREFERRED STOCK SERIES RR

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

     The Series RR  Preferred  Shares are  convertible  into Common Stock at the
     lesser of (i) $22.50 per share or (ii) 75% of the average closing bid price
     of the Common Stock during the five trading days prior to  conversion.  The
     Preferred  Shares pay an annual dividend of 6% payable  semi-annually or on
     conversion  or at  redemption  in cash or Common  Stock,  at the  Company's
     option.  During the year ended December 31, 1998, 1,285 shares of Series RR
     Preferred Stock were converted into 359,981 shares of the Company's  common
     stock. Subsequent to December 31, 1998, demand for conversion or redemption
     of the  remaining  215  shares  of  Series  RR  Preferred  Stock  had  been
     submitted.  At the  annual  shareholders  meeting,  on June 10,  1999,  the
     shareholders  approved a proposal to authorize issuance of common shares in
     excess of 360,000 on the  conversion  of  outstanding  Series RR  Preferred
     Stock. On July 26, 1999, the Company  reached  agreement with the holder of
     the remaining 215 shares of Series RR Preferred  Stock to allow  conversion
     into 130,788  common shares in full and final  settlement of the 215 Series
     RR Preferred Shares.

4.   EARNINGS PER SHARE

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

     --   The beneficial  conversion feature of the Company's Series C Preferred
          Stock and related  warrants  was  $3,330,000  and was  amortized  as a
          dividend from February 13, 1998, the issue date, to June 22, 1998, the
          date the  Registration  Statement of the underlying stock was declared
          effective.  $104,000 was recorded for the three months ended March 31,
          1998, and $3,226,000 for the three months ended June 30, 1998.


                                       9
<PAGE>

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

5.   STOCKHOLDERS' EQUITY

     Reverse Stock Split
     -------------------
     On March 11, 1999, the Company's  Board of Directors  authorized a 1 for 10
     reverse  stock  split of its  common  stock  effective  April 16,  1999 for
     shareholders  of  record  at the close of  business  on April 16,  1999 and
     amended the par value of the common stock to $.01. All shares and per-share
     amounts in the  accompanying  consolidated  financial  statements have been
     restated to give effect to the 1 for 10 reverse stock split.

     Reverse Split and Extension of Class A Warrants
     -----------------------------------------------
     In April 1999,  the  Company's  Board of  Directors  authorized  a 1 for 10
     reverse split of the Company's outstanding Class A Warrants effective April
     16, 1999 and extended the term of those warrants to April 2000.

     Loans by Warrant Holders
     ------------------------
     During  November,  1998,  the holders of certain $30.00  Warrants,  Lock-Up
     Warrants and Reload Warrants loaned $671,023 to the Company.  The loans may
     be credited  against the exercise price of those  Warrants.  As of December
     31, 1998, $265,122 was still outstanding. During March, 1999, 97,525 of the
     $30.00  warrants were  converted  into 97,525  shares of common stock.  The
     exercise price of the warrants paid in full the loan outstanding.

6.   SUBSEQUENT EVENTS

     Approved Actions by the Board of Directors
     ------------------------------------------
     On July 18, 1999,  the Board of Directors of the  Corporation  approved the
     following resolutions:

     (1)  A proposal to reduce the exercise price of a consultant's  option from
          $37.19  per share to $6.75 per share for  112,500  shares.  The market
          price of The  Company's  Common  Stock at the date of this  action was
          $1.156 and the additional  compensation  expense recognized under FASB
          123 is expected to be minimal.

     (2)  A proposal  authorizing the Company's Chief Executive  Officer ("CEO")
          and  Chief   Operating   Officer   ("COO")  to  negotiate  a  proposed
          acquisition of Fusion Networks, Inc.

          On July 26,  1999,  the Company  announced  that it had entered into a
          non-binding  letter of intent to acquire Fusion Networks,  Inc., based
          in Miami, Florida.

          Fusion  Networks is a newly formed  company which is in the process of
          building  a  portal-type  web site with an initial  emphasis  on Latin
          America and the Hispanic market in the United States. The president of
          Fusion Networks, Hernando Bahamon, has previously established a number
          of web-sites for companies based in Latin America.

