UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________________

FORM 10-Q

/X/  QUARTERLY REPORT Under Section 13 or 15(d) of the Securities
     Exchange Act of 1934

For the quarter ended March 31, 1997

Commission File No. 1-6485
________________________________________________________________
                              or

/ /  TRANSITION REPORT Under Section 13 or 15(d) of the Securities
     Exchange Act of 1934
________________________________________________________________

ACTION INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
________________________________________________________________

Pennsylvania
(State or other jurisdiction of incorporation or organization)
________________________________________________________________

25-0918682
(I.R.S. Employer Identification No.)
________________________________________________________________

460 Nixon Road, Cheswick, Pennsylvania                15024-1098
(Address of principal executive offices)                (Zip Code)
________________________________________________________________

Registrant's telephone number, including area code: (412) 782-4800
_________________________________________________________________

The number of shares of the Registrant's common stock outstanding
at May 12, 1997 was 5,539,458.
_________________________________________________________________

Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities 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
                           -----       -----


INDEX

ACTION INDUSTRIES, INC. AND SUBSIDIARIES



                                                             Page

Part I.  Financial Information

Item 1.  Financial Statements (Unaudited)

         Consolidated Balance Sheets -
           March 31, 1997, March 31, 1996,
           and June 30, 1996                                   3

         Consolidated Statements of Operations -
           Nine Months and Three Months Ended
           March 31, 1997 and March 31, 1996                   4

         Consolidated Statements of Shareholders' Equity
           (Capital Deficiency) - Nine Months Ended
           March 31, 1997 and March 31, 1996                   5

         Consolidated Statements of Cash Flows -
           Nine Months Ended March 31, 1997 and
           March 31, 1996                                      6

         Notes to Consolidated Financial Statements            7


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


Part II. Other Information

Item 6.  Exhibits and Reports on Form 8-K                     20


Signatures                                                    21


PART I.  FINANCIAL INFORMATION
<TABLE>
                             ACTION INDUSTRIES, INC. AND SUBSIDIARIES
                                   CONSOLIDATED BALANCE SHEETS
                                           UNAUDITED

<CAPTION>
                                         (In thousands)

                                                          March         March          June
                                                         31, 1997      31, 1996      30, 1996
                                                         --------      --------      --------
ASSETS
<S>                                                       <C>          <C>            <C>
Current Assets
  Cash and cash equivalents                                 $411           $59           $78
  Trade accounts receivable, less allowances
    of $200, $329, and $353                                  937         4,440         2,769
  Inventories                                                  0         9,582         3,928
  Other current assets                                       418         1,143           671
                                                          ------       -------        ------
    Total Current Assets                                   1,766        15,224         7,446

Property, Plant and Equipment                                 44         7,459           385

Other Assets
  Note Receivable                                            544         1,200           850
  Other                                                      166           470           227
                                                          ------       -------        ------
                                                          $2,520       $24,353        $8,908
                                                          ======       =======        ======

LIABILITIES  AND  SHAREHOLDERS'  EQUITY (CAPITAL DEFICIENCY)

Current Liabilities
  Notes  payable                                              $0        $3,337        $3,039
  Accounts payable                                         1,776         3,373         2,628
  Accrued compensation                                       442           113           607
  Other accrued liabilities                                  326         1,008           736
                                                          ------       -------        ------
    Total Current Liabilities                              2,544         7,831         7,010

Long-Term Liabilities
  Financing obligation - sale/leaseback                        0         7,013             0
  Long-term debt                                             115           115           115
  Deferred compensation                                    1,459         1,304         1,554
                                                          ------       -------        ------
    Total Long-Term Liabilities                            1,574         8,432         1,669

Shareholders' Equity (Capital Deficiency)
  Common stock, $0.10 par value;
    authorized 20,000,000 shares;
    issued 7,187,428 shares                                  719           719           719
  Capital in excess of par                                25,498        25,498        25,498
  Retained earnings (deficit)                            (16,241)       (6,553)      (14,414)
                                                          ------       -------        ------
                                                           9,976        19,664        11,803
  Less treasury shares, at cost                           11,574        11,574        11,574
                                                          ------       -------        ------
    Total Shareholders' Equity (Capital Deficiency)       (1,598)        8,090           229
                                                          ------       -------        ------
                                                          $2,520       $24,353        $8,908
                                                          ======       =======        ======


See notes to consolidated financial statements.
</TABLE>

<TABLE>
                          ACTION INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF OPERATIONS
                                         UNAUDITED

                            (In thousands except per share data)

<CAPTION>
                                              Nine Months Ended            Three Months Ended
                                            ----------------------       ----------------------
                                             March         March          March         March
                                            31, 1997      31, 1996       31, 1997      31, 1996
                                            --------      --------       --------      --------

