---------------------------------------------------------------------
                   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 June 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 June 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      Financial Statements                                           Page

            Condensed Consolidated Balance Sheet at June 2\30, 2001         5

            Condensed Consolidated Statement of Operations for the
            three and six months ended June 30, 2001 and 2000               7

            Condensed Consolidated Statements of Cash Flows for
            six months ended June 30, 2001 and 2000                         8

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

Item 3      Notes to Consolidate Financial Statements
            Subsequent Event                                                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 Hold22s

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)

                                June 30, 2001






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, 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 June 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)


                                                                     June 30
                                                                       2001

Assets

Current Assets:
----------------------------------------------------------------- -------------

      Cash & cash equivalents                                      $     57,997
      Accounts receivable - trade                                       853,004
      Inventories                                                        66,203
      Other current assets                                               50,884

           Total current assets                                       1,028,088

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

Property, plant & equipment                                           6,723,917
Accumulated depreciation &                                           (3,683,103)
depletion

      Net property, plant &                                           3,040,814
      equipment

Technology and marketing rights                                         355,000


                Total assets                                       $  4,423,902

---------------------------------------------------------------- ==============







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


                                     5



<PAGE>



                       INTERLINE RESOURCES CORPORATION
                               AND SUBSIDIARIES

                     Condensed Consolidated Balance Sheet
                                 (Unaudited)


                                                                    June 30
                                                                      2001

Liabilities & Stockholders' Equity

Current Liabilities:
----------------------------------------------------------------- ------------

    Accounts payable                                              $    536,056
    Accrued liabilities                                                423,312
    Notes payable - related party                                    3,595,920
    Current portion of long-term debt                                  251,604

         Total current liabilities                                   4,806,892
    Long-term debt less current
    portion                                                            414,191

              Total liabilities                                      5,221,083
---------------------------------------------------------------- -------------
Stockholder's Equity
---------------------------------------------------------------- -------------
    Preferred stock - $0.01 par value.
    25,000,000 shares authorized;
    1,000,000 series A shares
    authorized; No "A" shares issued
    or outstanding.



                                     6



<PAGE>




    Common stock - $0.005 par
    value,
         100,000,000 shares
    authorized.                                                         70,330
         14,066,052 shares issued &
                       outstanding

    Additional paid-in capital                                       9,209,058
    Retained earnings                                              (10,076,569)


              Total stockholders' equity                              (797,181)


              Total liabilities and
              stockholder's equity                                 $ 4,423,902

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


                                     7



<PAGE>



                       INTERLINE RESOURCES CORPORATION
                                     AND SUBSIDIARIES

                      Condensed Consolidated Statement of Operations
                                       (Unaudited)


                                 Three months ended         Six months ended
                                      June 30,                  June 30,
---------------------------- ------------------------- -------------------------
                                 2001         2000         2001         2000
---------------------------- ------------ ------------ ------------ ------------

Revenue                      $ 1,268,224  $ 1,433,693  $ 2,539,754  $ 2,750,496
Direct costs                     920,571    1,214,318    1,741,407    2,039,462
Gross Margin                     347,653      219,375      798,347      711,034
---------------------------- ------------ ------------ ------------ ------------
Selling, general &
  administrative expenses        300,289      225,231      556,551      483,740
Research & development                 -        6,391        1,730       13,519
Depreciation, depletion
  & amortization                 179,859      177,258      391,918      361,875
Loss from operations            (132,495)    (189,505)    (151,852)    (148,100)
---------------------------- ------------ ------------ ------------ ------------
Other income
  Interest income (expense)      (17,005)     (13,860)     (30,981)     (30,942)
  Interest (expense) -
    related party                (93,544)     (75,488)    (188,208)    (152,107)
  Gain from sale of assets             -        1,500            -        1,500
---------------------------- ------------ ------------ ------------ ------------
Net loss before income taxes    (243,054)    (277,353)    (371,041)    (329,649)
---------------------------- ------------ ------------ ------------ ------------
Income taxes
  Current                              -            -            -            -
  Deferred                             -            -            -            -
---------------------------- ------------ ------------ ------------ ------------
Net loss                        (243,054)    (277,353)    (371,041)    (329,649)
============================ ============ ============ ============ ============
Loss per common share -
  basic & diluted                  (0.02)       (0.02)       (0.03)       (0.02)
============================ ============ ============ ============ ============
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 consolidated condensed
financial statements.