          Pursuant  to the letter of intent,  it is  contemplated  that IDM will
          acquire Fusion Networks in exchange for  approximately  600,000 shares
          of common stock plus shares of non-voting  redeemable  preferred stock
          of IDM which, upon approval by IDM's shareholders, would automatically
          convert into approximately 26 million shares of common stock.


                                       10
<PAGE>

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

6.   SUBSEQUENT EVENTS (Continued)

     Approved Actions by the Board of Directors (Continued)
     ------------------------------------------------------
          The  proposed  acquisition  is  subject  to a  number  of  conditions,
          including  receipt by the Company's  board of directors of a "fairness
          opinion" from an investment banking firm, the receipt of all necessary
          regulatory  approvals and the  negotiation and execution of definitive
          documentation.  There can be no assurance that the acquisition will be
          successfully  implemented or that there will not be  modifications  to
          the acquisition terms.

     (3)  A  proposal  increasing  the number of shares by  1,600,000  under the
          Company's  1998 Stock Option Plan ("1998 Plan") subject to shareholder
          approval.

     (4)  A proposal  granting  1,000,000 options under the 1998 Plan to various
          officers,  directors  and  consultants  and granting  400,000  options
          outside of the 1998 Plan to a consultant.

     Redemption of 215 shares of Series RR Preferred Stock
     -----------------------------------------------------
     On July 26,  1999,  The Company  reached  agreement  with the holder of the
     remaining 215 shares of Series RR Preferred Stock to allow  conversion into
     130,788 shares of The Company's  Common Stock in full and final  settlement
     of the 215 Preferred RR shares.


                                       11
<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
1954.  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 the Results of  Operations  for the Three Months ended June
30, 1999 Compared with the Three Months ended June 30, 1998

Revenues.  The Company's total revenues  decreased by  approximately  55.7% from
$4,847,000  for the quarter  ended June 30, 1998 to  $2,147,000  for the quarter
ended June 30,  1999.  The  decrease  in  contract  income in 1999 from 1998 was
primarily  attributable  to a  reduction  in the  number  and size of  contracts
performed  during the  current  period as  compared  to the same period in 1998,
including,  in particular,  the East Dam project which was completed in 1998 and
which produced revenues of approximately  $1.7 million during the second quarter
of 1998 as compared to none for the second quarter of 1999.

Revenues for the quarter included $1 million  associated with the DOE project in
Los Alamos, New Mexico which was completed in 1997 and $650,000  associated with
the East Dam project which was completed in 1998. The payment for the Los Alamos
DOE project was for full  settlement of the Company's  change order claim in the
approximate  amount of $2.8  million.  The  payment for the East Dam project was
consideration  to the Company for assignment to the contractor on the project of
the Company's claim for additional compensation associated with change orders in
the  approximate  amount of $10 million.  The contractor  will pursue the claim,
paying all direct  claim  costs,  including  costs of experts.  In the event the
claim results in a payment to the  contractor,  the payment will be  distributed
70% to the contractor and 30% to the Company after deducting  direct claim costs
and the $650,000 paid by the contractor.

Cost of Sales.  Direct job costs decreased by approximately  the same percentage
as the revenue  57.5% from  $6,742,000  for the  quarter  ended June 30, 1998 to
$2,866,000  for the same period in 1999. The decrease in job costs was primarily
attributable to completion during 1998 of the East Dam project,  which reduction
was  partially  offset  by  additional  job  cost  charges  associated  with two
contracts in the Company's Oak Ridge,  Tennessee office. The first project is an
asset recovery  contract where the value of the equipment  salvaged pays for the
Company's  cost of dismantling  and removing the equipment.  During the quarter,
the Company became aware of several previously undisclosed problems that reduced
the value of the equipment and increased the costs to  decontaminate  and remove
the equipment.  As a result of the unforseen  problems,  the Company  recorded a
negative  $1.1 million  dollar gross margin on the contract  during the quarter.
The Company intends to aggressively  pursue contract change orders.  Any revenue
received from the change order will be recorded when realized.

