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

                   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 June 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 July 29, 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 June 30, 1999       5

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

            Condensed Consolidated Statements of Cash Flows for
            six months ended June 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

                                    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 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.




                                       3


<PAGE>



                                  INTERLINE
                                  RESOURCES
                                 CORPORATION
                               AND SUBSIDIARIES

                               PART I - ITEM 1
                             FINANCIAL STATEMENTS
                                 (UNAUDITED)

                                 June 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 June 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)


                                                June 30,
                                                  1999
                                                --------



Assets

Current assets:
  Cash and cash equivalents                     $223,328
  Accounts receivable - trade                    412,672
  Inventories                                     26,089
  Note receivable - current portion               20,000
  Other current assets                            21,493
                                              -----------
     Total current assets                        703,582

Property, plant and equipment                  6,343,753
Accumulated depreciation and depletion        (2,529,868)
                                              -----------
     Net property, plant & equipment           3,813,885

Note receivable                                   80,700
Technology and marketing rights                  788,319
                                              ------------
        Total assets                          $5,386,486
                                              ============

     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,
                                                        1999
                                                      --------

Liabilities and Stockholders' Equity

Current liabilities:
  Accounts payable                                     $162,611
  Accrued liabilities                                   163,425
  Note payable, related party                           750,000
  Current portion of long-term debt                     163,597
                                                     -----------
     Total current liabilities                        1,239,633
                                                     -----------
Long-term debt less current maturities                  602,034
Note payable, related party                           2,850,000
Deferred income                                          47,771
                                                     -----------
     Total liabilities                                4,739,438

Stockholders' equity:
  Preferred stock - $.01 par value. 25,000,000
     shares authorized; 1,000,000 series A shares
     authorized; 0 series A shares issued and o/s           -
  Common stock - $.005 par value. 100,000,000
     shares authorized; 14,066,052 shares
     outstanding at June 30, 1999                        70,371
  Additional paid-in capital                          9,209,017
  Retained earnings                                  (8,632,340)
                                                     -----------
       Total stockholders' equity                       647,048
                                                     -----------
       Total liabilities & stockholders' equity      $5,386,486
                                                     ===========




     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)

                                  Three months ended      Six months ended
                                       June 30,                June 30,
                                -----------------------------------------------
                                  1999        1998        1999         1998
                                -----------------------------------------------

Revenue                         $923,750    788,063     $1,740,684  $1,685,633
Direct costs                     588,547    559,802      1,122,759   1,230,680
                                -----------------------------------------------
Gross margin                     335,203    228,261        617,925     454,953

Selling, general and
   administrative expenses       235,016    221,415        475,432     513,809
Research and development          20,841     25,640         40,519      49,086
Depreciation, depletion and
     amortization                192,478    169,729        361,190     340,050
                                -----------------------------------------------
 (Loss) from operations         (113,132)  (188,523)      (259,216)   (447,992)
Other income (expense) net
  Interest income (expense)      (14,954)   (11,023)       (29,180)    (21,109)
  Interest expense, related
     party                       (63,000)   (89,456)      (126,000)   (177,931)
  Gain from sale of assets           -        1,334         18,908       1,334
                                -----------------------------------------------
(Loss) before discontinued
     operations                 (191,086)  (287,668)      (395,488)   (645,698)

Discontinued operations
  (Loss) from discontinued
     operations                      -      (29,814)           -       (53,868)
  Gain on disposal of
     discontinued operations         -       18,885            -        18,885
                                -----------------------------------------------
  Total discontinued operations      0      (10,929)           0       (34,983)

Net (loss)                      ($191,086) ($298,597)    ($395,488)  ($680,681)
                                ===============================================
Earning per share
  (Loss) from continuing
     operations                   ($0.01)    ($0.02)       ($0.03)     ($0.05)
  (Loss) from discontinued
     operations                    $0.00     ($0.00)        $0.00      ($0.00)
                                -----------------------------------------------
   (Loss) per common share:       ($0.01)    ($0.02)       ($0.03)     ($0.05)
                                ===============================================
Weighted average shares o/s     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.