<S>                                         <C>           <C>             <C>          <C>
NET SALES                                    $5,424       $24,534             $0        $5,455

COSTS AND EXPENSES
  Cost of products sold                       3,654        20,326              0         4,937
  Operating expenses                          4,006         7,836            561         2,438
  Interest expense                              446         1,614             67           416
                                            --------      --------       --------      --------
                                              8,106        29,776            628         7,791

OTHER INCOME (EXPENSE), NET                     855           204            365           (29)
                                            --------      --------       --------      --------
LOSS BEFORE INCOME TAXES                     (1,827)       (5,038)          (263)       (2,365)

PROVISION FOR INCOME TAXES                      -             -              -             -
                                            --------      --------       --------      --------
NET LOSS                                    ($1,827)      ($5,038)         ($263)      ($2,365)
                                            ========      ========       ========      ========


NET LOSS PER SHARE                           ($0.33)       ($0.91)        ($0.05)       ($0.43)
                                            ========      ========       ========      ========

Weighted average shares outstanding           5,539         5,539          5,539         5,539
                                            ========      ========       ========      ========


See notes to consolidated financial statements.
</TABLE>

<TABLE>
                                     ACTION INDUSTRIES, INC. AND SUBSIDIAIRIES
                      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (CAPITAL DEFICIENCY)
                                                     UNAUDITED

                                       (In thousands except share amounts)
<CAPTION>
                                                 Nine Months Ended March 31, 1997 and March 31, 1996
                                   --------------------------------------------------------------------------------
                                                          Capital    Retained
                                       Common Stock      In Excess   Earnings       Treasury Stock
                                     Shares     Amount    of Par     (Deficit)    Shares       Amount       Total
                                     ------     ------   ---------   ---------    ------       ------       -----

<S>                                 <C>          <C>      <C>        <C>         <C>          <C>          <C>
BALANCE - JUNE 24, 1995             7,187,428    $719     $25,498     ($1,515)   1,647,970    ($11,574)    $13,128

  Net Loss                              -          -         -         (5,038)       -            -         (5,038)
                                   --------------------------------------------------------------------------------
BALANCE - MARCH 31, 1996            7,187,428    $719     $25,498     ($6,553)   1,647,970    ($11,574)     $8,090
                                   ================================================================================

BALANCE - JUNE 30, 1996             7,187,428    $719     $25,498    ($14,414)   1,647,970    ($11,574)       $229

  Net Loss                              -          -         -         (1,827)       -            -         (1,827)
                                   --------------------------------------------------------------------------------
BALANCE - MARCH 31, 1997            7,187,428    $719     $25,498    ($16,241)   1,647,970    ($11,574)    ($1,598)
                                   ================================================================================


See notes to consolidated financial statements.
</TABLE>

<TABLE>
                     ACTION INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     UNAUDITED

                                   (In thousands)
<CAPTION>
                                                            Nine Months Ended
                                                         ------------------------
                                                          March           March
                                                         31, 1997        31, 1996
                                                         --------        --------
OPERATING ACTIVITIES:

<S>                                                      <C>             <C>
Net loss                                                 ($1,827)        ($5,038)
Adjustments to reconcile net loss to net cash
   provided by operating activities:
  Depreciation and amortization                              240             678
  Changes in operating assets and liabilities:
     Trade accounts receivable                             1,832           5,468
      Inventories                                          3,928           8,551
      Other current assets                                   253             (32)
      Accounts payable and accrued expenses               (1,427)         (2,220)
                                                          -------         -------
NET CASH PROVIDED BY OPERATING ACTIVITIES                  2,999           7,407
                                                          =======         =======

INVESTING ACTIVITIES:

   Acquisition of property, plant and equipment             -               (220)
   Payments received on notes receivable                     306            -
                                                          -------         -------
NET CASH USED IN INVESTMENT ACTIVITIES                       306            (220)
                                                          =======         =======

FINANCING ACTIVITIES:

   Notes and acceptances payable                          (3,039)         (6,825)
   Payment  of deferred compensation                         (95)           (384)
   Principal payments on long-term obligations              -               (726)
   Other, net                                                162             240
                                                          -------         -------
NET CASH USED IN FINANCING ACTIVITIES                     (2,972)         (7,695)
                                                          =======         =======

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS             333            (508)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD              78             567
                                                          -------         -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                  $411             $59
                                                          =======         =======


See notes to consolidated financial statements.
</TABLE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ACTION INDUSTRIES, INC. AND SUBSIDIARIES


A. The consolidated financial statements included herein have been
   prepared by the Company, pursuant to the rules and regulations
   of the Securities and Exchange Commission.  With the exception
   of the consolidated balance sheet which was derived from the
   audited financial statements as of June 30, 1996, such
   statements have not been audited.  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.  The Company believes that the
   disclosures are adequate to make the information presented not
   misleading.  It is suggested that these consolidated financial
   statements be read in conjunction with the financial statements
   and the notes thereto included in the Company's latest Annual
   Report on Form 10-K.  Effective July 1995 the Company changed
   its fiscal calendar from a 52-53 week year ending on the last
   Saturday of each fiscal month to the last day of the calendar
   month.