The second project was a waste disposal  project on which the Company planned to
decontaminate and sell the scrap steel from the project. During the quarter, the
Company  became aware that the waste had PCB's which  resulted in an increase in
the  disposal  cost  and the  contractor  imposed  additional  conditions  which
resulted in the scrap  steel being  disposed of at a cost to the Company in lieu
of being able to sell the same.  As a result of these  unforseen  problems,  the
Company recorded $1.2 million negative gross margin for this contract during the
quarter. The Company intends to pursue change orders against the contractor. Any
revenue received from the change order will be recorded when realized.

General and Administrative Expenses. While total revenues decreased by 55.7% for
the quarter, general and administrative expenses decreased 31.5% from $2,533,000
during the quarter ended June 30, 1998 to  $1,735,000  during the same period in
1999.  The  decrease  in  general  and  administrative   expense  was  primarily
attributable to a decrease in variable overhead due to lower business levels.

Depreciation and amortization.  Depreciation and amortization  expense decreased
by  approximately  46% from  $185,000 in 1998 to $100,000 in 1999.  The decrease
depreciation and amortization  expense was primarily  attributable to a decrease
in amortization of deferred issuance costs.


                                       12
<PAGE>

Interest Expense. In addition to its operating income and expenses,  the Company
reported net interest  expense of $30,000 for the quarter ended June 30, 1999 as
compared to net interest  expense of $1,146,000 for the same period in 1998. The
decrease in net  interest  income/expense  was  attributable  to  $1,163,000  in
interest expense recorded on the convertible notes and related warrants in 1998.
This amount represented the amortization of the beneficial conversion feature of
the convertible notes and warrants.

Miscellaneous.  During the second  quarter of years 1998 and 1999,  no provision
was made for post retirement benefits subject to FAS 106.

As a result of the foregoing, the Company reported a loss before and after taxes
of  $2,584,000  for the quarter ended June 30, 1999 as compared to a net loss of
$5,759,000 for the same quarter in 1998.

The net loss  attributable  to common stock was increased by the preferred stock
dividends totaling $4,000 in 1999 and $63,000 in 1998, and an accounting "deemed
dividend" of $3,226,000 in 1998 arising from the  amortization of the beneficial
conversion  feature of the  Company's  Preferred  Stock Series C. The Company is
calculating  earning  per  share  to  comply  with  the SEC  staff  position  on
accounting for  securities  issued with  beneficial  conversion  features.  This
accounting  required 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 in 1998) and amortized the dividend from
the issue date for the Series C  Preferred,  February 13, 1998 to June 22, 1998,
the date  the  Registration  Statement  of the  underlying  stock  was  declared
effective.

Six Months ended June 30, 1999 Compared with Six Months Ended June 30, 1998.

Revenues.  Total revenues decreased by approximately  54.3% from $10,015,000 for
the six months  ended June 30, 1998 to  $4,576,000  for the same period in 1999.
The decrease was primarily  attributable to the lower volume of business.  Also,
see the quarterly comparison for a discussion of some of the factors.

Cost  of  Sales.   Direct  job  costs  decreased  by  approximately  55.3%  from
$11,494,000  for the six months ended June 30, 1998 to  $5,142,000  for the same
period in 1999 and is primarily attributable to the lower revenue volume.

General  and  Administrative  Expenses.   General  and  administrative  expenses
decreased  55.7% from  $6,381,000  during the six months  ended June 30, 1998 to
$3,556,000  during  the same  period  in  1999.  The  decrease  in  general  and
administrative  expense was  attributable  to $1.9 million  expense  recorded in
February,  1998 for options granted to consultants to purchase 122,000 shares of
common stock of the Company at the market price of the Company's common stock at
the date of the grant and lower volume.

Interest  Expense.  The Company reported a decrease in net interest expense from
$4,323,000  for the six months  ended June 30,  1998 to $45,000  expense for the
same period in 1999. See the quarterly  comparison for discussion of the factors
contributing to the decreased expense.