                                     8



<PAGE>



                       INTERLINE RESOURCES CORPORATION
                               AND SUBSIDIARIES

                Condensed Consolidated Statement of Cash Fows
                                 (Unaudited)


                                                               Six months ended
                                                                   June 30,
--------------------------------------------------------- ----------------------
Cash flows from operating activities:                         2001        2000
--------------------------------------------------------- ----------- ----------
  Net loss                                                 (371,041)   (329,649)
  Adjustment to reconcile net loss to net cash provided
    by (used in) operating activities:
      Depreciation, depletion & amortization                391,918     361,875
      Gain on disposal of assets                                  -      (1,500)
      (Increase) decrease in :
        Accounts receivable                                (310,207)   (577,455)
        Inventories                                           7,407       9,527
        Other current assets                                (33,361)     (7,018)
        Note receivable                                           -      77,500
--------------------------------------------------------- ----------- ----------
   Increase (decrease) in:
      Accounts payable                                        3,265     639,771
      Accrued liabilities                                   194,746        (390)
      Net cash provided (used) by operating activites      (117,273)    172,661

--------------------------------------------------------- ----------- ----------
Cash flows from investing activities:
   Proceed from sale of equipment                                 -       1,500
   Purchase of property, plant & equipment                   (1,600)   (141,261)
   Net cash used by investing activities                     (1,600)   (139,761)
--------------------------------------------------------------------------------


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


                                     9



<PAGE>



                       INTERLINE RESOURCES CORPORATION
                               AND SUBSIDIARIES

                Condensed Consolidated Statement of Cash Fows
                                 (Unaudited)


                                                              Six months ended
                                                                  June 30,
-------------------------------------------------------- -----------------------
                                                            2001         2000
Cash flows from financing activities:
------------------------------------------------------- ----------- ------------
  Payment on long-term debt                                (86,159)     (73,920)
  Net cash used by financing activities                    (86,159)     (73,920)
------------------------------------------------------- ----------- ------------
Net (decrease) increase in cash                           (205,032)     (41,020)
------------------------------------------------------- ----------- ------------
Cash, beginning of period                                  263,029      255,735
------------------------------------------------------- ----------- ------------
Cash, end of period                                         57,997      214,715
------------------------------------------------------- ----------- ------------
Cash paid during the period for:
   Interest                                                 36,228       40,912
   Income taxes                                                  -            -
--------------------------------------------------------------------------------


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


                                     10



<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.

     Well Draw Gas Plant

The  Well  Draw Gas  Plant  (the  "Plant"),  is a  natural  gas  liquids  (NGLs)
processing  plant with a 150,000  gallons per day capacity.  The Plant processes
NGL's into 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 NGL's originate from liquids that are trucked
into the Plant from outside sources.


                                     11



<PAGE>




     At the Well Draw Gas Plant  ("Well  Draw") 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.  The Company also enters into agreements for
fractionation  of liquids  for others on a fee basis.  The plant  processed  and
fractionated  a total of 75,617  gallons a day of natural  gas  liquids  for the
three  months  ended June 30,  2001,  compared to 101,067  gallons a day for the
three  months  ended  June 30,  2000.  Of the  total  gallons  fractionated  and
processed,  6,763 gallons per day was for the Company and 68,854 gallons per day
for others  during  2001,  as  compared  to 11,531 and  89,536  gallons  per day
respectively for the three months ended June 30, 2000.

