UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                    For the Fiscal Year ended March 31, 1997

              Annual Report pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

                         Commission File Number 1-10955
                         ------------------------------


                       ENVIRONMENTAL ELEMENTS CORPORATION
             (Exact name of registrant as specified in its charter)


           DELAWARE                                     52-1303748
(State or other jurisdiction of
 incorporation or organization)             (I.R.S. Employer Identification No.)

 3700 Koppers St., Baltimore, Maryland                          21227
(Address of Principal Executive Offices)                      (Zip Code)

                                 (410) 368-7000
               Registrant's telephone number, including area code


           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
     Common stock, par value $0.01 per share, New York Stock Exchange, Inc.

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                      None

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 [ ]

Indicate by check mark if the disclosure of delinquent  filers  pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.                                                                   [ ]


The  aggregate  market  value of  Common  Stock  held by  non-affiliates  of the
registrant  as of June 6, 1997 was  approximately  $10.5  million based upon the
closing price of $2.25.  The number of shares  outstanding  of the  registrant's
Common Stock as of June 6, 1997 was 6,967,401.

                       Documents Incorporated by Reference
Portions of the  definitive  Proxy  Statement  relating to  registrant's  Annual
Meeting of Stockholders  to be held July 31, 1997 are  incorporated by reference
in Part III of this Form  10-K,  with the  exception  of  portions  that are not
incorporated by reference by their terms.

Portions of the  registrant's  Annual Report to Stockholders  for the year ended
March 31, 1997 are  incorporated by reference in Parts I, II and IV of this Form
10-K.


<PAGE>



                                     PART I

ITEM 1.  BUSINESS
General
    Environmental  Elements  Corporation  (the  "Company")  designs and supplies
proprietary, large-scale,  custom-engineered air pollution control systems which
enable  customers to operate  their  facilities in  compliance  with  regulatory
standards  limiting  particulate and gaseous  emissions.  The Company's business
strategy   is  to  provide  a  broad  array  of   proprietary   state-of-the-art
technologies to traditionally  intensive users of air pollution control systems,
including two primary  customer  groups -- electric  utilities and private power
generators and pulp and paper  producers-- in addition to municipal  solid waste
facilities and other industrial customers.
    The Company has historically concentrated on systems that reduce particulate
emissions  from   combustion   exhaust   streams,   specifically   electrostatic
precipitators  and fabric filter systems (also known as baghouses).  For each of
these product lines, the Company has developed  proprietary designs for durable,
cost-effective systems. The Company has developed,  acquired distribution rights
for, or licensed  from  others,  dry and semi-dry  scrubbers  for use in gaseous
emissions control.
    The Company  enters into  contracts for original  equipment  systems,  major
rehabilitation  and  rebuilding  services,  and ongoing  maintenance  and repair
services.  The Company offers a range of systems and technologies to address the
air  pollution  control  needs of customers in its selected  markets.  While the
Company,  in certain  instances,  may provide a combination of its systems as an
integrated   pollution  control  solution,   its  customers  typically  purchase
individual systems which, in certain instances,  may operate in conjunction with
other systems  supplied by others.  The Company's  contracts  with its customers
generally  require it to design and supply an air pollution control device which
removes  specified  amounts of gaseous or  particulate  matter  from  combustion
exhaust  gases.  The  Company  is  generally  contractually  responsible  to its
customers  for all phases of the design,  fabrication,  start-up and testing and
(if included in the scope of the Company's  contract) field  construction of its
systems. The Company's successful  completion of its contractual  obligations is
generally  determined  by a performance  test or tests of the Company's  systems
which are generally conducted by a customer-selected  independent testing agency
which verifies that the system is removing  gaseous or particulate  emissions in
amounts  required by the  contract.  In  connection  with the  expansion  of the
Company's  technological offerings and a shift in the Company's mix of business,
additional  measures of performance  may be afforded or required.  Such measures
may include  availability or reliability  guarantees and guarantees with respect
to the  consumption  of power,  reagent,  water or other  components of variable
operating costs.
    The Company  generally  does not  manufacture  or  fabricate  its systems or
engage in field construction activities utilizing its own employees,  other than
field supervisory personnel.  The Company fabricates,  through its joint venture
production  facility in the People's Republic of China,  precipitator  internals
for use by the  Company's  licensee  in China and for our use in other  selected
markets.  In fiscal 1996, the Company elected to discontinue  the  manufacturing
and certain  direct hire  construction  activities  previously  conducted by its
aftermarket  subsidiary,   Environmental  Elements  Services  Corporation,   and
relocated  the  aftermarket  business to the Company's  Baltimore  headquarters,
where it now conducts such business directly.
    The Company performs process engineering for its systems,  including but not
limited to, the determination of the size,  geometry and mechanical,  electrical
and  structural  characteristics  of the device  needed to meet its  contractual
obligations for gaseous or particulate  removal,  and performs the detail design
of and  develops  specifications  for all  structural,  electrical,  mechanical,
piping,  and  chemical

