===============================================================================


                     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 Quarter Ended September 30, 1999
                                       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 November 10, 1999 - 14,066,052 shares of $.005
par value Common stock.


                   DOCUMENTS INCORPORATED BY REFERENCE: NONE

===============================================================================


<PAGE>



                                 FORM 10-QSB
                       INTERLINE RESOURCES CORPORATION

                              TABLE OF CONTENTS


PART I. -   FINANCIAL INFORMATION

Item 1      Financial Statements                                           Page

            Condensed Consolidated Balance Sheet at September 30, 1999      5

            Condensed Consolidated Statement of Operations for the
            three and nine months ended September 30, 1999 and 1998         7

            Condensed Consolidated Statements of Cash Flows for
            Nine months ended September 30, 1999 and 1998                   8

            Notes to Condensed Consolidated Financial Statements           10

Item 2      Management's Discussion and Analysis of
            Financial Condition and Results of Operations                  13


PART II. - OTHER INFORMATION

Item 1      Legal Proceedings                                              23

Item 2      Changes in the Securities                                      25

Item 3      Defaults Upon Senior Securities                                25

Item 4      Submission of Matters to a Vote of Security Holders            25

Item 5      Other Information                                              25

Item 6(a)   Exhibits                                                       25

Item 6(b)   Reports on Form 8-K                                            25

            Signatures                                                     26






<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 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.

      Theses  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.




<PAGE>



                                    INTERLINE
                                    RESOURCES
                                   CORPORATION
                                AND SUBSIDIARIES

                                 PART I - ITEM 1
                              FINANCIAL STATEMENTS
                                   (UNAUDITED)


                               September 30, 1999



The condensed  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----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, 1999,  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.










<PAGE>



                       INTERLINE RESOURCES CORPORATION
                               AND SUBSIDIARIES

                     Condensed Consolidated Balance Sheet
                                 (Unaudited)





                                                        Sept 30,
                                                          1999
                                                      -------------


Assets

Current assets:
  Cash and cash equivalents                             $170,898
  Accounts receivable - trade                            437,723
  Inventories                                             63,633
  Note receivable - current portion                       20,000
  Other current assets                                    27,106
                                                      -------------
     Total current assets                                719,360

Property, plant and equipment                          6,361,768
Accumulated depreciation and depletion                (2,675,674)
                                                     --------------

     Net property, plant & equipment                   3,686,094

Note receivable                                           75,683
Technology and marketing rights                          753,645
                                                     --------------
        Total assets                                  $5,234,782
                                                     ==============

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








<PAGE>



                       INTERLINE RESOURCES CORPORATION
                               AND SUBSIDIARIES

                     Condensed Consolidated Balance Sheet
                                 (Unaudited)

                                                        Sept 30,
                                                         1999
                                                      -------------
Liabilities and Stockholders' Equity

Current liabilities:
  Accounts payable                                      $207,161
  Accrued liabilities                                    149,817
  Note payable, related party                          3,600,000
  Current portion of long-term debt                      163,597
                                                      -------------

     Total current liabilities                         4,120,575
                                                      -------------

Long-term debt less current maturities                   572,711
Note payable, related party                                 -
Deferred income                                           45,352
                                                      -------------
     Total liabilities                                 4,738,638

Stockholders' equity:
  Preferred stock - $.01 par value. 25,000,000
     shares authorized; 1,000,000 series A shares
     authorized; 0 series A shares issued an               -
  Common stock - $.005 par value. 100,000,000
     shares authorized; 14,066,052 shares
     outstanding at Sept 30, 1999                        70,371
  Additional paid-in capital                          9,209,017
  Retained earnings                                  (8,783,244)
                                                     --------------

       Total stockholders' equity                       496,144
                                                     --------------

       Total liabilities & stockholders' equity      $5,234,782
                                                     ==============

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


<PAGE>



                       INTERLINE RESOURCES CORPORATION
                               AND SUBSIDIARIES
                Condensed Consolidated Statement of Operations
                                 (Unaudited)


<TABLE>
<CAPTION>
                                         Three months ended               Nine months ended
                                              Sept 30,                         Sept 30,
                                        1999             1998             1999         1998
                                    ------------------------------------------------------------
<S>                                  <C>               <C>             <C>          <C>

Revenue                              $1,005,671        963,522         $2,746,355   $2,649,155

Direct costs                            637,875        606,960          1,760,634      837,640
                                    ------------------------------------------------------------
Gross margin                            367,796        356,562            985,721       11,515

Selling, general and
   administrative expenses              243,290        258,137            718,722       71,946
Research and development                 15,056         14,001             55,575       63,087
Depreciation, depletion and
     amortization                       181,522        170,028            542,712      510,078
                                    ------------------------------------------------------------
 (Loss) from operations                 (72,072)       (85,604)          (331,288)    (533,596)

Other income (expense) net
  Interest income (expense)             (15,834)        (6,874)           (45,014)     (27,983)
  Interest expense, related party       (63,000)       130,795           (189,000)     (47,136)
  Gain from sale of assets                 -              -                18,908        1,334
                                    -------------------------------------------------------------
Income (loss) before discontinued
     operations                        (150,906)        38,317           (546,394)    (607,381)

Discontinued operations
  (Loss) from discontinued
     operations                            -               -                  -        (53,868)
  Gain on disposal of discontinued
     operation                             -               -                  -         18,885

                                    -------------------------------------------------------------
  Total discontinued operations            0               0                  0        (34,983)

