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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

                [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                    For the Periods Ended September 30, 2001
                                       or
                [ ] Transition Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                         Commission file number 0-18995

                              INTERLINE RESOURCES CORPORATION
                              -------------------------------
             (Exact name of small business issuer as specified in its charter)

           Utah                                        87-0461653
      ------------------                  --------------------------------------
(State or other jurisdiction of                     (I.R.S. employer
incorporation or organization)                      identification No.)

                  160 West Canyon Crest Road, Alpine, UT 84004
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (801) 756-3031

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

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

                          Common Stock $.005 Par Value
                                 Title of Class

    Securities registered pursuant to Section 12(g) of the Exchange Act: None

Check  whether  the Issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the Exchange  Act of 1934 during the  preceding 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____.

APPLICABLE TO REGISTRANTS  INVOLVED IN BANKRUPTCY  PROCEEDINGS  DURING PRECEDING
FIVE YEARS  Indicate by check whether the Registrant has filed all documents and
reports required to be file by Section 12,13 or 15(d) of the Securities Exchange
Act of 1934 subsequent to the  distribution of securities under a plan confirmed
by a court. Yes X No____.

Common stock  outstanding at September 30, 2001 - 14,066,052 shares of $.005 par
value Common stock.

                    DOCUMENTS INCORPORATED BY REFERENCE: NONE

                                   FORM 10-QSB
                         INTERLINE RESOURCES CORPORATION

                                       1
<PAGE>




                                TABLE OF CONTENTS


PART I. - FINANCIAL INFORMATION

Item 1      Unaudited Financial Statements                                  Page

            Condensed Consolidated Balance Sheet at September 30, 2001        5
            Condensed Consolidated Statement of Operations for the
            three and nine months ended September 30, 2001 and 2000           7

            Condensed Consolidated Statements of Cash Flows for
            nine months ended September 30, 2001 and 2000                     8

Item 2      Management's Discussion and Analysis of
            Financial Condition and Results of Operations                     10

Item 3      Notes to Condensed Consolidated Financial Statements              19

PART II. - OTHER INFORMATION

Item 1      Legal Proceedings                                                 20

Item 2      Changes in the Securities                                         21

Item 3      Defaults Upon Senior Securities                                   21

Item 4      Submission of Matters to a Vote of Security Holders               22

Item 5      Other Information                                                 22

Item 6(a)   Exhibits                                                          22

Item 6(b)   Reports on Form 8-K                                               22

            Signatures                                                        23

                                       2
<PAGE>


                  FORWARD LOOKING INFORMATION AND RISK FACTORS


     Interline Resources  Corporation (the "Company") or its representatives may
make forward looking statements,  oral or written,  including statements in this
report's Management's Discussion and Analysis of Financial Condition and Results
of  Operation,  press  release  and filings  with the  Securities  and  Exchange
Commission,  regarding  estimated future net revenues from  operations,  planned
capital expenditures  (including the amount and nature thereof),  the effects of
the Company's prior Bankruptcy  proceeding,  the Company's  projected  financial
position,  results  of  operations,   business  strategy  and  other  plans  and
objectives  for  future   operations.   These  statements  are   forward-looking
statements,  within the meaning of Section 27A of the Securities Act of 1993 and
Section 21E of the Securities Exchange Act, which reflect  Management's  current
views with respect to future events and financial performance.

     Although  the Company  believes  that the  expectations  reflected in these
forward looking  statements are  reasonable,  there can be no assurance that the
actual results or  developments  anticipated by the Company will be realized or,
even if substantially  realized, that they will have the expected effects on its
business or results of operations. Such forward-looking statements involve known
and unknown  risks,  uncertainties  and other factors which may cause the actual
results,  performance or achievements of the Company to be materially  different
from any future  results,  performance or  achievements  expressed or implied by
such forward-looking statements. Such factors include but are not limited to the
outcome of the Company's current Bankruptcy Proceeding, the timing and extent of
changes  in  commodity   prices,   unforeseen   engineering  and  mechanical  or
technological  difficulties in connection with the Company's business operations
and other risks.

     These   forward-looking   statements  are  subject  to  certain  risks  and
uncertainties  including,  but not limited to, future financial  performance and
future events,  competitive pricing for services,  costs of obtaining capital as
well as national,  regional and local economic conditions.  Actual results could
differ materially from those addressed in the forward-looking statements. Due to
such uncertainties and risks,  readers are cautioned not to place undue reliance
on such forward-looking statements, which speak only as of the date whereof.

     All subsequent oral and written forward-looking  statements attributable to
the Company or persons  acting on its behalf are  expressly  qualified  in their
entirety by these  factors.  The Company  assumes no obligation to update any of
these statements.


                                       3


<PAGE>




                               INTERLINE RESOURCES
                                   CORPORATION
                                AND SUBSIDIARIES

                                 PART I - ITEM 1
                              FINANCIAL STATEMENTS
                                   (UNAUDITED)

                               September 30, 2001






The condensed  consolidated  financial statements included have been prepared by
the  Company,  without  audit,  pursuant  to the  rules and  regulations  of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial  statements prepared in accordance with generally
accepted  accounting  principles have been condensed or omitted pursuant to such
rules and  regulations,  although the Company  believes that the disclosures are
adequate to make the information presented not misleading.  The Company presumes
that the user of this interim  financial  information  has read or has access to
the audited  financial  statements for the preceding  fiscal year,  2000, and in
that  context,  this  disclosure  is  adequate  for a fair  presentation  of the
Company's financial position.