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components   necessary  to  make  the  system.  The  Company  purchases  various
components  consisting of both off-the-shelf  items and items made to its design
and  specifications by vendors;  enters into subcontracts for field construction
(if included in the scope of the Company's contract),  which it supervises;  and
manages  all  technical  and  commercial  aspects  of  the  performance  of  its
contracts, including the start-up of its systems.
    In general,  the Company's original equipment  contracts vary in length from
12 to 36  months  and  require  performance  of a  particular  project  within a
specified time frame.  Almost all of the Company's contracts are undertaken on a
fixed price  basis.  Fixed price  contracts  require the Company to bear certain
risks of cost overruns,  and from time to time the Company experiences a loss in
connection with a contract.
    The  Company  and its  predecessor  have been  engaged in the air  pollution
control business since 1946.
Product Lines and Services
    The  Company  supplies  electrostatic   precipitators   primarily  to  power
generation and pulp and paper customers.  An electrostatic  precipitator removes
particulate matter from combustion exhaust streams. The particulate in the gases
is electrically charged as it passes positively charged high-voltage  electrodes
and is then attracted to oppositely  charged  collecting  plates.  The collected
material is  periodically  removed from the plates by rapping or vibration.  The
Company's  precipitators  include computerized power control systems which allow
the precipitators to respond automatically to changing operating conditions. The
Company's installed base of electrostatic precipitators is one of the largest in
North America.
    The Company  supplies a wide range of fabric  filter  systems to control and
recover  dust and other  particulates  in a variety  of utility  and  industrial
applications  for  power-generation,  pulp and  paper,  incineration,  and other
industrial customers.
    The  Company  offers  state-of-the-art  semi-dry  scrubbing  systems for the
reduction of acid gases such as sulfur oxides and hydrogen chloride emissions. A
semi-dry scrubbing system removes  objectionable  gaseous pollutants and certain
heavy metals from exhaust  emissions by causing a chemical  reaction,  typically
using  lime  as a  reagent,  which  transforms  the  pollutants  into a  readily
disposable particulate.  The Company offers its semi-dry scrubbers primarily for
municipal solid waste incineration facilities.
    The Company  offers a fluidized  bed flue gas  desulfurization  dry reactor,
(known   as   a   circulating   dry  scrubber  or  "CDS"(R)  which  has  special
application to both the power generation and municipal solid waste  incineration
acid rain  retrofit  markets.  During  fiscal 1996 and fiscal 1997,  the Company
successfully   started  up  its  first  two   CDS(R)  systems  and  successfully
completed its  performance obligations.  The CDS(R) technology  is licensed from
Lurgi GmbH.
    The Company supplies original equipment  systems,  the majority of which are
replacements  of aged  existing  air  pollution  control  systems.  In addition,
because of the extreme  conditions  under which air  pollution  control  systems
operate,  maintenance,  repair,  and  rebuilding  of these systems is an ongoing
requirement  and  creates  additional  demand  for the  Company's  services  and
products.  The  Company  engages in  complete  and  partial  rehabilitation  and
rebuilding  of  air  pollution  control  systems,  often  involving  design  and
installation  work,  and also provides  ongoing  maintenance  services and spare
parts on a routine or  emergency-response  basis.  Such services may include the
provision  of  rebuild  project  materials,  construction  services,  and  field
engineering services including  inspection,  testing,  rebuild supervision,  and
equipment performance evaluation services.
    In fiscal 1997, the Company entered into its first alliance agreement with a
customer  under  which the  Company  provides  dedicated  engineering  and field
service personnel who will perform  inspection,  engage in  problem-solving  and
material planning, and make parts recommendations on a system-wide basis, with