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


                                                      Six months ended
                                                           June 30,
                                                      1999        1998
                                                     ------------------

Cash flows from operating activities:
  Net (loss)                                        ($395,488)  ($680,681)
  Adjustment to reconcile net (loss) to net
    cash (used in) provided by operating activities:
  Depreciation, depletion and amortization            361,190     340,050
  Gain on disposal of asset                            18,908       1,334
  Common Stock issued for services                        -        24,000
  (Increase) decrease in:
     Accounts receivable                              142,952)    (86,283)
     Inventories                                       29,136       4,603
     Other current assets                                (998)      1,213
     Note receivable                                    9,021     (45,677)
  Increase (decrease) in:
     Accounts payable                                (204,556)     60,344
     Accrued liabilities                              (26,550)   (741,252)
     Accrued interest, related party                      -       177,930
     Other current liabilities                            -        20,127
     Deferred income                                   (4,281)    145,220
                                                     ------------------------
      Net cash (used) by operating activities        (356,570)   (779,072)

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            (147,090)    (23,115)
                                                     ------------------------
  Net cash provided (used in) investing activities    (92,327)    665,438


     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)


                                                      Six  months ended
                                                          June 30,
                                                      1999        1998
                                                  -------------------------

Cash flows from financing activities:
  Proceeds from debt obligations                      76,280        -
  Payment on long-term debt                          (90,234)    (58,107)
                                                  -------------------------
  Net cash provided (used) by financing activities   (90,234)    (58,107)
                                                  -------------------------
Net increase (decrease) in cash                     (539,131)   (171,741)

Cash, beginning of year                              762,459   1,153,199
                                                  -------------------------
Cash,  end of  quarter                              $223,328    $981,458
                                                  =========================



     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 June 30, 1999,  the
remaining liability on the note was approximately $79,445.

     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,  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.


<PAGE>

                INTERLINE RESOURCES CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

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 $476 and $1,095 for the three  months  ended June 30, 1999 and
1998, respectively.

Reclassification

     Certain  amounts  in  the  prior  years  financial   statements  have  been
reclassified to conform to the June 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.

     In  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 72,826 gallons a day of NGLs for the three
months ended June 30, 1999 compared to 62,221 gallons a day for the three months
ended June 30, 1998. Of the total gallons  fractionated  and  processed,  11,451
gallons per day was for the Company  and 61,375  gallons per day for others,  as
compared to 9,847 and 52,374 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 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 June 30, 1999,  the Company  processed an average of 53,065 gallons
per day of NGLs under the Amoco contract compared to 44,565 for the three months
ended June 30, 1998. The Amoco agreement  accounted for 72.86% of the total NGLs
processed  by the Plant for the three  months  ended June 30,  1999  compared to
71.62% for the three months ended June 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.

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 June 30, 1999 the Company  processed an average of
8,310 gallons per day of NGLs under this  agreement  compared to 7,809 gallons a
day for the three months ended June 30, 1998. The KNGG  agreement  accounted for
11.41% of the total NGLs  processed by the plant for the three months ended June
30, 1999  compared to 12.55% for the three  months  ended June 30,  1998.  Local
markets for NGLs weaken during the warm months and liquid prices decline. During
the three  months  ended  June 30,  1999,  due to lower NGL  prices in the local
market,  KNGG reduced the amount of NGLs delivered to the plant to 8,310 gallons
a day compared to 40,599  gallons a day delivered  during the three months ended
March 31, 1999.

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  68,380  barrels of
crude during the three months ended June 30, 1999  compared to 67,830 during the
three months ended June 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 June 30, 1999 the wells produced  approximately 1,245 barrels
of oil and 3,168 Mcf of natural gas compared to  approximately  2,138 barrels of
oil and 4,024 Mcf of natural gas for the three months ended June 30, 1998.

NGL Transportation Operation

      The Company's NGL transportation operation transported  approximately 10.4
million gallons of raw and finished  products during the three months ended June
30, 1999. The Company  operates five  tractor-trailer-pup  combination  units to
move unprocessed  natural gas liquids to Well Draw for  fractionation,  and then
take 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.  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.