As a result of the  foregoing,  the  Company  reported  a loss  before  taxes of
$12,500,000  and a net loss after tax of  $12,100,000  for the six months  ended
June 30, 1998 as compared to a loss before and after taxes of $4,403,000 for the
same period in 1999.

The net loss  attributable  to common stock was increased by $8,000 and $117,000
in  preferred  stock  dividends  and  $0  and  $3,330,000  amortization  of  the
beneficial conversion feature in 1999 and 1998 respectively.


                                       13
<PAGE>

Liquidity and Capital Resources

At June 30, 1999,  the Company had a working  capital  deficit of  approximately
$3.2 million and a cash balance of $9,000. This compares to a deficit in working
capital of $0.5 million and a cash balance of $0.4 million at December 31, 1998.
The  changes  in  working  capital  and cash were  primarily  attributable  to a
combination of the loss incurred  during 1999 and the effects of (1) an increase
in accounts payable of $0.8 million, and (2) a cash flow from the investment and
advances from an unconsolidated affiliate of $0.8 million.

Approximately  $0.9 million of working  capital  consisted of unbilled costs and
estimated earnings on ongoing projects. Such amounts are expected to be received
during 1999 as projects  progress  with all such  amounts  being  payable to the
Company by the completion of such projects.

Also included in the working  capital balance at June 30, 1999, 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, 1998.  The 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 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 our intent to  incorporate  this  inventory  in future
projects.

At  December  31,  1998,  we had  approximately  $30 million of  operating  loss
carry-forwards  that may be applied against future taxable income.  $2.3 million
of such  losses  expire in the year 2010,  $9.1  million in the year 2011,  $8.6
million in the year 2012 and the balance  ($10.0  million) the  following  year.
Based on our continuing  operating  losses,  we wrote-off our deferred tax asset
during 1998 and no such assets was reflected at June 30, 1999.

We require substantial working capital to support our ongoing operations.  As is
common in the environmental services industry, payment for services rendered are
generally  received  pursuant to specific  draw  schedules  after  services  are
rendered.  Thus, pending the receipt of payments for services rendered,  we 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.

Operations  were  historically  funded  through a combination  of operating cash
flow, term notes and bank lines of credit.  Since April of 1994, we have carried
no bank debt and have funded operations  principally  through the sale of equity
securities and securities convertible into equity securities.  At June 30, 1999,
we had  no  bank  debt  and no  significant  long-term  debt  and  were  funding
operations entirely through cash on hand and operating cash flow.

Other than funds provided by operations and the potential  receipt of funds from
the exercise of outstanding  warrants, we presently have no sources of financing
or commitments to provide  financing.  A total of  approximately  34,000 Class A
Warrants  (after  giving  effect  to the April  1999  reverse  split)  issued in
connection with our initial public offering were  outstanding and exercisable at
June 30, 1999.  Such warrants are  exercisable  to purchase two shares of common
stock  each for a price of  $90.00,  or $45.00  per  share.  The  warrants  were
originally  exercisable until April of 1999 unless earlier called. We declared a
1-for-10 reverse split of our Common Stock and Class A Warrants  effective April
16,  1999  and  extended  the  term of the  Class A  Warrants  to April of 2000.
Exercise of the warrants  would provide  gross  proceeds of  approximately  $3.1
million and result in the issuance of  approximately  70,000 shares after giving
effect to the reverse split.  However,  given the current price of the Company's
Common Stock,  it is not expected that the Class A Warrants will be exercised in
the near future.


                                       14
<PAGE>

In  November  of 1998,  we paid  $600,000  to acquire a 49%  interest in Kortman
Polonia,  a Polish  company  with  substantial  real estate  holdings.  Kortmann
Polonia has initiated  discussions with various real estate developers and major
U.S.  retailers  with respect to the sale of various real estate  tracts and the
development and leasing of the remaining tracts.