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a goal of reducing our customer's total life cycle costs. The Company intends to
continue to focus on  opportunities  for similar  alliances with other important
customers.
Industry Demand Factors
    The market for air pollution  control  systems and  technologies is directly
dependent upon governmental regulation and enforcement of air quality standards.
During the past two decades,  federal,  state,  and municipal  governments  have
recognized that  contamination  of the air poses  significant  threats to public
health and safety, and, in response, have enacted legislation designed to reduce
or eliminate a variety of air pollutants. The Company believes that governmental
regulation  of air  pollution and its sources will continue to increase and that
it is well positioned to assist customers in its targeted markets to solve their
air pollution control problems.
    Given the existence of stringent domestic air emissions standards,  domestic
demand for the  Company's  systems and  technologies  generally  arises from the
following principle sources: need for replacement, rehabilitation and rebuilding
of air pollution  control  systems on aging  electric  utilities and on pulp and
paper  manufacturing  facilities;  construction  of  new  electricity-generating
facilities,  particularly  those operated under cogeneration and "private power"
arrangements;  continued expansion of pulp and paper manufacturing capacity; and
construction of new municipal solid waste incineration  facilities.  Demand from
any one of these sources may vary  significantly  from year to year depending on
economic, regulatory, and other factors including industry cycles.
    Emerging international demand for the Company's products is driven primarily
by a combination of electric generation and other infrastructure improvement and
the  passage  or  enforcement  of  existing  regulations  limiting  gaseous  and
particulate emissions in developing countries.
Markets Served
    The Company has historically followed a strategy of limiting its business to
systems and  technologies  for air  pollution  control and focusing  within that
business on selected markets in which the Company believes it can build upon its
reputation for expertise and reliability. The Company's current targeted markets
are electric  utilities and private power generators,  pulp and paper producers,
developers of municipal solid waste incineration  facilities,  and certain other
process industries  throughout the United States,  Canada, and selected areas of
central  Europe,   Asia  and  the  Pacific  Rim.  The  Company  started  up  two
precipitator  projects  in Poland  in  fiscal  1996,  and in  fiscal  1997,  the
Company's  baghouse and spray dryer emissions control system for a municipal and
medical waste  incinerator in the United Kingdom  commenced  operations.  In its
1997 fiscal year,  the Company  received and commenced  execution of an award to
supply reverse air fabric filter  emissions  systems at a municipal  solid waste
incineration  plant in Korea.  The  Company's  precipitator  technology  will be
installed in a power plant in China, through a contract awarded to the Company's
licensee in fiscal 1997.
    Currently,  the Company offers a select line of systems and  technologies to
meet the various needs of electric utilities and other electric power generators
for control of air  emissions  at new and  existing  facilities.  The  Company's
principal product sold to the  electric-generating  market  is its  Rigitrode(R)
electrostatic   precipitator,   which  combines  the  reliability  traditionally
associated  with  European  heavy-duty,   bottom-rapped  designs  and  the  cost
efficiency   associated  with  top-rapped  American  models.  (In  a  top-rapped
precipitator,  the force  used to  dislodge  dust from the  collection  plate is
applied to the top of the plate.) The Company is bidding,  and will  continue to
bid, a number of large contract opportunities in the utility market.
    The Company  also offers to the  utility  industry a range of fabric  filter
systems to control particulate emissions.  In recent years, the Company has been
particularly  successful in marketing its fabric filter systems to private power
projects  which either  cogenerate  electricity  and thermal  energy or generate
electricity  alone for sale to utilities  and in fiscal 1995  started-up a pulse
jet fabric  filter  system in the utility  market . In addition,  in response to
anticipated  substantial  demand for solutions to the