<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 $72,000. As of June
30, 1999 , the Company has spent $42,000 with  approximately  $30,000 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 June 30, 1999, the Company has recorded  revenues of $409,500 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
rerefined  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. The most viable opportunities management has discovered are
in countries that have governmental concessions resulting in economic incentives
for  collecting  and  processing  used oil.  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 technology. 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

      Revenues  increased  $135,687 or 17.22%,  to $923,750 for the three months
ended June 30, 1999 as compared to $788,063  for the three months ended June 30,
1998. The revenue  increase  included a $126,087 or 17.28%,  increase in oil and
gas revenues;  a $18,000,  or 36% decrease in used oil refining  revenues and an
$8,400  decrease in other revenues.  The Company's total revenues,  on a segment
basis, for the three months ended June 30, 1999 and 1998 were as follows:


             Revenues For Three Months Ended June 30, 1999 and 1998

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

Oil and Gas                $855,750     92.64%      $729,663    92.59%
Used Oil refining            68,000      7.36%        50,000     6.34%
Other                             0         0%         8,400     1.07%
                           -----------------------------------------------
Total Revenue              $923,750       100%      $788,063      100%
                           ===============================================


<PAGE>


Oil and Gas Revenues

      Oil and gas revenues  contributed  92.64% of total  revenues for the three
months ended June 30, 1999,  as compared to  approximately  92.59% for the three
months ended June 30, 1998.  Revenues  increased  $126,087 or 17.28% to $855,750
for the three  months  ended June 30, 1999 as compared to $729,663 for the three
months ended June 30, 1998.

      During the three months ended June 30, 1999 revenues  increased  $126,087,
or 17.28%.  This revenue increase was mainly attributed to a $41,838,  or 25.37%
increase in fractionation  fees, a $66,568, or 27.76% increase in transportation
fees,  and a $10,480,  or 4.41%  increase  in liquids  (NGLs)  sold to the local
market  under the account of the  Company.  Revenues  from the sale of crude oil
decreased  $3,966  during the three months  ending June 30, 1999 compared to the
three months ending June 30, 1998.

      The  increase  in  fractionation  and   transportation   fees  was  mainly
attributed to the Company's  agreement  with Amoco to process NGLs at Well Draw.
During the three months ended June 30, 1999 the Company  processed an average of
53,065 gallons per day of NGLs under this agreement compared to 44,565 gallons a
day for the three months ended June 30, 1998.

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


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

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

Liquids (NGL) Sold         $247,860    28.96%      $237,380     32.53%
Fractionation Fees          206,771    24.16%       164,933     22.60%
Transportation Fees         306,335    35.80%       239,767     32.86%
Crude Tariff Fees            50,601     5.91%        50,194      6.88%
Crude Oil Sold               23,894     2.79%        27,860      3.82%
Residue Gas Sold              6,549      .76%         6,500       .89%
Other                        13,740     1.62%         3,029       .42%
------------------------------------------------------------------------------
Total Revenue              $855,750      100%      $729,663       100%
==============================================================================

<PAGE>

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  68,000, or 7.36% of total revenues
for the three  months ended June 30, 1999  compared to 50,000,  or 6.34% for the
three months ended June 30, 1998.  The revenues  increased of $18,000 or 36%, to
$68,000 for the three  months  ended June 30,  1999  compared to $50,000 for the
three  months  ended June 30,  1998.  The $68,000  received  for the three month
ending June 30, 1999 and the $50,000  received  for the three  months ended June
30, 1998 were 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 June 30, 1999, the Company has recorded  revenues of
$409,500 attributed to the Ecolube agreement. During the three months ended June
30, 1999 and 1998,  the Company  received no revenues for  royalties for it used
oil technology.

Direct Costs

     Direct costs  increased  $28,745 or 5.13%, to $588,547 for the three months
ended June 30, 1999  compared to $559,802  for the three  months  ended June 30,
1998. As a percent of revenues,  direct costs  decreased to 63.71% for the three
months  ended June 30, 1999  compared to 71.04% for the three  months ended June
30,  1998.  The increase of $28,745 for the three months ended June 30, 1999 was
mainly attributed to the Company's  increase in revenues.  The 7.33% decrease in
direct costs as it relates to revenues was mainly  attributed  to the  Company's
focus to increase cash flows by  increasing  margins as it relates to its liquid
purchase contracts and reducing operational expenses.