Merit (formerly Amoco) Agreement
     During  1994,  the  Company  entered  into a six year  contract  with Amoco
Production Company ("Amoco") to process NGLs located at its Baroil Plant located
in Wyoming.  On December 1, 1999, Amoco Production Company sold its Baroil Plant
assets to Merit Energy Company ("Merit").  Merit is the largest product supplier
for the  Company's  Well Draw Gas Plant.  Effective  June 1, 2001,  the  Company
entered  into a new service  agreement  to  transport,  sweeten and  fractionate
natural gas liquids for Merit through March 31, 2002.  The commitment of Merit's
product  under the new  contract  is  expected  to permit  stable and  efficient
operation of the Plant through the term of the contract. During the three months
ended June 30, 2001, the Company  processed an average of 55,274 gallons per day
of Merit liquids  compared to 51,961  gallons per day for the three months ended
June 30,  2000.  The Merit  contract  accounted  for  73.09%  of the total  NGLs
processed for the 2001 period compared with 47.03% for 2000

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  ("KM").  During the three months
ended June 30, 2001, the Company  processed an average of 13,580 gallons per day
of NGLs under the KM contract  compared  to 37,574  gallons per day for the same
period in 2000. The KM contract accounted for 17.95% of the total NGLs processed
by the plant for the three months ended June 30, 2001, compared to 37.18% of the
total NGLs process for the three months ended June 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  52,460
barrels of oil during the three  months ended June  30,2001,  compared to 58,239
for the three months ended June 30,2000.

Hat Creek Partnership
     The Hat Creek Partnership, of which Interline Energy owns a 20.4% interest,
owned  working  interests  in two oil and gas wells -- the Hat Creek #2,  and CH
Federal wells -- and a 13 mile  gathering line  interconnected  to the Well Draw
Gas Plant.  Effective  July 1, 1999,  the Company sold its  interests in the Hat
Creek #2 well for the sum of  $4,080  to  Dakota  Oil LLC.  Dakota  Oil LLC is a
company formed and owned in part by Company insiders,  to attempt a recompletion
of the  Dakota  producing  zone in the Hat Creek #2 well,  which if  successful,
would have provided  additional  natural gas reserves to the Company's Well Draw
Gas Plant. Unfortunately, the recompletion was unsuccessful.


                                     12



<PAGE>





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 June 30, 2001, the wells produced approximately 1,254 barrels
of oil and 1,797 Mcf of natural gas compared to  approximately  1,333 barrels of
oil and 3,101 Mcf of natural gas for the three months ended June 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.

      During the three months ended June 30, 2001, the Company's trucks traveled
a combined total of 247,380 miles and carried approximately 10 million gallons
of raw and finished product compared to 229,849 miles and 14 million gallons of
raw and finish product for the quarter ended June 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  which 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 of 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  which  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).




                                     13



<PAGE>



     Based on the experiences  with the six plants that have been constructed or
licensed by theCompany,  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.

It has also become  evident to  management  that  demanding  royalties  based on
production is, in many situations and countries, difficult. Unless and until the
re-refined  oil  produced  in a plant can be sold at prices  comparable  to base
lubricating oils,  collecting royalties based on production will be difficult to
achieve.  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.

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




                                     14



<PAGE>



commencing  from the date of plant  start  up.  The  Ecolube  Plant has now been
constructed and has been operating at approximately 75% of design capacity. Full
commissioning  and  acceptance  is expected to be  completed  early in the third
quarter of 2001.