B. The accompanying financial statements reflect all adjustments
   (consisting of normal recurring accruals and estimates) which
   are, in the opinion of management, necessary for a fair
   presentation.

C. In October 1996 the Company entered into an agreement to sell
   its inventory and related intellectual property associated with
   its Replenishment (Powerhouse) business and Promotional
   business.  The Powerhouse-related assets were sold on October
   18, 1996.  The Promotional-related assets were sold on February
   12, 1997 pursuant to a foreclosure sale by Foothill Capital
   Corporation ("Foothill"), the Company's secured lender.  The
   assets sold represented substantially all of the operating
   assets employed in the Company's business.  Trade accounts
   receivable were retained, as were non-operating notes and other
   receivables from prior sales of the Company's headquarters
   facility and certain business units.  The Company also retained
   its substantial income tax net operating loss carryforwards.

   Also in October 1996 the Company finalized negotiations and
   signed a new lease arrangement for its headquarters facility.
   The new lease obligates the Company for rent of approximately
   $100,000 per year for a five year period under an operating
   lease.  This lease agreement, in conjunction with the physical
   departure from the warehouse space in the facility, resulted in
   the elimination as of June 30, 1996 of the previously reported
   capital lease obligation for the facility.

   The accompanying financial statements include the historical
   results of operations of the Company's Promotional and
   Replenishment businesses.  Valuation adjustments were made as
   of June 30, 1996 to the historical cost basis of the Company's
   inventories and property and equipment impacted by the sale of
   the Company's current operations, to value these assets at
   estimated net realizable value, and to reflect the abandonment
   or sale of certain fixed assets no longer used to support
   operations.  The net value realized by the Company in the sale
   of its inventories and the sale and abandonment of
   substantially all of its property and equipment approximated
   the net book value of these assets at the time of sale.

D. In April 1997 the Company announced that it had signed a letter
   of intent to acquire General Vision Services, Inc. ("GVS"), a
   direct and third-party provider of retail vision services
   primarily in the New York City metropolitan area, as well as
   elsewhere in New York and surrounding states, and in Florida.
   GVS operates from 104 locations, including 23 owned locations.
   GVS also provides retail hearing management services.

   The terms of the merger call for the Company to issue
   approximately 3,700,000 shares of its Common Stock and
   approximately 4,000,000 shares of a new Class B Redeemable
   Preferred Stock with a par value of $1 per share, in exchange
   for 100% of the capital stock of GVS.

   The proposed merger is subject to a number of closing
   conditions, including the consummation of a proposed private
   placement financing transaction.  The gross proceeds of the
   financing are expected to range between a best efforts minimum
   of $2,000,000 and a maximum of $3,300,000.  An amount ranging
   from $1,200,000 at the minimum to $2,000,000 at the maximum
   will be loaned to GVS prior to the consummation of the proposed
   merger.  The Company is currently considering increasing the
   maximum to $4,000,000.  If such increase is authorized,
   substantially all of the increase in the net proceeds will be
   added to the loan to GVS.  The securities to be issued in the
   proposed private financing transaction will not be registered
   with the Securities Exchange Commission and may not be offered
   or sold in the United States without registration or an
   applicable exemption from registration.  The proposed merger is
   also subject to the execution of a definitive merger agreement
   and to the approval of the current shareholders of both the
   Company and GVS.  The process of obtaining such approval is
   expected to take 120 days or more.

   The American Stock Exchange ("AMEX") halted trading in the
   Company's Common Stock on October 21, 1996.  The AMEX has
   determined to delist the Company's Common Stock, but has
   granted a brief period for the Company to effect an acquisition
   to satisfy the criteria for AMEX listing.  The proposed merger
   with GVS may or may not result in the Company qualifying for
   AMEX listing.  There can be no assurance that the listing will
   be maintained.

E. The results of operations for the third fiscal quarter and nine
   month period ended March 31, 1997 are not necessarily
   indicative of the results to be expected for the full year.  As
   a result of the asset sales described above, the Company does
   not currently have an operating business or source of revenue.