In the  opinion  of the  Company,  all  adjustments  consisting  of only  normal
recurring  adjustments as of September 30, 2001,  have been made. The results of
operations for the interim period are not necessarily  indicative of the results
to be expected for the entire year.

                                       4
<PAGE>




                         INTERLINE RESOURCES CORPORATION
                                AND SUBSIDIARIES

                      Condensed Consolidated Balance Sheet
                                   (Unaudited)




                                                 Sept. 30, 2001
                Assets
                Current Assets:
                      Cash & cash equivalents           $54,687
                      Accounts receivable - trade       532,312
                      Inventories                        66,203
                      Other current assets               47,884
                                                         ------

                           Total current assets         701,086

                Property, plant & equipment           6,944,301
                Accumulated depreciation & depletion (3,788,501)
                                                      ---------
                      Net property, plant & equipment 3,155,800


                Technology and marketing rights         319,286
                                                        -------


                                Total assets         $4,176,172
                                                     ==========








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

                                       5
<PAGE>


                         INTERLINE RESOURCES CORPORATION
                                AND SUBSIDIARIES

                      Condensed Consolidated Balance Sheet
                                   (Unaudited)

                                                   Sept. 30, 2001
                Liabilities & Stockholders'
                Deficit
                Current Liabilities:
                    Accounts payable                 $ 319,915
                    Accrued liabilities                621,458
                    Notes payable - related party    3,595,920
                    Current portion of long-term debt   89,904
                                                        ------
                         Total current liabilities   4,627,197

                    Long-term debt less current
                    portion                            531,161
                                                       -------
                           Total liabilities         5,158,358

                Stockholder's Deficit
                    Preferred stock - $0.01 par value.
                         25,000,000 shares authorized,
                         none issued or outstanding.        --
                    Common stock - $0.005 par
                         value, 100,000,000 shares
                         authorized, 14,066,052 shares
                         issued & outstanding           70,330
                    Additional paid-in capital       9,209,058
                    Accumulated deficit            (10,261,574)
                                                    ----------

                           Total                      (982,186)
                                                       -------
                    stockholders' deficit

                           Total liabilities and
                            stockholders' deficit  $ 4,176,172
                                                   ===========

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

                                       6
<PAGE>


                         INTERLINE RESOURCES CORPORATION
                                AND SUBSIDIARIES

                       Condensed Consolidated Statement of Operations
                                   (Unaudited)

                                      Three months ended     Nine months ended
                                        September 30,          September 30,
                                       2001       2000        2001       2000
                                       ----       ----        ----       ----

Revenue                              $ 836,445 $ 2,569,504 $3,376,199 $5,320,000
Direct costs                           541,337   2,184,067  2,282,744  4,223,529
                                       -------   ---------  ---------  ---------
Gross Margin                           295,108     385,437  1,093,455  1,096,471

Selling, general & administrative      229,520     245,929    786,071    729,669
Research & development                       -       3,519      1,729     17,038
Depreciation, depletion & amortization 141,111     184,638    533,030    546,513
                                       -------     -------    -------    -------

Loss from operations                  (75,523)    (48,649)  (227,375)  (196,749)

Other income
  Interest income (expense)           (14,668)    (16,154)   (45,649)   (47,096)
  Interest (expense) - related party  (94,814)    (76,054)  (283,022)  (228,161)
  Gain from sale of assets                  -           -          -      1,500
                                      -------     -------   --------    -------

Net loss before income taxes         (185,005)   (140,857)  (556,046)  (470,506)

Income taxes
      Current                                -          -          -          -
      Deferred                               -          -          -          -
                                      -------     -------    -------    -------

Net loss                            ($185,005) ($ 140,857) ($556,046) ($470,506)
                                     ========   =========   ========   ========
Loss per common share - basic
  & diluted                           ($ 0.01)    ($ 0.01)   ($ 0.04)   ($ 0.03)
                                     ========    ========   ========   ========
Weighted average shares - basic
  & diluted                        14,066,052  14,066,052 14,066,052 14,066,052


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

                                       7
<PAGE>


                         INTERLINE RESOURCES CORPORATION
                                AND SUBSIDIARIES

                 Condensed Consolidated Statement of Cash Flows
                                   (Unaudited)

                                                              Nine months ended
                                                                 September 30,
Cash flows from operating activities:                            2001       2000
                                                                 ----       ----

       Net loss                                            ($556,046) ($470,506)
       Adjustment  to  reconcile  net  loss  to  net  cash
       provided by (used in) operating activities:
            Depreciation, depletion & amortization            533,030    546,513
            Gain on disposal of assets                              -    (1,500)
            (Increase) decrease in:
                 Accounts receivable                           10,488    209,454
                 Inventories                                    7,407     22,197
                 Other current assets                        (30,361)    (7,550)

       Increase (decrease) in:
            Accounts payable                                (212,876)    140,946
            Accrued liabilities                               392,892     16,960
                                                             --------    -------
            Net cash provided (used) by operating
             activites                                        144,533    456,514

Cash flows from investing activities:
       Proceeds from sale of equipment                              -      1,500
       Decrease in note receivable                                  -     77,500
       Purchase of property, plant & equipment              (221,984)  (156,860)
                                                            ---------  ---------
       Net cash used by investing activities               ($221,984) ($ 77,860)





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

                                       8
<PAGE>


                         INTERLINE RESOURCES CORPORATION
                                AND SUBSIDIARIES

                 Condensed Consolidated Statement of Cash Flows
                                   (Unaudited)