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 Three- and Six- Months Ended June 30, 2001 and 2000
-----------------------------------------------------------------------

Revenues decreased $165,469,  or 11.5%, to $1,268.224 for the three months ended
June  30,2001,  as compared to  $1,433,693  for the three  months ended June 30,
2000. The revenue decrease included a $134,983 or 9.6%,  decrease in oil and gas
revenues  and a decrease of $30,486 or 100% in used oil refining  revenues.  The
Company's  total revenues,  on a segment basis,  for the three months ended June
30, 2001, and 2000 were as follows:

      Revenues For Three- and Six- Months Ended June 30, 2001, and 2000
      -----------------------------------------------------------------
                      3 Months Ended June 30         6 Months Ended June 30
----------------- ------------------------------ -------------------------------
                     2001     %     2000      %      2001    %       2000    %
----------------- ---------- --- ---------- ---- ---------- --- ---------- -----
Oil and Gas       $1,268,224 100 $1,403,207 97.9 $2,539,754 100 $2,650,662 96.4
Used Oil Refining          -   -    $30,486  2.1          -   -    $99,834  3.6

Total Revenue     $1,268,224 100 $1,433,693 100  $2,539,754 100 $2,750,496 100
----------------- ---------- --- ---------- ---- ---------- --- ---------- -----

Oil and Gas Revenues

Oil and gas revenues  contributed 100% of total revenues for the three- and six-
months  ended June 30,  2001,  as compared  to a 97.9% for the three  months and
96.4% for the six months ended June 30,  2000.  Revenues  decreased  $134,983 or
9.6% for the Quarter ended June 30 and $210,742 or 7.7% for the six months ended
on that date.

The  decrease  in oil  and gas  revenues  for the  quarter  resulted  from a 25%
decrease in processing  volumes  during 2001 when compared to 2000 period.  This
decrease  was  partially  offset by a 6%,  increase  in the  quantity of liquids
processed  for  Merit  and a 96%  increase  in the unit  rate  paid by Merit for
processing.  For  the  half-year  the  decrease  in  oil  and  gas  revenues  is
attributable  to the  substantial  elimination  of the  purchase  of liquids for
resale by the Company,  which action was offset by a significant increase in the
rate collected for fractionation at the Plant.

The Company  attributes the decrease in first half and second quarter throughput
in 2001 compared to the prior year period to comparative "softness" in the price
of NGL's relative to natural gas during January through April and to weakness in
the local  markets  for NGL's  compared  to those at Conway,  Kansas and Borger,
Texas during May and June. 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.


                                     15



<PAGE>




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




                                     16



<PAGE>



Oil & Gas Operations Revenue For Three- and Six- Months Ended June 30, 2001
and 2000
--------------------------------------------------------------------------------
                        3 Months Ended June 30         - Months Ended June 30
------------------ -------------------------------- ----------------------------
                      2001      %    2000      %     2001      %   2000       %
                      ----           ----            ----          ----
Liquids (NGL) Sold   $381,268 30.1  $668,118  47.6   $658,150     $1,099,067
Fractionation Fees   $452,649 35.7  $298,760  21.3 $1,028,274       $566,110
Transportation Fees  $351,238 27.7  $335,399  23.9   $669,110       $752,520
Crude Tariff Fees     $39,049  3.1   $43,097   3.1    $78,410        $88,213
Crude Oil Sold        $33,932  2.7   $42,530  30.3    $66,017        $96,563
Residue Gas Sold       $6,043  0.5   $15,303   1.1    $31,000        $37,890
Other                  $4,045  0.3        $0   0.0     $8,789        $10,299
                     --------       --------        ---------     ----------
Total Revenue      $1,268,224 100 $1,403,207  100  $2,539,754 100 $2,650,662 100
                   ==========     ==========       ==========     ==========

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- and six-
month periods  ended June 30, 2001,  compared to $30,486 for the three month and
$99,834 for the six month period in 2000.