Selling, General and Administrative

     Selling,  general and administrative  expenses increased $13,601, or 6.14%,
to $235,016 for the three  months  ended June 30, 1999  compared to $221,415 for
the three months June 30, 1998. As a percent of revenues,  selling,  general and
administrative  expenses  were 25.44% for the three  months  ended June 30, 1999
compared to 28.10% for the three  months  ended June 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  $22,749  or 13.40% to
$192,478 for the three  months ended June 30, 1999  compared to $169,729 for the
three  months ended June 30, 1998.  As a percent of revenues,  depreciation  and
amortization  expenses  increased  to 20.84% for the three months ended June 30,
1999 compared to 21.54% for the three months ended June 30, 1998.

<PAGE>

Research and Development

     Research and development  expenses  decreased $4,799, or 18.72%, to $20,841
for the three  months  ended June 30,  1999  compared  to $25,640  for the three
months ended June 30, 1998. As a percent of revenues,  research and  development
expenses decreased to 2.26% for the three months ended June 30, 1999 compared to
3.25% for the  three  months  ended  June 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  $75,391,  or 39.99%,  to $113,132 for the
three  months  ended June 30,  1999  compared  to a $188,523  loss for the three
months ended June 30, 1998.  The $75,391  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 $3,931, or 35.665%, to $14,954 for
the three  months  ended June 30,  1999  compared to $11,023 for the three month
ended June 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 decreased $26,456 or 29.57%, to $63,000
for the three  months  ended June 30,  1999  compared  to $89,456  for the three
months  ended June 30,  1998.  This  $26,456  decrease in interest  expense to a
related party was attributed to the Company's new note agreement. As part of the
plan  of  reorganization  under  Chapter  11 the  Company  executed  a new  note
agreement for $3,600,000.  The new note agreement bears interest at 7% per annum
compared to the old note agreements of 16%.

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.

<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  will make  quarterly  payments of all accrued  interest
beginning on December 22, 1998 and  continuing  until  September  22, 2002.  The
Company will also make  principal  payments of $750,000 on  September  22, 1999;
$1,000,000 on September 22, 2000;  $1,000,000 on September 22, 2001 and $850,000
on September  22, 2002.  The note is secured by Trust Deeds  securing a security
interest in the Company's  Alpine Office located in Alpine,  Utah and a security
interest in all assets of  Interline  Energy  Service,  Inc. As obligated in the
previous agreements, the Company executed a new Pledge Agreement with this major
creditor  pledging  stock of the  Company and stock 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.

      As of July 29, 1999,  the Company is current on all interest  payments due
to its major creditor under the new trust agreement.  On September 22, 1999, the
Company is  obligated  to pay this major  creditor  $812,000  which  consists of
principal of $750,000 and interest of $62,000 under the new trust deed note (see
new terms of trust deed above) due to its major  creditor.  As of July 29, 1999,
the  Company  is not in a  position  to pay this  major  creditor  $812,000  due
September  22, 1999. If the Company is unable to receive cash from the marketing
of it refining  technology  or raise  additional  financing  through the sale of
equity,  sale of debt or  assets,  then the  Company  could 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 $356,570 for the six months
ended June 30, 1999  compared to net cash used by operations of $779,072 for the
six months ended June 30, 1998. Of the $779,072 cash used in operations  for the
six months ended June 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 six months ended June 30, 1998 was $29,072.

<PAGE>

     The $327,498 increase in cash used by operations (exclusive of the $750,000
payment to Genesis  Petroleum,  Inc.) was mainly  attributed  to an  increase of
$142,952 in accounts receivable and a $204,556 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 third 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 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 August 30,  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 September 30, 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.


<PAGE>

                          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.  Iterline  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.

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 27, 2000.


<PAGE>

Item 2. Changes in Securities:
      None

Item 3. Defaults Upon Senior Securities:
      None

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 August  13,  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: July 29, 1999          INTERLINE RESOURCES CORPORATION


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


                               By/s/ Mark 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

July 29, 1999       CEO/President            /s/ Michael R. Williams
                    and Director            ----------------------------------
                                             Michael R. Williams

July  29, 1999      Director/Secretary      /s/Laurie Evans
                                            ----------------------------------
                                            Secretary Laurie Evans