F. Inventories consisted primarily of merchandise held for resale.
   Inventories were valued at the lower of first-in, first-out
   (FIFO) cost or market.  All inventories were sold or otherwise
   disposed of in connection with the asset sales described above.

G. The Company had a credit agreement which provided for up to $10
   million in committed credit lines through June 30, 1997.   In
   connection with the foreclosure sale by Foothill, the credit
   agreement was terminated as of February 12, 1997.  Availability
   under the credit line was limited by the level of eligible
   accounts receivable and inventories.  Interest was payable at
   3.5% over the prime rate of interest.

   The Company did not meet the requirements under the restrictive
   covenants of the credit agreement as of December 31, 1996, and
   was not able to meet these covenants subsequently.  The
   lender's remedies under  such a default included the right to
   demand repayment of the outstanding loan and interest due.

H. No income tax benefits were provided on the losses incurred in
   the nine month periods ended March 31, 1997 and March 31, 1996
   because realization of such benefits is not reasonably assured.

   Net operating loss carryforwards available to offset future
   taxable income and thereby reduce income taxes payable in the
   future are approximately $48 million, including losses for
   financial reporting purposes which have not yet been reported
   for income tax reporting purposes. 


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS


FINANCIAL CONDITION

Sale of Operating Assets.  The Company entered into a nonbinding
letter of intent dated August 30, 1996 to sell to Mazel Stores,
Inc. ("Mazel") the inventory and related intellectual property
associated with its Powerhouse (Replenishment) business, and
pending the approval of its shareholders, to also sell the
inventory and intellectual property related to its Promotional
business.  A binding Asset Purchase Agreement (subject to
shareholder approval with regard to the Promotional assets) was
signed on October 18, 1996.  The Powerhouse-related assets were
then sold to Mazel.

The Company's Promotional-related assets were to be sold to Mazel
upon satisfaction of various conditions, including shareholder
approval.  Unanticipated delays in satisfying those conditions of
closing resulted in the delay of the sale of the Promotional
assets.  The Company expected the process of obtaining shareholder
approval to be completed in December 1996 or early January 1997.
The Company was not able to obtain timely approval to distribute
the proxy statement to solicit such shareholder approval.  The sale
of the Promotional-related assets was delayed beyond the time
provided for in the Company's agreement with Mazel, and beyond the
time expected by Foothill.  Foothill exercised its rights and
remedies under the Amended and Restated Loan and Security Agreement
with the Company, and sold the Promotional-related assets to Mazel
in a private foreclosure sale on February 12, 1997.

The proceeds of the sale to Mazel were $1.6 million, including
$400,000 related to the sale of the Powerhouse assets in October,
and $1.2 million related to the foreclosure sale of the Promotional
assets in February 1997.   This resulted in a loss to the Company
of $900,000, representing the difference between the proceeds and
the net book value of the assets sold.  The loss was previously
recorded in the Company's year-end financial statements as of June
30, 1996.   Proceeds were used to repay in its entirety the debt
owed to Foothill under the Company's credit agreement, and
transaction related costs.

The assets sold to Mazel by the Company and Foothill represented
substantially all of the operating assets employed in the Company's
business.  Trade accounts receivable were retained, as were 
non-operating notes receivable and rights to future payments from prior
sales of the Company's headquarters facility and certain business
units.  The  Company also retained its substantial income tax net
operating loss carryforwards.

Acquisition of Operating Business.  After signing the letter of
intent with Mazel, the Company continued to actively explore other
strategic options available to it, including business combinations
with other operating businesses in order to continue as an
operating concern and preserve all or a portion of its income tax
net operating loss carryforwards.  The Company received indications
of interest from various third parties for a business combination
of this type, and engaged in specific discussions relating to such
a transaction with these interested parties. Such discussions led
to the signing of a nonbinding letter of intent to acquire General
Vision Services, Inc. ("GVS"), a direct and third-party provider of
retail vision services.  GVS operates primarily in the New York
City metropolitan area, as well as elsewhere in New York and
surrounding states, and in Florida.  GVS operates from 104
locations, including 23 owned locations.  GVS also provides retail
hearing management services.

The terms of the merger call for the Company to issue approximately
3,700,000 shares of its Common Stock and approximately 4,000,000
shares of a new Class B Redeemable Preferred Stock with a par value
of $1 per share, in exchange for 100% of the capital stock of GVS.
The shares to be issued by the Company would result in the current
shareholders of GVS owning a 40% equity interest in the Company
after the proposed merger, and the pre-merger Action Industries,
Inc. shareholders retaining 60%, prior to the further dilution, if
any, which may result from the private financing discussed below
and incentive stock options to be granted to key employees of GVS
based upon future operating performance.