Net income (loss)                     ($150,906)       $38,317          ($546,394)   ($642,364)
                                    =============================================================

Earning per share
   Income (loss) from continuing
      operations                       ($0.01)          $0.00             ($0.04)      ($0.04)
   Income (loss) from discontinued
     operation                          $0.00           $0.00              $0.00       ($0.00)
                                    -------------------------------------------------------------
   Income (loss) per common share:     ($0.01)          $0.00             ($0.04)      ($0.05)
                                    -------------------------------------------------------------
Weighted average shares o/s          14,066,052      14,074,167         14,066,052   14,074,167
                                    =============================================================

</TABLE>


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


<PAGE>




                       INTERLINE RESOURCES CORPORATION
                               AND SUBSIDIARIES
                Condensed Consolidated Statement of Cash Flows
                                 (Unaudited)


                                                        Nine months ended
                                                             Sept 30,
                                                        1999         1998
                                                    -------------------------

Cash flows from operating activities:
  Net (loss)                                         ($546,394)    ($642,364)
  Adjustment to reconcile net (loss) to net
     cash (used in) provided by operating
      activities:
  Depreciation, depletion and amortization             542,712       510,078
  Gain on disposal of asset                             18,908         1,334
  Common Stock issued for services                        -           24,000
  (Increase) decrease in:
     Accounts receivable                              (168,003)     (289,821)
     Inventories                                        (8,408)      (11,463)
     Other current assets                               (6,611)      (28,560)
     Note receivable                                    14,038       (45,677)
  Increase (decrease) in:
     Accounts payable                                 (160,006)      207,657
     Accrued liabilities                               (40,158)     (792,481)
     Accrued interest, related party                      -             -
     Other current liabilities                            -           20,116
     Deferred income                                     6,700        (4,753)
                                                     -------------------------

      Net cash (used) by operating activities         (347,222)   (1,051,934)

Cash flows from investing activities:
  Proceeds from sale of equipment                       54,763         4,700
  Purchase of intangible assets                           -              -
  Net assets of discontinued operations                   -          683,853
  Purchase of property, plant & equipment             (179,545)      (56,036)
                                                     -------------------------

  Net cash provided (used in) investing activiti      (124,782)      632,517


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


<PAGE>




                       INTERLINE RESOURCES CORPORATION
                               AND SUBSIDIARIES
                Condensed Consolidated Statement of Cash Flows
                                 (Unaudited)

                                                         Nine months ended
                                                             Sept 30,
                                                        1999          1998
                                                     -------------------------

Cash flows from financing activities:
  Proceeds from debt obligations                        76,280         -
  Conversion of related party interest to note                       34,135
  Payment on long-term debt                           (119,557)     (76,682)
                                                     -------------------------

  Net cash provided (used) by financing activiti      (119,557)     (42,547)
                                                     -------------------------

Net increase (decrease) in cash                       (591,561)    (461,964)

Cash, beginning of year                                762,459    1,153,199
                                                     -------------------------

Cash,  end of  quarter                                $170,898     $691,235
                                                     =========================















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




<PAGE>






               INTERLINE RESOURCES CORPORATION AND SUBSIDIARIES
                  Notes to Consolidated Financial Statements

Oil and Gas Accounting
      The Company uses the  "successful  efforts"  method to account for oil and
gas operations.  The use of this method results in the  capitalization  of costs
related to acquisition, exploration and development of revenue producing oil and
gas properties.  The costs of unsuccessful  exploration  efforts are expensed in
the  period in which  they are  determined  unrecoverable  by  future  revenues.
Provision for  depreciation  and depletion of oil and gas properties is based on
the units of production method, based on proven oil and gas reserves.

      Segment   information   concerning   oil  and  gas  reserves  and  related
disclosures  are not presented since they are not significant in relation to the
financial statements taken as a whole.


Construction Accounting
      Construction  revenues  are  recognized  on  the  percentage-of-completion
method  of  accounting.  Profits  on  contracts  are  recorded  on the  basis of
"cost-to-cost"   determination   of   percentage  of  completion  on  individual
contracts,  commencing  when  progress  reaches a point where cost and  estimate
analysis and other  evidence of trend are  sufficient to estimate  final results
with  reasonable  accuracy.  That portion of the total  contract  price which is
allocable  to contract  expenditure  incurred  and work  performed is accrued as
earned income. At the time a loss on a contract becomes known, the entire amount
of the estimated  ultimate loss is accrued.  Claims for  additional  revenue are
recognized when settled. The aggregate of cost incurred and income recognized on
uncompleted contracts in excess of related billings is shown as a current asset,
and the  aggregate  of billings on  uncompleted  contracts  in excess of related
costs incurred and income recognized is shown as a current liability.


Cash Equivalents
      For purposes of the  consolidated  statement of cash flows,  cash includes
all cash and investments with original maturities to the Company of three months
or less.


Inventories
      Inventories consisting of supplies and miscellaneous material are recorded
in the  financial  statements  at  their  aggregate  lower  of  cost  (first-in,
first-out) or market.


Investments
      Investments  in less than majority  owned entities are accounted for using
the equity method.  Investments are included in the financial  statements  under
the caption of "Other Assets."