                                                              Nine months ended
                                                                 September 30,
                                                                2001        2000

Cash flows from financing activities:
        Payment on long-term debt                          (130,889)  (117, 149)
                                                           ---------  ----------
        Net cash used by financing activities              (130,889)   (117,149)

Net (decrease) increase in cash                            (208,342)     261,505

Cash, beginning of period                                    263,029     255,735
                                                             -------     -------

Cash, end of period                                       $ 54,687     $ 517,240
                                                          ==========   =========






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

                                       9
<PAGE>



                               PART 1 - ITEM 2.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 General

     Interline Resources  Corporation (the Company),  is a Utah corporation with
its  principal  and  executive  offices  located at 160 West Canyon  Crest Road,
Alpine,  Utah 84004,  telephone (801) 756-3031.  The Company's current operating
subsidiaries  are (1) Interline  Energy Services,  Inc.  ("Interline  Energy") a
Wyoming  corporation which manages the Company's oil and gas operations  located
in Wyoming which consist of natural gas gathering,  natural gas processing, over
the road NGL truck  transportation  and oil well  production.  and (2) Interline
Hydrocarbons,  Inc. ("Interline  Hydrocarbons") a Wyoming corporation which owns
and operates the Company's used oil refining technology.

     On September  26,  1997,  the Company  filed a Petition for  Reorganization
under  Chapter 11 (the  Petition)  of the United  States  Bankruptcy  Code.  The
Company continued its operations as a debtor-in-possession  under the Bankruptcy
Code.  The Company's  subsidiaries  did not join the Company in the Petition and
were not directly involved in the Bankruptcy Reorganization Proceedings.

     On June 18, 1998, the Company filed a Plan of Reorganization and Disclosure
Statement to the Plan of Reorganization  with the United States Bankruptcy Court
for the District of Utah, Central Division. On July 14, 1998, the Company's Plan
of Reorganization  and Disclosure  Statement to the Plan of  Reorganization  was
approved and circulation  thereof was authorized by the United States Bankruptcy
Court for the District of Utah, Central Division.

     On September  10, 1998,  the Plan of  Reorganization  was  confirmed by the
United States Bankruptcy Court for the District of Utah. As a result, restraints
on the  activities  of Interline  imposed by the  Bankruptcy  code were removed.
Interline  reached  agreement with its major creditor during the Chapter 11 case
and the terms of the  agreement  (See Part 1 - Item 2 -  Liquidity  and  Capital
Resources) were  incorporated in the plan. All other creditors were paid in full
under the plan.

Interline Energy Services - Oil and Gas Operations.

     The Company has been  engaged in the oil and gas industry  since 1990,  and
currently operates in east-central  Wyoming near Douglas.  The Company's oil and
gas operations  include the Well Draw Gas Plant, a crude gathering  pipeline,  a
20.4% interest in the Hat Creek Partnership, NGL trucking and four producing oil
and gas wells.

                                       10
<PAGE>

Well Draw Gas Plant

     The Well Draw Gas Plant  (the  "Plant")  is a natural  gas  liquids  (NGLs)
processing  plant with capacity of 150,000  gallons per day. The Plant separates
commingled NGLs into commercial grade propane,  butane and natural gasoline.  As
part of the Plant  system,  the Company  owns a natural gas  gathering  pipeline
system.  The  gathering  system  is  connected  to the Well  Draw Gas  Plant and
supplies a small percentage of liquids for the Plant. Most of the NGLs processed
at the Plant are produced in and trucked from outside sources.

     On  August  11,  2001 a fire  erupted  at the  Plant,  causing  substantial
property damage.  The Company has been unable to fractionate NGLs since the fire
but has provided  liquid  treating and injection  services for a reduced product
volume  continuously since the fire. The Company maintains property insurance on
all its  facilities  and  expects  the cost of  repairing  the plant to be fully
covered  by  insurance  proceeds.   The  Company  is  rebuilding  the  Plant  as
expeditiously  as practical  and expects to resume  normal  operations  in early
December 2001.

     Under normal  operations  the Company buys mixed  liquids from a variety of
sources,  transports them to the Plant, fractionates the liquids into commercial
propane, butane, and natural gasoline, and re-markets these products for its own
account.  The Company also enters into agreements for  fractionation  of liquids
for others on a fee basis.  The plant  processed a total of 61,077 gallons a day
of natural gas liquids for the three months ended  September 30, 2001,  compared
to 99,781  gallons a day for the three months ended  September  30, 2000. Of the
total gallons  fractionated  and  processed,  10,632 gallons per day was for the
Company and 50,444 gallons per day for others during 2001, as compared to 28,235
and 71,546 gallons per day respectively for the three months ended September 30,
2000.

Merit Energy Company Agreement

     Effective June 1, 2001, the Company entered into a new service agreement to
transport,  sweeten and fractionate natural gas liquids for Merit Energy Company
(Merit)  through March 31, 2002. The commitment of Merit's product under the new
contract  was  expected to permit  stable and  efficient  operation of the Plant
through the term of the  contract.  However,  the Plant fire has  prevented  the
Company from providing all of the service  contemplated  by the June 1 agreement
and the  Company  has agreed to collect a reduced fee from Merit until the plant
returns to normal  operation.  During the three months ended September 30, 2001,
the Company  processed  an average of 33,288  gallons  per day of Merit  liquids
compared to 40,151  gallons per day for the three  months  ended  September  30,
2000.  The Merit  contract  accounted for 54.50% of the total NGLs processed for
the 2001 period compared with 40.24% for 2000

                                       11
<PAGE>

Kinder Morgan (formerly KN Gas Gathering) Agreement

     During 1998,  the Company  entered into an agreement with KN Gas Gathering,
Inc. ("KNGG") to process NGLs on a month to month basis. On October 7, 1999, all
assets of KNGG was  purchase  by Kinder  Morgan  Inc.  ("KM").  During the three
months  ended  September  30, 2001,  the Company  processed an average of 18,197
gallons per day of NGLs under the KM contract compared to 20,770 gallons per day
for the same period in 2000.  The KM contract  accounted for 29.79% of the total
NGLs  processed  by the plant for the three  months  ended  September  30, 2001,
compared  to  20.82% of the  total  NGLs  process  for the  three  months  ended
September 30, 2000.