The Company currently has a federal income tax net operating loss
carryforward ("NOL") of approximately $48 million, which can be used
to offset future taxable income, if any.  There can be no assurance
that the NOL will be preserved if the proposed merger with GVS is
consummated, nor that the NOL can be utilized in part or in full.
If fully utilized to offset future taxable income of the Company
after the proposed merger, however, the NOL could offset future
federal income taxes in excess of $15 million, based on current
rates.

The proposed merger is subject to a number of closing conditions,
including the consummation of a proposed private placement
financing transaction, the maximum gross proceeds of which are
expected to be approximately $3,300,000.  After transaction costs
estimated to be approximately $440,000, $2,000,000 of the proceeds
will be loaned to GVS prior to the consummation of the proposed
merger.  The Company is currently considering increasing the
maximum to $4,000,000.  If such increase is authorized,
substantially all of the increase in the net proceeds will be added
to the loan to GVS. The remainder of the proceeds will be utilized
to pay outstanding liabilities and for ongoing expenses.  The
securities to be issued in the proposed private financing
transaction will not be registered with the Securities Exchange
Commission and may not be offered or sold in the United States
without registration or an applicable exemption from registration.
The proposed merger is also subject to the execution of a
definitive merger agreement and to the approval of the current
shareholders of both the Company and GVS.  The process of obtaining
such approval is expected to take 120 days or more.  The letter of
intent was originally subject to the retention of the Company's
American Stock Exchange listing, however, that condition has been
waived.

The American Stock Exchange ("AMEX") halted trading in the Company's
Common Stock on October 21, 1996.  The AMEX has determined to
delist the Company's Common Stock, but has granted a brief period
for the Company to effect an acquisition to satisfy the criteria
for AMEX listing.  The proposed merger with GVS may or may not
result in Action qualifying for AMEX listing.  There can be no
assurance that the listing will be maintained.

In connection with the foreclosure sale by Foothill, the Company's
working capital credit agreement was terminated on February 12,
1997.  The ability of the Company to repay its existing obligations
and to continue in existence until the merger discussed in the
preceding paragraphs can be consummated, is dependent on the
realization of the remaining assets and the proceeds of the private
placement financing, as well as the ability to coordinate the
timing of payment of the obligations with cash receipts.

The events which have led to the decision to sell the current
operations are described in the following paragraphs.

Organization and Business.  The organization and business of Action
Industries, Inc. and its Subsidiaries (collectively, the "Company")
have undergone significant changes beginning in fiscal 1990 and
continuing through fiscal 1996 and into fiscal 1997 in connection
with a major restructuring effort and the Company's response to
declining sales.

The Company experienced declining sales in its traditional
promotional business each year since 1989.  Net sales were $134.2
million in 1989, had declined to $84.1 million by 1992, and had
declined further to $30.2 by 1996.  The Company  implemented a
restructuring plan in 1990 including various activities  intended
to return the Company to sales growth or stability and
profitability.  The Company focused on its core business and sold
or eliminated those noncore business units and assets which were
not profitable or were not consistent with those objectives.
Almost continuous downsizing efforts were made over the years since
1990 to reduce merchandise inventories and the Company's reliance
on working capital borrowings, and to reduce personnel and other
operating costs in order to compensate for the decline in sales.
The strategy also encompassed reduction of low margin business,
including reduction of guaranteed sale business, which contributed
to the decline in sales.  While progress was made initially and at
other times over the years, the Company was not able to make
sufficient progress overall to improve or even maintain its
position in the retail marketplace.

The historical decline in sales was the result of many factors,
including a changing retail marketplace, the increasing complexity
of the promotional business itself, and strategic decisions to exit
or downsize unprofitable, higher risk product lines.

During fiscal 1996 continued declining sales and increasing
operating losses resulted in the Company aggressively accelerating
its inventory reduction plan, further downsizing its operating
infrastructure, and  the assessment that significant improvements
in sales and profitability were necessary in order to provide
sufficient liquidity to continue to operate the business.

In response to this assessment, the Company engaged Parker/Hunter,
an investment banking firm to assist in identifying, analyzing and
pursuing possible strategic alternatives for potential business
combinations involving substantially all of the business, all of
its operating assets or the capital stock of the Company.