<PAGE>



               INTERLINE RESOURCES CORPORATION AND SUBSIDIARIES
                  Notes to Consolidated Financial Statements

Property, Plant and Equipment
      Property,  plant  and  equipment  are  carried  at cost.  Depreciation  is
computed using straight-line and accelerated methods. When assets are retired or
otherwise disposed of, the cost and related accumulated depreciation are removed
from the accounts,  and any  resulting  gain or loss is recognized as income for
the  period.  The cost of  maintenance  and  repairs  is  charged  to  income as
incurred;  significant renewals and betterments are capitalized.  Deductions are
made for  retirements  resulting  from  renewals or  betterments.  The estimated
useful lives are as follows:

      Building and equipment        15-25 years
      Equipment and vehicles        3-10 years

Amortization
      The Company has amortized its marketing and technology rights for the used
oil refining process over seventeen years. This period  approximates the assets'
useful lives.

Contingencies
      During 1996, the Company  entered into an agreement to sell certain assets
of the Company. As part of this agreement,  the Company also agreed to guarantee
a note payable  between the purchaser and a third party.  At September 30, 1999,
the remaining liability on the note was approximately $75,445.

      The Company has  executed  license  agreements  with  licensees to utilize
Interlines used oil technology which includes technology received from Petroleum
System,  Inc.  ("PSI") through an assignment  agreement of certain patent rights
(PSI technology). Under the assignment agreement the Company is obligated to pay
royalties to PSI for those Interline plants using PSI technology.

      The Company has now developed a new technology  which does not utilize PSI
technology. As a result, on September 10, 1998 the Company reassigned all of the
intellectual rights its obtained from PSI under the assignment  agreement,  back
to PSI.  The only plants that  utilize  the PSI  technology  are the Dubai Plant
which has been shut down and essentially abandoned,  the Genesis Plant which has
been shut down and no longer  operates,  and the England  Plant which  currently
operates.  Under the terms of the assignment agreement, the Company is obligated
to assign all royalties  payable from plants  utilizing PSI  technology  back to
PSI. The Company did so on September 10, 1998. PSI has made other claims against
the Company which are described in Part II, Item 1. Legal Proceedings.

      In April of 1997,  the Company sold its 40% interest in the England  Plant
joint Venture to John Wheland for $500,000.  John Wheland has only paid $200,000
of the purchase  price and while the Company  demanded  payment of the remaining
purchase price the payment remains in dispute.  Additionally, in connection with
the sale of the Company's interest in the joint venture,



<PAGE>



                  INTERLINE RESOURCES CORPORATION AND SUBSIDIARIES
                     Notes to Consolidated Financial Statements

Contingencies
the joint  venture was to pay the  Company  $100,000  for  certain  construction
charges and services it performed on the plant.  The joint  venture has not made
this payment,  and its payment is in dispute.  As a result, on November 19, 1998
the Company  instituted a legal proceeding against John Whelan in the High Court
of  Justice,  Queen's  Bench  Division,   Bristol  District  Registry,   Bristol
Mercantile  Court.  This action is  currently  pending with a trial date set for
March 27, 2000.

Profit Sharing Plan
      During 1995, the Company commenced a defined contribution retirement plan,
which qualifies under code section 401(k), for all eligible employees. Employees
who work at least 1,000 hours  during a year and are over age 21 are eligible to
participate.  Employees  may  contribute  up to fifteen  percent of their annual
compensation subject to regulatory  limitations.  The Company also contributes a
discretionary amount on behalf of the participating  employees. The Company made
contributions of $186 and $987 for the three months ended September 30, 1999 and
1998, respectively.

Reclassification
      Certain  amounts  in  the  prior  years  financial  statements  have  been
reclassified to conform to the September 30, 1999 presentation.

Going Concern
      The Company has sustained  significant  operating losses in 1998 and 1997,
and it has taken longer than  projected to bring the  re-refining  technology to
economic  viability.  This has caused the  Company  to incur more  research  and
development cost than originally  projected.  In addition,  the Company filed on
September 26, 1997, a voluntary petition for relief under Chapter 11 of the U.S.
Bankruptcy  Code.  On September  10, 1998,  the  bankruptcy  court  approved the
Company's plan.  Under terms of the confirmed  plan,  certain  obligations  were
restructured.  It is not  known  if  the  Company  will  be  able  to  meet  its
obligations  under the confirmed plan. These factors create an uncertainty about
the Company's ability to continue as a going cencern.

      The Company has made continuous efforts to negotiate settlement to satisfy
claims,  obligations  and to obtain  profitable  operations.  The ability of the
Company to continue as a going  concern is dependent  on the Company  generating
cash  from  the  sale  of  its  re-refining  technology,  and  attaining  future
profitable operations.  The consolidated financial statements do not include any
adjustment  that might be  necessary  if the  Company is unable to continue as a
going concern.

Inflation
      The Company's business and operations have not been materially affected by
inflation  during the past three years and the  current  calendar  quarter.  The
Company  believes that inflation  will not  materially nor adversely  impact its
business plans for the future.



<PAGE>



                              PART 1 - ITEM 2.

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

General
      The Company is a Utah corporation with its principal and executive offices
located at 160 West Canyon  Crest Road,  Utah 84004  (801)  756-3031.  Interline
Resources  Corporation (the "Company"),  a Utah  corporation,  is engaged in two
areas  of  business,   each  operating  as  separate   subsidiaries:   Interline
Hydrocarbon Inc., a Wyoming corporation, which commercializes the Company's used
oil  refining  technology;  and  Interline  Energy  Services,  Inc.,  a  Wyoming
corporation,  which  manages the  Company's  oil and gas  operations  located in
Wyoming.