Conoco Pipeline

     The Conoco Pipeline,  purchased by the Company from Conoco Pipeline Company
in  January  of 1995 is a 180 mile  crude  gathering  and  trunk  pipeline  with
associated pumping stations and storage tanks. The pipeline  transports oil from
oil producing fields in Converse County, Wyoming to Conoco's Lance Creek Station
where it connects  with an  interstate  crude oil pipeline  system.  The Company
receives   revenues  from  operation  of  the  Conoco  Pipeline  by  charging  a
transportation fee. The pipeline gathered and transported  approximately  47,310
barrels of oil during the three months  ended  September  30, 2001,  compared to
53,026 for the three months ended September 30,2000.

Hat Creek Partnership

     The Hat Creek Partnership, of which Interline Energy owns a 20.4% interest,
owns a working  interests in the Hat Creek #2 well and a 13 mile  gathering line
interconnected to the Well Draw Gas Plant. This well contributes only incidental
revenue to the Company which is reported with "Oil well Production," below.

Oil Well Production

     The  Company  owns  working  interests  in four wells  located in  Converse
County,  Wyoming.  The Company is also the operator of these  wells.  During the
three months ended  September 30, 2001, the wells produced  approximately  1,163
barrels of oil and 2,135 Mcf of natural  gas  compared  to  approximately  1,244
barrels of oil and 2,850 Mcf of natural gas for the three months ended September
30, 2000.

NGL Trucking Operations

     The   Company's   NGLs   transportation   operation   consists   of   seven
tractor-trailer-pup  combination units. These units move unprocessed natural gas
liquids to Well Draw for  fractionation,  and takes propane,  butane and natural
gasoline from Well Draw to various refiner, chemical plants, and end-users. When
time permits, these trucks also move liquids on a common carrier basis for third
parties.  The Company intends to continue to emphasize this profitable  business
segment,  and believes that our reputation for flexibility and customer  service
will allow us to maximize opportunities.

                                       12
<PAGE>

     During the three months ended  September  30, 2001,  the  Company's  trucks
traveled a combined  total of 247 thousand  miles and carried  approximately  10
million gallons of raw and finished  product  compared to 258 thousand miles and
14 million  gallons of raw and finished  product for the quarter ended September
30, 2000.

Interline Hydrocarbon - Used Oil Refining.

     In January 1993, the Company  acquired  certain patent rights to a used oil
reprocessing  technology from Petroleum  Systems Inc.,  ("PSI").  However,  as a
result  of  substantial   independent  research  and  development  of  used  oil
technologies  and processes  since 1993,  the Company has been able to develop a
new process  that does not  utilize the PSI  technology.  On May 28,  1998,  the
Company filed a patent  application in the United States Patent Office for a new
and alternative method from the PSI technology for processing used oil. This new
technology has been implemented in the Korean, Australian and Spanish Plants. As
a  result,  on  September  10,  1998  the  Company  reassigned  to PSI  all  the
intellectual  rights it  obtained  from it under the  assignment  agreement.  In
making that  re-assignment,  the Company  assigned  all rights it had to receive
royalties  from  any  plants  constructed  by  the  Company  that  utilized  PSI
technology.

     To date, the Company has  constructed or licensed six used oil plants.  For
full disclosure on each plant,  refer to the Company's December 31, 2000, 10-KSB
filing.

     Revenues to the  Company,  from its used oil refining  technology  can come
from five  sources:  1)  profits  made from  constructing  used oil  plants,  2)
granting exclusive  franchise  territories to licensees,  3) receiving royalties
based on either production or a flat yearly licensing fee, 4) taking partnership
interests in  operating  plants by either  contributing  the  technology  and/or
making cash contributions for partnership interests and, 5) supplying technology
and  construction  plans along with  process  consultation  services and star-up
assistance to customers  wishing to construct their own plant (as opposed to the
Company supplying a "turn-key" facility).

     Based on the experiences  with the six plants that have been constructed or
licensed by the Company, management's current preference is not to perform plant
construction  services.  Further,  until  the  Company  improves  its  financial
condition,  it is not in a  position  to take  interests  in  operating  plants.
Management  believes the best way for it to capitalize  on the  technology is to
sell the construction plans for a plant and provide consultation services to the
purchaser.

     Management  has  also  determined   that  collecting   royalties  based  on
production is sometimes  impractical.  This reality has been seen in both Korea,
where the royalty was  terminated  for the first plant,  and England  where,  as
described in previous filings, the royalties were reduced and deferred until the
plant  becomes  profitable.  The  most  viable  opportunities  the  Company  has
identified  to  employ  its  technology  are  in  countries  where  governmental
concessions provide economic incentives for collecting and processing used oils.