Working with its advisors, the Company was unable to attract a
source of additional debt and/or equity capital.  A credible
forecast showing improved future operating results could not be
developed, given the Company's sales and profitability prospects.
Upon this determination that there was little or no possibility of
raising the additional capital necessary to finance a turnaround or
further restructuring of the business, a comprehensive search for
purchase and/or merger candidates interested in the Company's
common stock, all of its assets, or its business in its entirety
was undertaken.  This was also unsuccessful for the same reasons.
Parker/Hunter located the opportunity to sell the Company's
inventory and intangible assets related to the operation of the
business to Mazel.  The opportunity for the sale to Mazel was the
only alternative to a liquidation of the business, and was
considered preferable to a liquidation of the business in terms of
the expected proceeds on the sale of the assets, and the ability to
maximize the value of the realization of the other assets not
involved in the sale.

These issues led to the Company's decision to sell the inventory
and other assets of its Powerhouse (Replenishment) business and its
Promotional business.  Substantial doubt existed as to the ability
of the Company to continue to exist as a going concern, unless a
business combination which would provide additional capital could
be accomplished on a timely basis.

In fiscal 1997 the decline in sales continued, principally due to
the Company's plan to sell its Powerhouse and Promotional
businesses, and the inability to purchase additional merchandise
for sale as a result of the Company's constrained capital
resources.  Net sales decreased $19.1 million (78%) in the nine
month period ended March 31, 1997, as compared to the prior year.

In fiscal year 1996 the Company agreed in principle to terminate
the lease on its headquarters office/warehouse facility (where it
had been the sole tenant) and to enter into a new lease as a tenant
for significantly reduced space in this facility in the form of
office space only.  The Company operated its business exclusively
from public warehouses beginning in February of 1996.  A new
operating lease arrangement for the facility was signed in October
1996.  The new lease eliminated the Company's substantial
commitment under the prior arrangement (annual rent of $1.9
million), which materially reduced (but did not eliminate) the
Company's current and future occupancy costs. The new lease
requires minimum annual rental payments of $100,000 for the five
year period beginning in March of 1997.

The Company and its landlord are actively seeking prospective
tenants to relieve the Company of some or all of its obligations
under the current lease.  The note receivable discussed below
accrues interest beginning in March of 1999, at which time the
Company will receive annual interest of $138,000, which may be
offset against the rental obligation. In addition, the new lease
arrangements are expected to provide the Company's landlord in the
facility with the ability to refinance or resell the property in
the future, such that the Company could realize some or all of the
$2.3 million reduced principal portion of what was originally a
$3.5 million note receivable due to the Company from its
sale/leaseback of the facility in 1991.  The note has been recorded
in the financial statements along with a valuation allowance of
$2.3 million, resulting in a net recoverable amount of zero.  This
is because the note does not bear interest until 1999 and the
Company's ability to realize some or all of the value of the note
is dependent on whether or not the landlord can sell or refinance
the property in sufficient amount to satisfy the first mortgage on
the property, which has priority over the Company's note
receivable.  The Company expects to be able to negotiate the
utilization of part or all of its interest in the zero net book
value note receivable in settlement of certain of its balance sheet
liabilities.


LIQUIDITY AND CAPITAL RESOURCES

The major sources of cash during the first nine months of the 1997
fiscal year were the sale of remaining inventories, including the
sale to Mazel, and collections on accounts receivable.  Operating
losses and repayment of notes payable and other current obligations
were the primary uses of cash.  Working capital at March 31, 1997
was a deficit of $778,000, decreased from positive working capital
of $436,000 at June 30, 1996, largely related to the lower level of
sales in the current year and operating losses.  The Company will
be required to continue to manage the timing of payment of its
obligations to deal with this impaired liquidity.

Cash and cash equivalents were $411,000 at March 31, 1997 as
compared to $78,000 at June 30, 1996 and $59,000 at March 31, 1996.
Cash balances fluctuate daily to meet operating requirements and as
a result of the timing of receipts and disbursements.

Accounts receivable of $937,000 at March 31, 1997 decreased from
$2.8 million at June 30, 1996 and $4.4 million at March 31, 1996 as
a result of decreased  sales in the current fiscal year to date, in
part the result of the completion of the sale of the operating
business in February, 1997.

Remaining Promotional inventories were sold in the foreclosure sale
to Mazel in February of 1997.  Inventories on hand had been $1.1
million at December 31, 1996, decreased from $3.9 million at June
30, 1996 as a result of minimal purchasing related to the Company's
capital constraints and the sale of the Powerhouse inventories to
Mazel.  Inventories decreased from $9.6 million at March 31, 1996
due to the Company's aggressive inventory reduction efforts in
light of its capital constraints, and inventory adjustments and
writeoffs related to the sale of the inventories and the sale of
the Company's operating business.