      The Company has invested substantial resources  commercializing a used oil
refining technology and has signed license agreements with companies in England,
South Korea,  Dubia,  Australia and Spain. The Company's first used oil refinery
was  constructed  in Salt Lake City,  Utah in 1996.  The  Company's  oil and gas
operations   consist  of  natural  gas   gathering,   natural  gas   processing,
transportation and oil well production all located in Wyoming.

      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 Proceeding.

      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  authorized by the United
States Bankruptcy Court for the District of Utah, Central Division.

      On September  10, 1998,  the plan of  reorganization  under  Chapter 11 of
Interline  Resources  Corporation 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 have been 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.

      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  and  (2)  Interline
Hydrocarbons,  Inc. ("Interline  Hydrocarbons") a Wyoming corporation which owns
and operates the Company's used oil refining technology.





<PAGE>



Interline Energy Service - Oil and Gas Operations

      The Company has been engaged in the oil and gas industry  since 1990.  Its
oil and gas operations  primarily  involve  natural gas  gathering,  natural gas
processing,  a crude  oil  pipeline  operation,  and oil  well  production.  The
Company's  main oil and gas  operations  are  located in  east-central  Wyoming.
Wyoming operations, located near Douglas, include the Well Draw Gas Plant ("Well
Draw"),  a  crude  gathering   pipeline,   a  20.4%  interest  in  the  Hatcreek
Partnership, NGL trucking and four producing oil and gas wells.

Well Draw Gas Plant
      Well Draw, located near Douglas,  Wyoming, is a natural gas liquids (NGLs)
processing plant which has the capacity to process  approximately 150,000 gallon
of NGLs each day. The Company buys mixed liquids from several  different plants,
transports them to Well Draw,  fractionates the liquids into commercial propane,
butane, and natural gasoline, and re-markets these products for its own account.
Additionally,  the Company enters into agreements for  fractionation  of liquids
from others on a fee basis.  Most of the liquids originate from liquids that are
trucked into the plant from outside sources.  The liquids are then processed and
fractionated  into  commercial  propane,   butane,  and  natural  gasoline,  and
re-marketed into the local market. As part of the plant system, the Company owns
a gathering  pipeline system. The gathering system is connected to the Well Draw
Gas Plant and supplies a small  percentage  of liquids for the plant.  The plant
processed and fractionated a total of 93,318 gallons a day of NGLs for the three
months ended  September 30, 1999 compared to 89,198  gallons a day for the three
months  ended  September  30,  1998.  Of  the  total  gallons  fractionated  and
processed,  8,183 gallons per day was for the Company and 85,135 gallons per day
for  others,  as compared to 6,993 and 82,205  gallons per day  respectively  in
1998.

Amoco Contract
      During  1994,  the Company  entered  into a six year  contract  with Amoco
Production  Company to process  NGLs.  The agreement  expires June 1, 2000.  The
Amoco  agreement  is the largest  liquids  contract the Company has entered into
since it purchased the Well Draw Gas Plant in 1990. To fulfill the contract, the
Company made modifications to the Well Draw Gas Plant to increase its processing
capacity from about 90,000 to approximately 150,000 gallons per day. The Company
also constructed an amine treating unit to reduce sulfur  concentrations  of the
NGLs at Amoco's Bairoil, Wyoming plant where the NGLs are collected.  During the
three  months ended  September  30,  1999,  the Company  processed an average of
49,527 gallons per day of NGLs under the Amoco  contract  compared to 45,066 for
the three months ended  September 30, 1998.  The Amoco  agreement  accounted for
53.07% of the total  NGLs  processed  by the  Plant for the three  months  ended
September 30, 1999  compared to 50.52% for the three months ended  September 30,
1998.

      Most of the revenue  earned at the Well Draw Gas Plant is derived from the
Amoco agreement.  The Amoco agreement expires June 1, 2000 and if this agreement
is not renewed it will have a  substantial  impact on the ability of the Company
to continue operations.




<PAGE>



KN Gas Gathering Agreement
      During the first  quarter of 1998,  the Company  entered  into a agreement
with KN Gas Gathering,  Inc. ("KNGG") to process NGLs on a month to month basis.
During the three  months  ended  September  30,  1999 the Company  processed  an
average  of 32,543  gallons  per day of NGLs under this  agreement  compared  to
33,045  gallons a day for the three months ended  September  30, 1998.  The KNGG
agreement  accounted for 34.87% of the total NGLs processed by the plant for the
three months ended  September  30, 1999  compared to 37.05% for the three months
ended  September  30, 1998.  Local markets for NGLs  strengthen  during the cold
months and liquid prices increase. During October 1999, due to higher NGL prices
in the local market, KNGG increased the amount of NGLs delivered to the plant to
45,845  gallons a day.  Also for the first seven days of November  1999 KNGG has
delivered to the plant an average of 59,100 gallons a day of NGLs

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  66,948  barrels of
crude during the three months ended September 30, 1999 compared to 56,033 during
the three months ended September 30, 1998.

Hat Creek Partnership
      The  Hat  Creek  Partnership,  of  which  Interline  Energy  owns a  20.4%
interest,  owns  working  interests  in two  oil  and  gas  wells  and a 13 mile
gathering line  interconnected  to the Well Draw Gas Plant. The Company receives
revenues from the sale of oil and gas from the oil wells.

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, 1999 the wells  produced  approximately  1,312
barrels of oil and 2,907 Mcf of natural  gas  compared  to  approximately  1,015
barrels of oil and 3,309 Mcf of natural gas for the three months ended September
30, 1998.