                                       13

<PAGE>

     Management  still  believes  that there  exists  economic  support  for and
interest in the used oil refining  technology.  The Company continues to receive
inquiries  about its  patented  process  but has  become  more  selective  as to
potential  purchasers.  Because of the substantial knowledge Management obtained
about the complicated  used oil supply and demand picture the Company has become
much more active in helping  potential  customers  evaluate the markets in which
they would compete.

Transpacific Industries - Australia

     In September 1996, the Company signed an exclusive  purchase agreement with
Transpacific Group of Companies granting them exclusive rights to the Technology
for all of Australia.  Under the terms of the agreement,  Transpacific purchased
from the  Company a 24,000  gallon per day plant for $3.4  million.  On July 16,
1997,  Transpacific  announced that it had formed a new Australian national used
oil collection,  recycling and refining company called  Nationwide Oil Pty. Ltd.
with Shell  Australia  Ltd., and Mobil Oil Australia Ltd. to own and operate the
plant.

     The Company  completed  construction  of the Nationwide  plant in Sydney in
August  of 1998 and the  plant  has been  operating  since  that  time.  Per the
purchase  agreement,  upon  completion  of the plant the  Company is entitled to
retention monies in the amount of $186,509 and ongoing  royalties of 6 cents per
gallon.  Since the inception of the startup of the Australian plant, the Company
has tried on many occasions to receive these outstanding sums and to resolve the
royalty issues with  Transpacific.  These negotiations have not been successful.
In February of 2000,  the Company  hired legal  counsel in  Australia  to pursue
money due under the purchase  agreement.  On July 19, 2000,  the Company filed a
claim with the  Queensland  Supreme Court  seeking  payment of the royalties due
under the License Agreement. The action is currently in the discovery stage.

Ecolube, S.A. - Madrid, Spain

     On June 10, 1998 the Company signed an engineering and marketing  agreement
with Ecolube,  S.A., a subsidiary of Sener Engineering of Madrid,  Spain.  Under
the agreement, the Company provided Ecolube with engineering  specifications and
construction  drawings  for the  building  of a 24,000  gallon per day waste oil
re-refinery  in  Madrid.  Under the  agreement,  Interline  receives  a $534,000
engineering  and  licensing  payment  and running  royalties  of $0.0175 on each
gallon produced and sold for 10 years. Ecolube has the right to build additional
plants in the  Iberian  Peninsula  (Spain and  Portugal)  for a four year period
commencing from the date of plant start up. By the end of the third quarter 2001
the Ecolube Plant had passed all  efficiency  tests and appeared to have met all
remaining tests for full and final acceptance of the facility.

Results of Operations

     The following analysis of the financial condition and results of operations
should be read in conjunction  with the Financial  Statements and Notes thereto,
included elsewhere in this report.

                                       14
<PAGE>


Total Revenues For Three- and Nine- Months Ended September 30, 2001 and 2000

     Revenues decreased  $1,733,059,  or 67.4%, to $836,445 for the three months
ended  September 30, 2001, as compared to $2,569,504  for the three months ended
September 30, 2000.

     Revenues For Three- and Nine- Months Ended September 30, 2001, and 2000

                   3 Months Ended September 30   9 Months Ended September 30
                     2001     %     2000     %     2001      %     2000     %
                     ----     -     ----     -     ----      -     ----     -
Oil and Gas       $ 836,445  100 $2,569,504 100 $3,376,199  100 $5,220,166  98
Used Oil Refining         0    0          0   0          0    0     99,834   2
                  ---------  ---  --------- ---  ---------  ---  ---------  --

Total Revenue     $ 836,445  100 $2,569,504 100 $3,376,199  100 $5,320,000 100

Oil and Gas Revenues

     Oil and gas revenues  contributed 100% of total revenues for the three- and
nine-  months  ended  September  30,  2001,  as compared to a 100% for the three
months  and  98.1%  for the nine  months  ended  September  30,  2000.  Revenues
decreased $1,733,059 or 67% for the Quarter ended September 30 and $1,843,967 or
35% for the nine months ended on that date.

     The decrease in oil and gas revenues  for the quarter  resulted  from a 39%
decrease in processing volumes during 2001 when compared to the 2000 period. For
the 9  months  the  decrease  in oil and gas  revenues  is  attributable  to the
substantial elimination of the purchase of liquids for resale by the Company and
the reduction in throughput caused by the fire.

     The Company  attributes  the decrease in throughput in 2001 compared to the
prior year period to: 1)  comparative  "softness" in the price of NGL's relative
to natural gas during January  through  April;  2) weakness in the local markets
for NGL's compared to those at Conway,  Kansas and Borger,  Texas during May and
June;  and, 3) reduced Plant capacity  following the August 11 fire. In addition
to these  factors,  during the 2001 periods the Company  materially  reduced the
quantity of NGL's purchased and sold by the company. This reduction was prompted
by reduction in the quantity of liquids available for purchase during the period
and substantially lower margins which could be derived from such activity.