In addition  to funding  requirements  to support  ongoing  operations,  we have
committed  substantial  capital  resources to  implementation  of the  strategic
initiative  known as "Vision  2000." The focus of Vision 2000 is to position the
Company as a leading participant in the global energy and waste treatment 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  and can be  expected  to continue to require
substantial capital expenditures in the future.  Direct investments in potential
energy and waste treatment projects undertaken under the Vision 2000 initiative,
excluding corporate overhead allocable to such initiative, totaled approximately
$9 million at December 31, 1998. Capital expenditures and other outlays to bring
proposed  projects  to an  operational  state are  expected  to far  exceed  the
investment to date. In particular,  the proposed El Salvador  Power Project,  is
expected  to  cost  approximately  $55  million  to  develop  and  will  require
substantial funding beyond that which the Company can presently provide. We have
entered into  discussions  with  several  potential  equity  investors in the El
Salvador  Power  Project.  Similarly,  in connection  with our  acquisition of a
controlling  interest  in the  Georgia  Power  Project,  we agreed to  perform a
technical  evaluation  on the  facility  and,  depending  on the results of that
evaluation, to invest up to $9 million over the life of the facility for repairs
and  rehabilitation.  The ability to  successfully  bring the El Salvador  Power
Project, and other similar projects, on line, carry out any required repairs and
rehabilitation  on the Georgia  Power  Project and  implement  other Vision 2000
initiatives  is  substantially  dependent  upon our  ability  to secure  project
financing and other financing.  While we believe that we will be able to attract
adequate   financing  to  develop  the  El  Salvador  Power  Project  and  other
anticipated projects, we have 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 bonding and other job costs, we
do not anticipate any substantial  demands on our liquidity or capital resources
during the following twelve months.

In  March of 1999,  our  management  appeared  before  a  Nasdaq  hearing  panel
regarding the possible  de-listing of our common stock for failure to maintain a
minimum  bid price of at least  $1.00.  In order to address  the  deficiency  in
minimum bid price, we proposed and have approved a 1-for-10 reverse split of our
common stock and warrants to be effective April 16, 1999. On May 7, 1999, NASDAQ
informed us of their  decision that because of the  Company's  failure to comply
with the minimum  $5,000,000  market value of public float  requirement  for the
past 37 consecutive  trading days as of that date,  that effective with the open
of business of May 11, 1999, the company's  securities were transferred from the
National Market to the Small Cap Market, pursuant to the maintenance criteria.

Subsequent  to June 30,  1999,  we  received  payments  of $1  million  from the
settlement of our change order claims on the Los Alamos DOE project and $650,000
from  assignment  to our  contractor  of our change order claims on the East Dam
project.  The contractor will pursue the East Dam claim, paying all direct claim
costs,  including costs of experts.  In the event the claim results in a payment
to the contractor, the payment will be distributed 70% to the contractor and 30%
to the Company after  deducting  direct claim costs and the $650,000 paid by the
contractor.  We  also  expect  to be able to  close  on the  sale of one or more
parcels  held by Kortmann  Polonia  during  1999.  Given our  current  financial
position, we are evaluating  opportunities to sell part, or all, of our interest
in proposed power projects in El Salvador and elsewhere.

We believe  that our working  capital,  including  funds  received  from our Los
Alamos DOE and East Dam claims, combined with the expected receipt of funds from
the  resolution of certain other change orders and  litigation  and the possible
sale of a portion of our equity interest in various  projects,  is sufficient to
meet our 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 there is no assurance as to
the timing or amount of the receipt of funds from change  orders,  litigation or
other  sources,  we may be  required  to seek new bank  lines of credit or other
financing  in  order  to  facilitate  the  performance  of  jobs.  While  we are
conducting  ongoing  discussions with various  potential  lenders with a view to
establishing available credit facilities,  we presently have no commitments from
any  bank or  other  lender  to  provide  financing  if such  financing  becomes
necessary to support operations.