Direct Costs

Direct  costs  decreased  $193,227,  or 24.2%,  to $920,571 for the three months
ended June 30, 2001,  compared to $1,214,318 for the three months ended June 30,
2000.  As a percent of revenues,  direct costs  decreased to 72.6% for the three
months ended June 30, 2001 compared to 84.7% for the three months ended June 30,
2000. For the six months ending June 30 of 2001 and 2000 direct costs  decreased
$298,055 to $1,741,407 in 2001 compared to $2,039,462  for 2000. The 2001 figure
represents  68.6% of total  revenues for the half year compared to 74.1% 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 increased $75,058, or 33.3% for the
quarter ended June 30, 2001,  and $72,811,  or 15% for the six months then ended
compared to the year earlier periods. As a percent of revenues, selling, general
and  administrative  expenses  increased to 23.7% for the three months and 21.9%
for the six months ended June 30,  2001,  compared to 15.7% for the three months
and 17.6% for the six months ended one year earlier.


                                     17



<PAGE>




The  increase  in  selling,  general  and  administrative  expenses  was  mainly
attributed to increases in insurance,  utilities, business development and labor
costs.

Depreciation and Amortization

Depreciation  and amortization  expenses  increased $2,601 or 1.5% for the three
months ended June 30, 2001,  and $30,043,  or 8.3% for the half-year then ended.
As a percent of revenues,  depreciation and amortization  expenses  increased to
16.7% and 15.4% for the 2001 three- and six- month periods compared to 14.0% and
13.2% 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.

Research and  development  expenses  decreased 100%, to $0, for the three months
ended June 30, 2001, compared to $6,391 for the three months ended June 30, 2000
and 87.2% to $1,730 from $13,519 for the six months then ended.  As a percent of
revenues,  research and development  expenses decreased to 0.0% and 0/1% for the
three and six month periods  ended June 30, 2001,  compared to 0.4% and 0.5% for
the year earlier periods.

Income (Loss) from operations

Loss from operations decreased $57,010, or 30.1%,for the three months ended June
30, 2001, but increased $3,752 for the half year then ended when compared to the
year earlier periods.

Other income (expenses)

Net interest expense  increased $21,201 or 23.7% for the three months ended June
30, 2001,  and $36,101 (also 23.7%) for the six months ended June 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 and 2000, the
Company  did not pay this  major  creditor  the  first and  second  installments
($750,000  and  $1,000,000)  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.  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.

                                     18



<PAGE>



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 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  two  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 and June 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 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
($750,000 and $1,000,000) 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.  For the
quarter  ended June 30,  2001,  the Company  spent  $1,600 to purchase  improved
software for its chromatograph at the Well Draw Plant.  Management is unaware of
any  significant  future  capital  expenditures.  However  the  very  nature  of



                                     19



<PAGE>



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 Company's net cash used in the Company's operations was $117,273 for the six
months  ended June 30, 2001  compared  to net cash  provided  by  operations  of
$172,661  for the period  ended June 30,  2000.  The net decrease of $289,934 in
cash  provided by operations  for the  half-year  ended June 30, 2001 was mainly
attributed  to a  $41,392  increase  in the  Company's  net loss,  and  material
differences  in the  collection  of  accounts  receivable  and  disbursement  of
accounts  payable  between the period  ended June 30, 2001 and that ended a year
earlier.

PART 1 - ITEM 3.

                Notes to The Consolidated Financial Statements

Subsequent  Event:  The Company has entered  into a  non-binding  Memorandum  of
Understanding  to form a joint venture with a foreign entity.  The Company would
be  required to use its best  efforts to raise  substantial  debt and/or  equity
financing in exchange for  convertible  preferred  class shares,  which shall be
convertible  into 51% of the joint  venture's  common shares and would  exercise
significant control over the joint venture.


                                     20



<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.
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




                                     21



<PAGE>



reached  agreement  with  itsmajor  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,  199,8 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 (the  Company did not make this  installment  - see below);
$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 and
$1,000,000 by September  22, 2000. As of May 15, 2001,  the Company has not paid
the first two 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  ($750,000 and $1,000,000) or
the total  ($3,595,920) due under the note. As of May 15, 2001, the Company also
has not made the required interest payments.

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.

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