     The  Company's  Oil & Gas  Operations  revenue for the three  months  ended
September 30, 2001 and 2000 were as follows:


                                       15

<PAGE>


Oil & Gas Operations Revenue For Three- and Nine- Months Ended September 30,
2001 and 2000

                     3 Months Ended September 30   9 Months Ended September 30
                     2001      %      2000     %     2001    %     2000     %
                     ----             ----           ----          ----
Liquids (NGL) Sold  $152,199   18 $1,907,950   74  $810,349  24 $3,007,017  58
Fractionation Fees   249,180   30    194,426    8 1,277,458  38    760,536  15
Transportation Fees  376,563   45    367,097   14 1,045,673  31  1,119,617  21
Crude Tariff Fees     34,578    4     39,239    2   112,988   3    127,452   2
Crude Oil Sold             -    0     37,825    1    66,017   2    134,396   3
Residue Gas Sold      16,936    2     15,476    1    47,936   1     53,366   1
Other                  6,989    1      7,491    0    15,778   1     17,782   0
                   ---------  ---  ---------  ---   ------- ---  --------- ---

Total Revenue       $836,445  100 $2,569,504  100 3,376,199 100 $5,220,166 100


Used Oil Refining Revenues

     Since  it  commenced  operations  in the used oil  refining  business,  the
Company has primarily derived revenues attributed to fees for engineering, plant
design,  license,  exclusively or other services  associated  with the Company's
used oil refining  technology.  The revenue  attributed to the used oil refining
business varies  significantly  from quarter to quarter reflecting the status of
the Company's fees and plant design services.

     The  company  did not  earn  used oil  revenue  in the  nine  months  ended
September 30, 2001.

Direct Costs

     Direct  costs  decreased  $1,642,730,  or 75.2%,  to $541,337 for the three
months ended  September 30, 2001,  compared to  $2,184,067  for the three months
ended  September 30, 2000. As a percent of revenues,  direct costs  decreased to
64.7% for the three months ended  September  30, 2001  compared to 85.0% for the
three months ended  September 30, 2000. For the nine months ending  September 30
of 2001 and  2000  direct  costs  decreased  $1,940,785  to  $2,282,744  in 2001
compared  to  $4,223,529  for 2000.  The 2001 figure  represents  67.6% of total
revenues  for the most recent nine months  compared to 79.4% for the same period
in 2000.

     The decrease in direct costs resulted from the reduction in the purchase of
natural gas liquids for processing at the Company's Well Draw Plant.

Selling, General and Administrative

     Selling,   general  and  administrative  expenses  consist  principally  of
salaries and benefits, travel expenses, insurance, legal and accounting, outside
contract services,  information technical services and administrative  personnel
of the Company.

     Selling, general and administrative expenses decreased $16,409, or 6.7% for
the quarter ended  September 30, 2001,  and increased  $56,402,  or 7.7% for the

                                       16
<PAGE>

nine months then ended  compared to the year  earlier  periods.  As a percent of
revenues,  selling,  general and administrative  expenses increased to 27.4% for
the three  months  and 23.3%  for the nine  months  ended  September  30,  2001,
compared to 9.6% for the three  months and 13.7% for the nine  months  ended one
year earlier.

Depreciation and Amortization

     Depreciation and amortization  expenses  decreased $43,527 or 23.6% for the
three months ended  September 30, 2001, and $13,484,  or 2.5% for the nine moths
then ended. As a percent of revenues,  depreciation  and  amortization  expenses
increased to 16.9% and 15.8% for the 2001 three- and nine-month periods compared
to 7.2% and 10.3% for the comparable 2000 periods.

Research and Development

     Research  and   development   expenses  are  mainly   attributable  to  the
development and enhancement of the Company's used oil refining  technology.  The
Company will incur research and  development  expenses over time as it continues
to develop its used oil refining technology.  The company did not incur research
and development costs during the three months ended September 30, 2001.

 Income (Loss) from operations

     Loss from  operations  increased  $26,874,  or 55.2%,  for the three months
ended  September 30, 2001, and increased  $30,626 for the nine months then ended
when compared to the year earlier periods.

Other income (expenses)

     Net interest expense  increased $17,274 or 18.7% for the three months ended
September 30, 2001, and $53,414 or 19.4% for the nine months ended September 30,
2000. The increases were mainly  attributed to higher  interest  payments to the
Company's major creditor during the 2000 period.

     The  company's  major  creditor  is a related  party with whom the  Company
signed a secured note in the amount of  $3,595,920.  On  September  22, of 1999,
2000 and 2001,  the Company  did not pay this major  creditor  the  installments
($2,750,000  combined) due under the note. As a result, the Company is currently
in default  under the note.  Pursuant to the terms of the note,  In the event of
default  any  installments  not paid when due shall bear an increase in interest
from seven percent (7%) to fourteen percent (14%).

Liquidity and Capital Resources

     Sources  of  liquidity  for  the  Company  are  revenues  from  oil and gas
operations and revenues from the sale of its  hydrocarbon  refining  technology.


                                       17
<PAGE>

Currently,  the only consistent  ongoing revenue sources to the Company are from
its oil and gas operations in Wyoming.  The Company  receives  revenues from its
used oil  refining  technology  when a sale or  license  is  executed.  On-going
royalty fees will be received from the  Australia  Plant (see Part II - Item 1 -
Legal  Proceeding),  and the Spanish Plant when  commissioning and acceptance is
completed.  While the Company continues to work with potential purchasers of its
technology, such sales and expected revenues are uncertain and unpredictable.

     On  September  9,  1998,  the  reorganization  plan  under  Chapter  11 was
confirmed by the United States  Bankruptcy  Court for the District of Utah.  The
Company reached agreement with its major creditor during the Chapter 11 case and
the terms of the  agreement  were  incorporated  in the  plan.  The terms of the
agreement  included  a  new  trust  deed  note  dated  September  22,  1998  for
$3,600,000,  together  with  interest  at the rate of 7% per annum on the unpaid
principal.  The Company is obligated to make  quarterly  payments of all accrued
interest beginning on December 22, 1998 and continuing until September 22, 2002.
The  Company  is also  obligated  to make  principal  payments  of  $750,000  on
September 22, 1999;  $1,000,000  on September 22, 2000;  $1,000,000 on September
22, 2001 and $850,000 on September 22, 2002.  The note is secured by Trust Deeds
securing an interest in the Company's Alpine Office located in Alpine,  Utah and
a security interest in all assets of Interline Energy Service,  Inc. The Company
executed a new Pledge  Agreement with this major creditor  pledging stock of all
subsidiaries of the Company.