NGL Transportation Operation
      The Company's NGL transportation  operation  transported  approximately 10
million  gallons of raw and  finished  products  during the three  months  ended
September 30, 1999.  The Company  operates six  tractor-trailer-pup  combination
units to move unprocessed natural gas liquids to Well Draw for fractionation. It
then takes  propane,  butane,  and  natural  gasoline  from Well Draw to various
refiners,  chemical plants, and end-users.  When time permits, these trucks also
move liquids on a common carrier basis for third parties.



<PAGE>

      Management  is  unaware of any  significant  future  capital  expenditures
except for the  addition  to the office  and  control  room at the Well Draw Gas
Plant . The total cost of this addition  will be  approximately  $90,000.  As of
September  30, 1999 , the Company has spent $60,371 with  approximately  $29,629
remaining.  However, the very nature of equipment operation,  including the wear
and tear and replacement in this type of operation, can be significant. Further,
it is noted that most of the revenues  earned by the Well Draw Plant are derived
from the Amoco  contract  which will expire in June 1, 2000. If this contract is
not renewed,  it will have a substantial  impact on the ability of the Well Draw
plant to continue  operations.  Management  continues to seek other liquids, and
gas connections, to expand and diversify its operations in Wyoming, however, its
operations are in a limited and well defined area and expansion is difficult.


Interline Hydrocarbon - Used Oil Refining

     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  territories to licensee,  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) rather than build
plants,  sell the construction  plans and provide  consultation and expertise so
the customer can then build the Plant.

      Based on the experiences  with the five Plants that have been built by the
Company,  management's  current  belief  is to  stay  out  of  the  construction
business.  Further, until the Company becomes more financially stable, 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.

      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.  The plant will be located in Madrid,  Spain.  Under the agreement,
Ecolube will  construct  and operate the plant and produce  lubricant  base oil.
Interline will receive a $534,000  engineering and licensing payment and receive
a running  royalty of $0.0175 on each gallon  produced and sold for 10 years. As
of  September  30, 1999,  the Company has  recorded  revenues of $409,000 of the
$534,000  based on meeting  certain  criteria in the  contract.  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.

     It has also become evident to management that demanding  royalties based on
production in many  situations and countries is difficult.  Unless and until the
re-refined oil produced in a Plant can be sold at higher values based on pricing
similar to base  lubricating  oils,  on-going  royalties  based on production is
difficult to obtain. 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 not payable until profitable.


<PAGE>

     Management  still  believes that there exists  economic  justification  and
interest in the used oil  refining  technology.  The most  viable  opportunities
management has discovered  are in countries that have  governmental  concessions
resulting in economic  incentives for  collecting  and processing  used oil. The
Company continues to improve the technology,  and on May 28, 1998 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.  While  management
continues to receive inquiries about the technology, the Company is selective as
to potential purchasers. From experience, management is aware of the complicated
nature between the balance of supply and demand. Management has become much more
selective  in  its  consideration  of  selling  the  technology  to  prospective
purchasers and unless  favorable  conditions  exist the Company  discourages the
purchaser. Management has become much more active in helping potential customers
evaluate their end product sales markets.



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.


Total Revenues  For Nine  Months  Ended  September  30,  1999 and 1998  Revenues
      increased $97,201, or 3.67%, to $2,746,356 for the nine months ended
September 30, 1999 as compared to $2,649,155 for the nine months ended September
30, 1998. The revenue  increase  included a $355,836 or 15.32%,  increase in oil
and gas revenues;  a $235,860,  or 77.62% decrease in used oil refining revenues
and an $22,775  decrease in other revenues.  The Company's total revenues,  on a
segment  basis,  for the nine months ended  September  30, 1999 and 1998 were as
follows:

          Revenues For Nine Months Ended September 30, 1999 and 1998


                            1999        %          1998            %
-------------------------------------------------------------------------

Oil and Gas             $2,678,356   97.52%     $2,322,520       87.67%
Used Oil refining           68,000    2.48%        303,860       11.47%
Other                            0       0%         22,775        .86%
-------------------------------------------------------------------------

Total Revenue           $2,746,356     100%     $2,649,155        100%
=========================================================================







<PAGE>



Total Revenues  For Three  Months  Ended  September  30, 1999 and 1998  Revenues
      increased $42,149 or 4.37%, to $1,005,671 for the three months ended
September 30, 1999 as compared to $963,522 for the three months ended  September
30, 1998. The revenue  increase  included a $197,799 or 24.48%,  increase in oil
and gas revenues; a $149,975, or 100% decrease in used oil refining revenues and
an $5,675 decrease in other revenues. The Company's total revenues, on a segment
basis, for the three months ended September 30, 1999 and 1998 were as follows:

         Revenues For Three Months Ended September 30, 1999 and 1998


                           1999          %            1998         %
----------------------------------------------------------------------

Oil and Gas             $1,005,671     100%         $807,872    83.85%
Used Oil refining                0       0%          149,975    15.57%
Other                            0       0%            5,675      .58%
----------------------------------------------------------------------

Total Revenue            $1,005,671    100%         $963,522      100%
======================================================================




Oil and Gas Revenues
      Oil and gas  revenues  contributed  100% of total  revenues  for the three
months ended  September  30, 1999, as compared to  approximately  83.85% for the
three months ended September 30, 1998.  Revenues increased $197,799 or 24.48% to
$1,005,671 for the three months ended September 30, 1999 as compared to $807,872
for the three months ended September 30, 1998.