                                       15
<PAGE>

Year 2000 Issue

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

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

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

Certain Factors Affecting Future Operating Results

This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21e of the Securities Exchange Act
of 1934.  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:  uncertainty with respect to the continued listing of our
Common  Stock on Nasdaq;  uncertainty  with  respect  to our  ability to finance
continued  operating  losses and future growth  initiatives  pursuant to "Vision
2000";  possible  fluctuations  in the  growth  and  demand for energy and waste
treatment  services in markets in which the Company may seek to establish energy
production and waste treatment operations; intense competition for establishment
of  energy  production,  waste  treatment  and  similar  operations  in  growing
economies;   currency,   economic,   financing  and  other  risks   inherent  in
establishing  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;  uncertainty as to our
ability to realize  sufficient  proceeds  from the sale of  interests in various
projects to support current  operations;  and other factors generally  affecting
the  timing and  financing  of  projects.  In  addition  to the  foregoing,  the
following specific factors may affect future operating results.

At June 30,  1999,  we had a  backlog  of  approximately  $6  million  of signed
services  contracts  as  compared  to a backlog of  approximately  $8 million at
December 31, 1998. The largest  project in our backlog at June 30, 1999, was the
North Rim  project,  with an  estimated  value for the balance of services to be
performed  of $2.5  million.  The  North  Rim  project  began in May 1999 and is
scheduled to be completed during 1999. However,  the elapsed time from the award
of a contract to commencement of services, and completion of performance, may be
two or more  years.  The  backlog  at June 30,  1999 does not  include  services
expected to be  rendered  under the EWN  project in  Germany.  The total  German
government  funding  for the EWN  project is  approximately  $3.65  billion.  We
anticipate  that we will  perform as much as $700 million of services at the EWN
site over a ten-year period. We expect to finalize a comprehensive agreement for
the  revitalization  of the EWN site  during the  second  half of 1999 and to be
performing  remediation  services during the fourth quarter of 1999.  Because of
the  uncertainty  as to the actual start date for  services at the EWN site,  no
estimate can be made as to the value of services  expected to be rendered during
1999.

                                       16
<PAGE>

In addition to existing  contracts,  we are presently  bidding on, or propose to
bid on, numerous  projects in order to replace revenues from projects which will
be completed  during 1999 and to increase  the total  dollar  volume of projects
under  contract.  We anticipate  that efforts to bid on and secure new contracts
will focus on projects which can be readily  serviced from the regional  offices
as well as certain large  international  plant  relocation  projects and nuclear
decommissioning  projects  which we  intend to  pursue.  Our  regional  offices,
particularly the Oak Ridge,  Tennessee  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,  we believe  that our  existing  presence on adjacent
projects  combined  with our proven  expertise  and  resources  will allow us to
successfully bid on and perform substantial additional projects based out of our
regional offices.

In  addition  to  remediation  and  plant  relocation  projects  on which we are
presently  bidding or  negotiating,  during  1997 and 1998 we entered the energy
production  and waste  treatment  services  market.  We  expect to begin  energy
production  and sales at our Georgia Power  Project  during the third quarter of
1999 and expect to begin  operations  at, and to receive  revenues  from various
other energy and waste treatment projects and nuclear  decommissioning  projects
at various sites by as early as the second half of 1999.

While we anticipate that entry into the energy  production,  waste treatment 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,  waste  treatment 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.  We do not currently have the necessary  capital resources to undertake
such ventures without third-party financing.  We anticipate that we will take on
equity  partners  and seek third  party debt  financing  to finance  substantial
portions  of the  projects  which we  expects to  undertake.  While we have been
successful in attracting  substantial partners in carrying out various phases of
the  EWN  nuclear  decommissioning/site   revitalization  project,  we  have  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 we commence future projects.

There is  substantial  uncertain  as to our  ability to continue to operate as a
result of continuing losses and a lack of currently  available resources to fund
future  operations.  In an effort to deal with these concerns,  we are presently
evaluating the sale or other  liquidation of various  long-term  assets which we
believe can provide adequate funding to support future  operations.  In March of
1999, we agreed to accept  $300,000 in full  settlement  of our note  receivable
from UPE relating to the sale of our surplus equipment  inventory.  $150,000 was
paid at closing  with the  balance  payable in monthly  installments  over eight
months. We are presently  evaluating the sale of properties in Poland as sources
of additional  funds. We believe that adequate funding will be provided from the
efforts described to support our operations for the foreseeable future. However,
in the absence of receipt of adequate funding from those, or other, sources, our
ability to continue to operate at the current level is in doubt.