      In August of 1999, the Company received $4,080 for its interest in the Hat
Creek #2 well. Under the pledge agreement with this major creditor, all proceeds
from the sale of Company assets will go to pay down the principal portion of the
note. After applying the proceeds from this sale the note was reduced to
$3,595,920.

     At the time the plan was confirmed,  management believed the Company's cash
from the oil and gas  operating  activities,  cash received from the sale of its
hydrocarbon  refining technology and cash retained under the reorganization plan
would be adequate to meet its operating needs in the near term and would provide
a plan to meet debt obligations.  Certain  assumptions where made in the plan of
reorganization  that the Company  would  receive cash from the  marketing of its
hydrocarbon  refining  technology.  Since September 10, 1998 when the Bankruptcy
Plan was confirmed, the Company has received $179,006 cash from the marketing of
its refining technology.

     The Company has not paid the first three  principal  payments due under the
September  22,  1998,  trust  note.  The  Company  also  did  not  pay  interest
installments  ($93,554) due December 22, 2000, March 22, 2001, June 22, 2001 and
September  22,  2001.  As a result,  the note for  $3,595,920  due to this major
creditor is currently in default. Under the trust deed note if default occurs in
the payment of installments of principal or interest, the holder thereof, at its
option and without notice or demand,  may declare the entire  principle  balance
and accrued  interest due and payable.  Also if default occurs any  installments
not paid when due shall bear interest thereafter at the rate of fourteen percent
(14%) per annum  until  paid.  The note is  secured  by Trust  Deeds  securing a

                                       18
<PAGE>

security  interest in the Company's Alpine Office located in Alpine,  Utah and a
security  interest in all assets of Interline  Energy Service,  Inc. The Company
executed a pledge  agreement  with this  major  creditor  pledging  stock of all
subsidiaries of the Company. Per the trust deed note and pledge agreement,  upon
default,  the major  creditor  can  exercise  his  rights and sell or demand the
Company  to sell  the  collateral  or any  part of the  collateral  to cure  the
installments  in default  ($2,750,000  combined) or the total  ($3,595,920)  due
under the note.

     In an effort  to cure the  default  status  with its  major  creditor,  the
Company is seeking to sell its Alpine Office Building  located in Utah. Also the
Company is trying to raise cash from the marketing of it refining  technology or
raise additional  financing through the sale of equity,  sale of debt or assets.
If the  Company  is  unable to raise  additional  cash it may be forced to cease
operations and liquidate the assets of the Company.

     Management has put strict  restraints on all capital  expenditures with the
exception  of  any  necessary   expenditures  to  maintain  current  operations.
Management is unaware of any significant  future capital  expenditures.  However
the very nature of equipment  operation,  wear and tear and  replacement in this
type of  operation  can be  significant.  The  Company  will  continue  to incur
research  and  development  costs  as  it  continues  to  develop  its  refining
technology.  At present these  activities are being performed by current Company
employees and part time contract consultants.

     The net cash used by the Company  was  $208,342  for the nine months  ended
September  30, 2001  compared to a net cash  increase of $261,505 for the period
ended  September 30, 2000.  The net decrease in cash provided by operations  for
the nine months ended  September  30, 2001 was mainly  attributed  to a $556,046
increase in the Company's  accumulated  deficit, and material differences in the
collection of accounts  receivable and  disbursement of accounts payable between
the period ended September 30, 2001 and that ended a year earlier.

PART 1 - ITEM 3.

                  Notes to The Condensed Consolidated Financial Statements

      None.

                                       19
<PAGE>


PART II - OTHER INFORMATION
Item 1.  Legal Proceedings
         LEGAL PROCEEDINGS

Interline U.K.

     In February  1995,  the Company  formed  Interline  (UK)  Limited,  a joint
venture with Whelan  Environmental  Services,  Ltd. of Birmingham,  England,  to
construct a refinery in Stoke, England. As part of the transaction,  the Company
executed a licensing  agreement  with the joint  venture  giving it the right to
own,  operate and practice the Interline used oil  technology.  The terms of the
joint  venture  provided  the Company a 40%  ownership  interest,  and under the
license agreement, the right to receive a 6 cent gross royalty per gallon of oil
processed.  The refinery was  completed in early 1996 and  officially  opened in
July 1996.  The refinery,  with a capacity to process 24,000 gallons of used oil
per day, is in current  production.  In April of 1997 the  Company  sold its 40%
interest  in the joint  venture to John Whelan for  $500,000.  Whelan is now the
sole owner of the used oil refinery in Stoke-on-Trent,  and is authorized to use
the Interline technology under the original licensing agreement.  As a result of
the realities of the pricing structure in England for used oil products, and the
higher than expected  operating  costs to operate the England plant,  the 6 cent
royalty  called for in the license  agreement  was reduced to 3 cents and is not
payable until the refinery is profitable.  To date, the Company has not received
any royalty revenue from the English plant.  Further,  John Whelan had only paid
$200,000 of the purchase price.  After attempted  settlement  negotiations broke
down, on November 19, 1998 the Company instituted a legal proceeding against him
in the High Court of Justice, Queens Bench Division,  Bristol District Registry,
Bristol Mercantile Court.