      During the three  months  ended  September  30,  1999  revenues  increased
$197,799,  or 24.48%. This revenue increase was mainly attributed to a $137,962,
or 83.63%  increase in liquids (NGLs) sold to the local market under the account
of the Company, a $27,842,  or 12.98% increase in fractionation  fees, a $6,249,
or 14.5%  increase  crude oil tariff  fees and a $51,897 or 16.18%  increase  in
transportation  fees.  Revenues from the sale of crude oil decreased $13,644, or
31.84% during the three months  ending  September 30, 1999 compared to the three
months ending September 30, 1998.

      The  increase  in  liquids  (NGLs)  sold to the local  market  was  mainly
attributed to an increase of 56.94% in liquid prices for the three months ending
September 30, 1999 compared to the three months ending  September 30, 1998.  The
increase in fractionation fees and transportation  fees was mainly attributed to
a increase in liquids  (NGLs)  processed  for others at the Well Draw Gas Plant.
During the three  months  ended  September  30,  1999 the Company  processed  an
average of 93,318  gallons per day of NGLs compared to 89,198  gallons a day for
the three months ended September 30, 1998.

      The  Company's  Oil & Gas  Operations  revenue for the three  months ended
September 30, 1999 and 1998 were as follows:


<PAGE>




Oil & Gas Operations Revenue For Three Months Ended September 30, 1999 and 1998



                                  1999          %           9 1998       %
-------------------------------------------------------------------------------

Liquids (NGL) Sold              $302,928      30.12%       $164,966    20.42%
Fractionation Fees               242,422      24.11%        214,580    26.56%
Transportation Fees              372,707      37.06%        320,810    39.71%
Crude Tariff Fees                 49,346       4.91%         43,097     5.33%
Crude Oil Sold                    29,204       2.90%         42,848     5.30%
Residue Gas Sold                   9,065        .90%         10,045     1.24%
Other                                  0          0%         11,526     1.44%

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

Total Revenue                 $1,005,672        100%       $807,872      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.

      Used oil refining  revenues  contributed  $0 total  revenues for the three
months ended  September 30, 1999  compared to $149,975,  or 15.57% for the three
months ended September 1998. The revenue decrease of $149,975 or 100%, to $0 for
the three months  ended  September  30, 1999  compared to $149,975 for the three
months  ended  September  30, 1998.  The  $149,975  received for the three month
ending September 30, 1998 was revenues relating to the engineering and licensing
agreement  with  Ecolube,  S.A., a subsidiary  of Sener  Engineering  of Madrid,
Spain. Under the Ecolube agreement, the Company will receive a total engineering
and licensing  payment of $534,000.  As of September  30, 1999,  the Company has
recorded revenues of $409,000  attributed to the Ecolube  agreement.  During the
three months ended September 30, 1999 and 1998, the Company received no revenues
for royalties for it used oil technology.

Direct Costs
      Direct costs increased  $30,915 or 5.09%, to $637,875 for the three months
ended  September  30,  1999  compared  to $606,960  for the three  months  ended
September 30, 1998. As a percent of revenues,  direct costs  increased to 63.43%
for the three months ended  September  30, 1999 compared to 62.99% for the three
months ended  September  30, 1998.  The increase of $30,919 for the three months
ended  September 30, 1999 was mainly  attributed  to the  Company's  increase in
revenues.



<PAGE>



 Selling, General and Administrative
      Selling,  general and administrative expenses decreased $14,847, or 5.75%,
to $243,290 for the three months ended  September  30, 1999 compared to $258,137
for the three  months  September  30, 1998.  As a percent of revenues,  selling,
general  and  administrative  expenses  were 24.19% for the three  months  ended
September 30, 1999  compared to 26.79% for the three months ended  September 30,
1998.  These expenses  consisted  principally  of salaries and benefits,  travel
expenses,  insurance,  legal,  information technical services and administrative
personnel of the Company.  Also included are outside legal and accounting  fees,
and  expenses  associated  with  computer  equipment  and  software  used in the
administration of the business.

Depreciation and Amortization
      Depreciation  and  amortization  expenses  increased  $11,494  or 6.76% to
$181,522 for the three months ended  September 30, 1999 compared to $170,028 for
the  three  months  ended   September  30,  1998.  As  a  percent  of  revenues,
depreciation and amortization  expenses increased to 18.05% for the three months
ended September 30, 1999 compared to 17.65% for the three months ended September
30, 1998.

Research and Development
      Research and development  expenses  increased $1,055, or 7.54%, to $15,056
for the three months ended  September 30, 1999 compared to $14,001 for the three
months  ended  September  30,  1998.  As a percent  of  revenues,  research  and
development expenses increased to 1.50% for the three months ended September 30,
1999 compared to 1.45% for the three months ended September 30, 1998.
      Research  and  development   expenses  are  mainly   attributable  to  the
development and enhancement of the Company's used oil refining  technology.  The
Company will continue to incur research and development expenses as it continues
to develop its used oil refining technology.

 (Loss) from operations
      Loss from  operations  decreased  $13,532,  or 15.81%,  to $72,072 for the
three months ended  September  30, 1999 compared to a $85,604 loss for the three
months ended  September 30, 1998. The $13,532  decrease in loss from  operations
was  mainly  attributed  to the  Company's  focus  to  increase  cash  flows  by
increasing  margins as it relates to its  liquid  purchase  contracts,  reducing
operational personnel and reducing operational expenses.