In light of continued  uncertainty effecting the Company's operations at the end
of the second quarter of 1999,  management has evaluated various options outside
of its  traditional  businesses  to return the Company to  profitability  and to
increase shareholder value. Pursuant to those efforts, in July 1999, the Company
entered into a letter of intent to acquire Fusion Networks, Inc. in exchange for
approximately   600,000  shares  of  common  stock  plus  shares  of  non-voting
redeemable  preferred stock of IDM which,  upon approval by IDM's  shareholders,
would  automatically  convert  into  approximately  26 million  shares of common
stock.  Fusion  Networks is a newly  formed  company  which is in the process of
building a  portal-type  web site with an initial  emphasis on Latin America and
the Hispanic market in the United States. The proposed acquisition is subject to
a number of conditions, including receipt by the Company's board of directors of
a  "fairness  opinion"  from an  investment  banking  firm,  the  receipt of all
necessary  regulatory  approvals and the negotiation and execution of definitive
documentation.   There  can  be  no  assurance  that  the  acquisition  will  be
successfully  implemented  or  that  there  will  not  be  modifications  to the
acquisition terms.


                                       17
<PAGE>


Impact of Inflation

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk

          Not Applicable.

                           PART II - OTHER INFORMATION

Item 2. Changes in Securities

     (a)  On June 2, 1999,  the Company sold $400,000 of 6.5%  Promissory  Notes
          and 125,000 shares of Common Stock.

     (b)  The securities were issued to one accredited investor.

     (c)  The  aggregate  sales  price  of  such  securities  was  $400,000.  No
          commissions were paid in connection with the placement.

     (d)  The  securities  were offered  pursuant to Regulation D. The offer was
          directed  exclusively to a single accredited  investor without general
          solicitation  or  advertising  and based on  representations  from the
          investor  that  such  investor  was  acquiring  for  investment.   The
          securities bear legends restricting the resale thereof.

     (e)  The Promissory  Notes are due in 60 days with interest at 6.5%. In the
          event the company does not pay the Promissory  Notes at maturity,  the
          holder has the right, among other remedies, to convert the amounts due
          on the  Promissory  Notes into Common Stock at the lesser of (i) $1.50
          per share or (ii) 75% of the  average  closing bid price of the Common
          Stock during the five trading days prior to conversion.  Conversion of
          the  Promissory  Notes  in the  event of  default  is  subject  to the
          issuance of a maximum of 486,058  shares of Common Stock on conversion
          unless the  shareholders of the Company have approved  issuance beyond
          that level upon conversion.

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

     (a)  On  June  10,  1999,  an  annual  meeting  of   shareholders   of  IDM
          Environmental Corp. was held.

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

                  Joel Freedman             2,440,744  For   154,904 Withheld
                  Frank Falco               2,440,544  For   155,104  Withheld

     In addition to the foregoing directors, Michael Killeen, Robert McGuinness,
Mark  Franceschini,  Richard  Keller  and  Frank  Patti  continued  to  serve as
directors following the meeting.

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

          (i)  Approval  of   issuances  of  shares  in  excess  of  360,000  on
               conversion of outstanding Series RR Preferred Stock (324,400 For,
               169,019 Against, 27,746 Abstain)


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<PAGE>

Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits

                  Exhibit No.               Description
                  -----------              -------------

               10.1 Form of 6.5% Promissory Note
               10.2 Registration Rights Agreement re: 6.5% Promissory Notes
               27.1 Financial Data Schedule

     (b)  Reports on Form 8-K

     Form  8-K,  dated  May 21,  1999,  was  filed  reporting  under  Item 5 the
resignation  of  four  officers  and  the  retention  of  the  same  persons  as
consultants to the company.

                                   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 16, 1999                    By:   /s/ Joel Freedman
                                              --------------------------
                                              Joel Freedman, President


Dated:  August 16, 1999                    By:   /s/ Michael Killeen
                                              --------------------------
                                              Michael B. Killeen, Principal
                                              Financial and Accounting Officer

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