     In January of 2000,  the  Company  was  required  to deposit  approximately
$80,000 security bond with Bristol  Mercantile Court. The Company was also faced
with spending $50,000 to litigate the case. Due to the Company's cash restraints
and in the best interest of the Shareholders, the Company elected not to proceed
with the case and the action against John Whelan was dismissed.  The Company has
the option to re-file this claim against John Whelan for five years.

Transpacific Industries - Australia

     In September 1996, the Company signed an exclusive  purchase agreement with
Transpacific Group of Companies granting them exclusive rights to the Technology
for all of Australia.  Under the terms of the agreement,  Transpacific purchased
from the Company a 24,000 gallon per day plant for $3.4 million.

     The plant was completed and has been  operating  since August of 1998.  Per
the purchase agreement,  upon completion of the plant the Company is entitled to
retention monies in the amount of $186,509 and ongoing  royalties of 6 cents per
gallon.  Since the inception of the startup of the Australian plant, the Company
has tried on many occasions to receive these outstanding sums and to resolve the
royalty issues with  Transpacific.  These negotiations have not been successful.

                                       20
<PAGE>

In February of 2000,  the Company  hired legal  counsel in  Australia  to pursue
money due under the purchase  agreement.  On July 19, 2000,  the Company filed a
claim in the Queensland Supreme Court seeking payment of the royalties due under
the License Agreement. The action is currently in the discovery stage.

Item 2. Changes in Securities:

      None

Item 3. Defaults Upon Senior Securities:

     On  September  9, 1998,  the plan of  reorganization  under  Chapter 11 was
confirmed by the United States  Bankruptcy  Court for the District of Utah.  The
Company reached agreement with its major creditor during the Chapter 11 case and
the terms of the  agreement  were  incorporated  in the  plan.  The terms of the
agreement  included  a  new  trust  deed  note  dated  September  22,  1998  for
$3,600,000,  together  with  interest  at the rate of 7% per annum on the unpaid
principal.  The Company is obligated to make  quarterly  payments of all accrued
interest beginning on December 22, 1998 and continuing until September 22, 2002.
The  Company  is also  obligated  to make  principal  payments  of  $750,000  on
September 22, 1999,  $1,000,000  on September 22, 2000,  $1,000,000 on September
22, 2001 and $850,000 on September 22, 2002.  The note is secured by Trust Deeds
securing a security  interest in the Company's  Alpine Office located in Alpine,
Utah and a security interest in all assets of Interline Energy Service, Inc. The
Company executed a new Pledge Agreement with this major creditor  pledging stock
of all subsidiaries of the Company.

      In August of 1999, the Company received $4,080 for its interest in the Hat
Creek #2 well. Under the pledge agreement with this major creditor, all proceeds
from the sell of Company assets will go to pay down the principal portion of the
note. After applying the proceeds from this sell the note was reduced to
$3,595,920.

     Under the new trust  deed  note,  (see new terms of trust  deed  above) the
Company is obligated to pay this major creditor  $750,000 by September 22, 1999,
$1,000,000  by September  22, 2000 and  $1,000,000  by September 22, 2001. As of
November 10, 2001, the Company has not paid the principal payments due under the
trust note. As a result,  the note for  $3,595,920 due to this major creditor is
currently in default. Under the trust deed note if default occurs in the payment
of installments of principal or interest,  the holder thereof, at its option and
without notice or demand,  may declare the entire principle  balance and accrued
interest due and payable.  Also if default occurs any installments not paid when
due shall bear  interest  thereafter  at the rate of fourteen  percent (14%) per
annum  until  paid.  The note is  secured  by Trust  Deeds  securing  a security
interest in the Company's  Alpine Office located in Alpine,  Utah and a security
interest in all assets of Interline Energy Service,  Inc. The Company executed a
pledge agreement with this major creditor  pledging stock of all subsidiaries of
the Company.  Per the trust deed note and pledge  agreement,  upon default,  the
major  creditor  can  exercise his rights and sell or demand the Company to sell
the collateral or any part of the collateral to cure the installments in default
($2,750,000  combined)  or the total  ($3,595,920)  due  under  the note.  As of
November 14, 2001, the Company also has not made the required interest payments.

                                       21
<PAGE>

     In an effort  to cure the  default  status  with its  major  creditor,  the
Company is trying to raise cash from the marketing of it refining  technology or
raise additional  financing through the sale of equity,  sale of debt or assets.
If the  Company  is  unable to raise  additional  cash it may be forced to cease
operations and liquidate the assets.

Item 4. Submission of Matters to a Vote of Security Holders:
      None

Item 5. Other Information:
      None

Item 6(a). Exhibits:
      None

Item 6(b) Form 8-K:
      None

                                       22
<PAGE>



                                   SIGNATURES


     In  accordance  with Section 13 or 15(d) of the  Exchange  Act, the Company
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Dated: August 13, 2001              INTERLINE RESOURCES CORPORATION


                                    By/s/ Michael R.  Williams
                                      ----------------------------
                                       Michael R. Williams
                                       Chairman of the Board and
                                       Chief Executive Officer


     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the Company and in the capacities and on the
dates indicated.

Date              Title             Signature

August 13, 2001   Chairman          /s/ Michael R. Williams
                  & CEO             ------------------------
                                    Michael R. Williams

August 13, 2001   Director/         /s/ B. E. Bergquist
                  President & COO   -------------------------------
                                    B. E. Bergquist




                                       23