Aggregate borrowings (long-term debt and notes payable) decreased
from $10.5 million at March 31, 1996 to $3.2 million at June 30,
1996 and $115,000 at March 31, 1997.  This was the  result of the
elimination of the sale/leaseback obligation upon finalizing the
negotiations of the new lease, and the payoff of the Company's
short-term borrowings under its credit agreement in connection with
the February 12, 1997 foreclosure sale of inventories by Foothill.
Borrowings were repaid with cash generated from the sale of
inventories and collection of receivables, net of cash used to fund
operating losses incurred.

In connection with the foreclosure sale by Foothill, the Company's
credit agreement was terminated as of February 12, 1997.  Interest
had been payable at 3.5% over the prime rate of interest.

The Company did not meet the requirements under the restrictive
covenants of the credit agreement as of December 31, 1996, and was
not able to meet those covenants subsequently.  The lender's
remedies under such a default included the right to demand
repayment of the outstanding loan and interest due.

As indicated above, the Company's working capital credit agreement
was terminated in February, 1997.  The ability of the Company to
repay its existing obligations and to continue in existence until
the merger discussed above can be consummated, is dependent on the
realization of the remaining assets and the proceeds of the private
placement financing, as well as the ability to coordinate the
timing of payment of the obligations with cash receipts.

The Company suspended current payments under certain long-term
severance arrangements with former employees in November 1996. The
former employees have consented to the suspension of payments
pending negotiations of settlement of the amounts due.  The Company
is negotiating the terms of these arrangements and certain other
assets and liabilities in an effort to improve its impaired
liquidity.  Unless the proposed merger discussed above can be
completed on a timely basis, it is unlikely that the Company's
capital resources will be sufficient to meet its cash needs, in
which case material adverse consequences may result.

The Company made no capital expenditures in the nine month period
ended March 31, 1997.  No capital expenditures are planned.


RESULTS OF OPERATIONS

Third Quarter Fiscal 1997 Compared with Third Quarter Fiscal 1996

Net Sales.  There were no sales during the third quarter ended
March 31, 1997 as a result of the sale of the operating business to
Mazel.  Net sales in the prior year third quarter ended March 31,
1996 were $5,455,000.

Following is a breakdown of net sales by type of program:
<TABLE>
<CAPTION>
                                        NET SALES
                                   Third Quarter Ended
                               --------------------------
                                March             March             Increase
                               31, 1997          31, 1996          (Decrease)
                               --------          --------          ----------
<S>                            <C>              <C>               <C>
Dollar Days                    $  -0-           $3,944,000        $(3,944,000)
Replenishment                     -0-            1,465,000         (1,465,000)
                               --------         ----------        ------------
Core Promotional Business         -0-            5,409,000         (5,409,000)

Gift and Other                    -0-               46,000            (46,000)
                               --------         ----------        ------------
                               $  -0-           $5,455,000        $(5,455,000)
                               ========         ==========        ============
</TABLE>

Cost of Products Sold and Gross Profit Margins. Gross profit
margins were 9.5% in the third quarter ended March 31, 1996.
Margins decreased from the previous year principally due to higher
than anticipated returns on prior period guaranteed sales.  Also,
the Company sold certain merchandise at reduced prices and
experienced increased display costs per sales dollar due to a
decrease in the value of merchandise included per display fixture.

Operating Expenses.  Operating expenses decreased from $2,438,000
(45% of sales) in the fiscal 1996 third quarter to $561,000 in
fiscal 1997.  The decrease in costs was primarily the result of the
sale of the operating business and the Company's continuing cost
reduction efforts.

Interest Expense.  The decrease of $349,000 (84%) was due to
elimination of the sale/leaseback obligation and the February 1997
payoff of short-term borrowings at the termination of the Company's
credit agreement.

Other Income (Expense), Net.  Other income of $365,000 in the third
quarter of fiscal 1997 included adjustments for improved accounts
receivable collections of approximately $318,000 and other
miscellaneous items.  The prior year other expense amount of
$29,000 was comprised of miscellaneous items.

Loss Before Income Taxes.  The third quarter loss decreased from
$2,365,000 in fiscal 1996 to $263,000 in fiscal 1997.  The
improvement of $2,102,000 reflects the combined effect of all the
above.

Provision for Income Taxes.  No income tax benefits were provided
on the losses in the third quarter of fiscal 1997 and 1996 because
realization of such benefits cannot be reasonably assured.  Net
operating loss carryforwards available to offset future taxable
income and thereby reduce future income taxes payable are
approximately $48 million, including losses for financial reporting
purposes which have not yet been reported for income tax reporting
purposes.

Net Loss.  The decrease of $2,102,000 reflects the combined effect
of all of the above.


Nine Month Period of Fiscal 1997 Compared with Nine Month Period of
Fiscal 1996

Net Sales.   Aggregate net sales for the period of nine months
ended March 31, 1997 were $5,424,000, a decrease of $19,110,000
(78%) compared to $24,534,000 in the prior year.