Other income (expenses)
      Net interest income (expense) increased $8,960, or 130.35%, to $15,834 for
the three months ended September 30, 1999 compared to $6,874 for the three month
ended  September 30, 1998. The net increase was mainly  attributed to a decrease
in interest earned on the Company's money market and interest bearing accounts.

     Interest  expense to a related party was $63,000 for the three months ended
September 30, 1999 compared to a positive  interest  expense of $130,795 for the
three months ended  September  30, 1998.  This  $193,795  difference in interest
expense to a related  party was  attributed  to the  Company  making an one time
adjustment reducing the accrued interest due to a new note agreement. As part of
the plan of  reorganization  under  Chapter 11 the  Company  executed a new note
agreement for $3,600,000.


<PAGE>

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.
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  only from the  Australia  Plant,  and the Spanish
Plant,  when  constructed and operational.  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 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 (the  company did not make this  installment  - see below);
$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 the of all
subsidiaries of the Company.

      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 not receive any cash from the marketing of
it refining technology.

      On  September  22,  1999,  the  Company  was  obligated  to pay this major
creditor  $812,000  which  consists of  principal  of $750,000  and  interest of
$63,000 under the new trust deed note (see new terms of trust deed above). As of
November 10, 1999, the Company paid this major  creditor an interest  payment of
$63,000,  but did not make the principal payment of $750,000 due under the trust
note.  As a  result,  the note for  $3,600,000  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 hereof,  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


<PAGE>



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  installment  in default
($750,000) or the total ($3,600,000) 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 the building at Well Draw Gas Plant and any necessary  expenditures
to maintain current operations.  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 Company's net cash used by operations was $347,222 for the nine months
ended  September  30, 1999 compared to net cash used by operations of $1,051,934
for the nine months ended  September  30, 1998. Of the  $1,051,934  cash used in
operations for the nine months ended September 30, 1998, $750,000 was attributed
to an one time payment to Genesis Petroleum, Inc. to settle all claims (See Item
1 - Legal Proceeding).  Without the one time payment to Genesis Petroleum, Inc.,
cash used in continuing  operations for the nine months ended September 30, 1998
was $301,934.The  $25,564 increase in cash used by operations  (exclusive of the
$750,000  payment  to  Genesis  Petroleum,  Inc.) was  mainly  attributed  to an
increase of $168,003 in accounts  receivable and a $160,006 decrease in accounts
payable.


Year 2000 Compliance

      The Year 2000 (Y2K) issue is the result of computer programs being written
using two digits  rather  than four to define the  applicable  year.  This could
result in a system failure or miscalculations causing disruptions of operations,
including,  but not limited to, a temporary  inability to process  transactions,
including invoices or other similar normal business activities.

      The  Company  is in the  process  of  assessing  its  computer  equipment,
accounting   software,   telephone   systems,   scanning   equipment  and  other
miscellaneous systems. The Company's compliance plan provides for the conversion
of  noncompliant  systems in the fourth quarter of 1999.  The Company  estimates
that the cost to complete these efforts will not exceed $15,000.

      The  Company  has  begun  discussion  with  its  significant  vendors  and
customers   on  the  need  to  be  2000   compliant.   The  Company  has  mailed
questionnaires  to its significant  vendors,  customers and service providers to
assist in an assessment of whether they will be Year 2000


<PAGE>



compliant. If they are not, such failure could affect the Company's ability sell
its oil and gas products  and receive  payments,  to receive  natural gas liquid
products from its customers to generate  revenues and the ability to get vendors
and  service  providers  to  provide  products  and  services  in support of the
Company's  operations.  The  Company  expects to  complete  this  assessment  by
November  15,  1999.  Although  the  Company  has no reason to believe  that its
vendors and  customers  will not be compliant  by the year 2000,  the Company is
unable to determine the extent to which Year 2000 issues will effect its vendors
and customers.

      The Company is in the process of  assembling a  comprehensive  analysis of
the  operational  problems and costs that would be  reasonable  likely to result
from failure by the Company and  significant  third parties to complete  efforts
necessary to achieve Year 2000 compliance on a timely basis. A contingency  plan
has not been fully developed for dealing with most reasonably  likely worst case
scenario,  and such scenario has not been clearly identified.  The Company plans
to complete such analysis and contingency planning by November 15, 1999.

      The Company presently does not plan to incur  significant  problems due to
the Year 2000  issue.  However,  if all Year 2000  issues are not  properly  and
timely identified,  assessed,  remediated and tested,  there can be no assurance
that the Year 2000 issue will not  materially  impact the  Company's  results of
operations or adversely  affect its  relationship  with customers,  vendors,  or
others.  Additionally,  there can be no  assurance  that the Year 2000 issues of
other  entities  will not have a  material  impact on the  Company's  results of
operations.

                        PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

Bankruptcy Proceedings
      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 Proceeding.

      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  authorized by the United
States Bankruptcy Court for the District of Utah, Central Division.

      On September  10, 1998,  the plan of  reorganization  under  Chapter 11 of
Interline  Resources  Corporation 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 have been removed.  Interline  reached
agreement  with its major  creditor  during the Chapter 11 case and the terms of
the agreement were incorporated in the plan. All other creditors will be paid in
full under the plan.



<PAGE>



Petroleum Systems Inc
      The Company has  executed  license  agreements  with  licensees to utilize
Interlines used oil technology which includes technology received from Petroleum
System,  Inc.  ("PSI") through an assignment  agreement of certain patent rights
(PSI technology). Under the assignment agreement the Company is obligated to pay
royalties to PSI for those Interline plants using PSI technology.

      The  Company and PSI have been  involved in a dispute as to what  payments
the Company owes PSI under the  assignment  agreement.  The Company and PSI were
first  involved in an  arbitration  proceeding to determine  the issues  between
them, but PSI discontinued  resolution through  arbitration and on July 29, 1997
filed a lawsuit  against the Company and its wholly owned  subsidiary  Interline
Hydrocarbons  in the Third Judicial  District Court of the State of Utah ("State
Court  Action")  alleging  that the  Company  was in  breach  of the  Assignment
agreement  and that PSI should be allowed to  re-acquire  all of the  technology
rights assigned to the Company through the assignment  agreement.  PSI filed its
complaint  and  the  Company  answered,  but  as  a  result  of  the  bankruptcy
proceeding, and its procedural rules the State Court Action was stayed until the
bankruptcy proceedings were resolved.

      On March 26, 1998,  PSI filed claim against the Company in the  bankruptcy
proceeding  seeking royalties of $420,000,  asserting breaches of the assignment
agreement and requesting the return of a prototype  production device ("Baby M")
held by the Company. The Company filed an objection to the claim, and a trial of
the claims was held on June 5 and 8, 1998. After hearing testimony of witnesses,
receiving exhibits and hearing arguments of counsel,  the court entered an order
denying PSI's claim for $420,000, ordering that the Company return Baby M to PSI
and denying all other claims  brought by PSI. The Company has returned Baby M to
PSI.

      On May 29, 1998,  PSI filed a motion for relief from the automatic stay in
the  bankruptcy  court  seeking the right to proceed with its State Court Action
against the Company and the Company's subsidiary Interline  Hydrocarbons.  After
argument and hearing,  the bankruptcy court requested counsel for PSI to prepare
an order granting  relief from the automatic  stay. The Company  objected to the
proposed  order  granting  relief from the automatic  stay and a hearing was set
before the court on August 13, 1998. After argument, the Court entered its order
granting relief from the automatic stay, but limited PSI cause of action against
the Company by prohibiting any money damage to be assessed against the Company.

      On September 10, 1998, on its own  initiative,  the Third  District  Court
scheduled  an Order to Show Cause for on October  15,  1998.  Its purpose was to
advise the court as to the  progress  of the  action.  The  hearing  was held on
October 15, 1998 and the court entered an order that the case be certified ready
for trail within 90 days - January 13, 1999.  PSI was to amend or otherwise file
a new  complaint  against  the  Company.  PSI took no steps  to  proceed  on its
complaint  against the Company and on January 9, 1999 the Company filed a motion
to dismiss the PSI claim. On January 27, 1999 the court granted the motion,  and
extend its order dismissing the lawsuit



<PAGE>



 Interline U.K.
      In April of 1997,  the Company sold its 40% interest in the England  Plant
joint Venture to John Wheland for $500,000.  John Wheland has only paid $200,000
of the purchase  price and while the Company  demanded  payment of the remaining
purchase price the payment remains in dispute.  Additionally, in connection with
the sale of the Company's  interest in the joint venture,  the joint venture was
to pay the Company  $100,000  for certain  construction  charges and services it
performed on the plant.  The joint  venture has not made this  payment,  and its
payment is in dispute.  As a result, on November 19, 1998 the Company instituted
a legal  proceeding  against  John Whelan in the High Court of Justice,  Queen's
Bench Division, Bristol District Registry, Bristol Mercantile Court. This action
is currently pending with a trial date set for March 2000.











REMAINDER OF PAGE INTENTIONALLY LEFT BLANK



<PAGE>



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 (the  company did not make this  installment  - see below);
$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 the of all
subsidiaries of the Company.

      On  September  22,  1999,  the  Company  was  obligated  to pay this major
creditor  $812,000  which  consists of  principal  of $750,000  and  interest of
$63,000 under the new trust deed note (see new terms of trust deed above). As of
November 10, 1999, the Company paid this major  creditor an interest  payment of
$63,000,  but did not make the principal payment of $750,000 due under the trust
note.  As a  result,  the note for  $3,600,000  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 hereof,  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  installment in default
($750,000)  or the total  ($3,600,000)  due under the note.  As of November  10,
1999,  the  Company  has not  received  formal  notice  from the major  creditor
demanding the Company to cure the default by selling collateral of the Company.

      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 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.






<PAGE>



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

Item 5. Other Information:

     The Company  announced on August 13, 1997 that the American  Stock Exchange
(AMEX) made a final determination to delist the Company from the AMEX's Emerging
Company marketplace.

      As of October 30,  1998,  a market is being made of the  Company's  common
stock on the NASD Bulletin Board under symbol "IRCE".

Item 6(a). Exhibits:
      None

Item 6(b) Form 8-K:
      None



<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: November 10, 1999            INTERLINE RESOURCES CORPORATION


                                    By: /s/ Michael R. Williams
                                       Michael R. Williams
                                       CEO/President
                                       Principal Executive Officer
                                       Director

                                    By: /s/ Nark W. Holland
                                      Mark W. Holland
                                      Chief Financial Officer/Director


      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
------------------------------------------------------------------------------
November 10, 1999        CEO/President          /s/ Michael R. Williams
                         and Director               Michael R. Williams

November 10, 1999        Director/              /s/ Laurie Evans
                         Secretary                  Laurie Evans