The decline in sales is primarily the result of the sale of the
Powerhouse business on October 18, 1996 and the Promotional
business on February 12, 1997, and limitations on purchases of
additional merchandise for sale in fiscal year 1997, as a result of
the Company's constrained capital resources.

Following is a comparison of net sales by type of program:
<TABLE>
<CAPTION>
                                        NET SALES
                                  Nine Month Period Ended
                                --------------------------
                                 March             March            Increase
                                31, 1997          31, 1996         (Decrease)
                                --------          --------         ----------
<S>                            <C>              <C>              <C>
Dollar Days                    $3,150,000       $16,875,000      $(13,725,000)
Replenishment                   1,436,000         5,326,000        (3,890,000)
                               ----------       -----------      -------------
Core Promotional Business       4,586,000        22,201,000       (17,615,000)

Gift and Other                    838,000         2,333,000        (1,495,000)
                               ----------       -----------      -------------
                               $5,424,000       $24,534,000      $(19,110,000)
                               ==========       ===========      =============
</TABLE>

Cost of Products Sold and Gross Profit Margins.  Gross profit
margins (as a percentage of sales) increased from 17% in fiscal
1996 to 33% in the current year.  The increase was principally due
to lower levels of guaranteed sales and returns on guaranteed sales
in the nine month year to date period of fiscal 1997 and the sale
in fiscal year 1997 of inventories which had been written down or
written off as of June 30, 1996.

Operating Expenses.  Operating expenses decreased from $7,836,000
(32% of sales) in the nine month period of fiscal 1996 to
$4,006,000 (74% of sales) in the nine month period of fiscal 1997.
The decrease in costs was primarily the result of the Company's
continuing cost reduction efforts.  The increase in costs as a
percentage of net sales is due to the greater impact of fixed and
indirect costs on the lower level of sales.  These include legal
and other corporate costs, as well as the cost of the Company's
merchandising and distribution operations.

Interest Expense.  The decrease of $1,168,000 (72%) was due to
elimination of the sale/leaseback obligation and lower short-term
borrowing levels, including the payoff of short-term borrowings at
the termination of the Company's credit agreement, net of the
impact of higher effective interest rates and other borrowing costs
in the current year.

Other Income (Expense), Net.  Other income of $855,000 in the first
nine months of fiscal 1997 included recovery of sales and use taxes
paid in prior years ($671,000, including interest), adjustments for
improved accounts receivable collections of approximately $318,000,
and miscellaneous items, net of charges in connection with the
settlement of an arbitration award to a former sales agent
($175,000).  The prior year other income amount of $204,000 was
comprised of miscellaneous items.

Loss Before Income Taxes.  The loss for the nine month period ended
in March decreased from $5,038,000 in fiscal 1996 to $1,827,000 in
fiscal 1997.  The improvement of $3,211,000 reflects the combined
effect of all the above.

Provision for Income Taxes.  No income tax benefits were provided
on the losses in the first nine months of fiscal 1997 and 1996
because realization of such benefits cannot be reasonably assured.
Net operating loss carryforwards available to offset future taxable
income and thereby reduce future income taxes payable are
approximately $48 million, including losses for financial reporting
purposes which have not yet been reported for income tax reporting
purposes.

Net Loss.  The decrease of $3,211,000 reflects the combined effect
of all of the above.



PART II.  OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


The following documents are filed as part of this report:


(a)  Exhibits:                                       Page


10.27     Acknowledgement of Default; Waiver;
          and Agreement                                22

10.28     Letter of Intent Re: Acquisition of
          General Vision Services, Inc.                24

10.29     Letter Agreement Re: Binding Effect of
          Letter of Intent Re: Acquisition of
          General Vision Services, Inc.                30

10.30     Letter Agreement Re: Modification to
          Letter of Intent Re: Acquisition of
          General Vision Services, Inc. to delete
          as a closing condition the retention by
          the Company of its listing with the
          American Stock Exchange.                     31


(b)  Reports on Form 8-K:

     The Company filed no reports on Form 8-K during the
     quarter ended March 31, 1997.


SIGNATURES




Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.


                                   ACTION INDUSTRIES, INC.
                                        (Registrant)



Date: May 12, 1997               T. RONALD CASPER
                                 ------------------------------

                                 T. Ronald Casper
                                 Acting President and
                                 Chief Executive Officer


Date: May 12, 1997               KENNETH L. CAMPBELL
                                 ------------------------------
                                 Kenneth L. Campbell
                                 Senior Vice President, Finance
                                 (Principal Financial and
                                   Accounting Officer)