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requirements  of acid rain  legislation,  the Company,  under license from Lurgi
GmbH, has introduced a state-of-the-art CDS(R) system for the control  of sulfur
oxide  emissions.  The  Company  also  offers a  proprietary semi-dry  scrubbing
system using rotary atomizer  technology  which the Company believes  offers the
advantages of lighter  weight,  ease of  maintenance, and economy  of  operation
that are particularly significant to smaller electricity-generating facilities.
    The Company has installed over 500  electrostatic  precipitators at pulp and
paper plants in the United States and Canada. The Company attributes its success
in this market to the  competitive advantages  of its  Rigitrode(R) precipitator
and to its reputation for reliability  and service.  The Company has established
long-standing  relationships,  in many cases  covering more than 25 years,  with
leading firms in the industry.
    Municipal  solid waste and private  waste-to-energy  facilities,  as well as
hazardous  waste  incineration  plants,  must comply with stringent  federal and
state  environmental  standards.  Existing  regulations  require new solid waste
incineration  facilities  to control both sulfur  oxides and  hydrogen  chloride
emissions.  Such systems  generally  include an acid gas  scrubbing  tower and a
modular baghouse for collection of particulates. In fiscal 1997, we successfully
placed into  operation  our  emissions  system on a municipal  and medical waste
incinerator  in England  and a  waste-to-energy  facility  in New York.  Also in
fiscal 1997, we were awarded a contract to retrofit a  waste-to-energy  facility
in Georgia. The Company has identified the incineration market as one which will
provide an opportunity to market its semi-dry scrubbing systems in the future.
    In addition to serving the principal  markets  described  above, the Company
sells its systems to  customers  in  petroleum  refining  and certain  materials
processing industries,  including mining, metals conversion,  cement production,
and steel manufacturing.  The Company's sales in these markets consist primarily
of wet scrubbers and electrostatic precipitators.  The Company believes  that it
is competitive in these other markets.
Bookings and Backlog Information
    The  information  required  by this  item is  contained  under  the  caption
"Bookings  and  Backlog"  in  "Management's  Discussion  and  Analysis"  in  the
Company's 1997 Annual Report to Shareholders.
Research and Development
    The Company has an ongoing program for development and  commercialization of
new air pollution control technologies and enhancement of existing technologies.
The Company  spent  approximately  $139,000,  $347,000,  and $512,000 on product
development  during  fiscal  1997,  1996,  and 1995,  respectively.  Among other
important product development  activities,  the Company has developed wide plate
spacing precipitators and has introduced them into the utility market.
    The Company has recently  advanced its research and  development  operations
beyond  its  historical  product  development   activities  to  funded  research
programs. The Company is developing,  and has applied for patents on an advanced
technology  for the  control of  sub-micron  sized  particulate  emissions  from
utility and  industrial  boilers in order to respond to  increasingly  stringent
regulations for fine particulate emissions.
Patents
    The  Company  owns  or  has  the  rights  to a  number  of  patents,  patent
applications,  and other proprietary technologies which are important to various
aspects of its business.  While these patents are not considered material to the
conduct of the  Company's  business as a whole,  the  Company  views its pending
patent applications with respect to its fine particulate agglomerator technology
as  potentially  providing  the  Company  with a  significant  advantage  in the
marketing of its precipitators.  Generally,  however,  the Company believes that
its ability to compete in the air pollution  control industry depends  primarily
on  its  engineering  and  technological   expertise,   rather  than  on  patent
protection.

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Sales and Marketing
    The Company's  sales and marketing  efforts are organized along market lines
-- power industry, industrial, and aftermarket. The Company has integrated field
service  resources of the original  equipment  and  aftermarket  divisions  into
regional  sales  representation  for each of its  markets,  allowing it to build
long-term customer relationships.  The sales efforts are technical in nature and
involve its sales and marketing professionals, supported by the Company's senior
technical and management  professionals.  A significant portion of the Company's
sales are made  through  architectural  and  engineering  firms,  which  play an
important role in the preparation of  specifications  for air pollution  control
systems.  The  Company's  sales and  marketing  group  consists of industry  and
regional sales managers and sales representatives.
    Although the Company seeks to obtain repeat business from its customers,  it
does not depend on any single  customer to maintain  its level of activity  from
year to year. Three customers accounted for 33% of the Company's sales in fiscal
1997; one customer  accounted for 21% of the Company's sales in fiscal 1996; and
another  customer  accounted for 10% of the Company's sales in fiscal year 1995.
At fiscal year end 1997,  however,  approximately 63% of the Company's  accounts
and  retainages  receivable  were due from  companies  within the pulp and paper
industry  and  approximately  13% were  due  from  companies  within  the  power
industry.
    All of the Company's  foreign sales were  generated  from the United States.
Export  sales were less than 10% of  consolidated  sales in fiscal  years  1997,
1996,  and  1995.  In  order  to  take  advantage  of  certain  overseas  market
opportunities,  the Company has established  licensing agreements with companies
in Brazil and the People's Republic of China under which the Company is entitled
to royalties based upon sales in the licensed territory. These agreements do not
currently represent a material source of income. In addition to the license, the
Company has established,  with its Chinese licensee,  a production joint venture
in China  which will  produce  certain  precipitator  components  for use by the
Company and its licensee.
Suppliers and Subcontractors
    Like  other  companies  in its  industry,  the  Company  relies  on  outside
suppliers,  manufacturers  and  fabricators  to supply parts and  components  in
accordance with the Company's specifications. In addition, in cases in which the
Company's scope of work includes installation of equipment,  the Company selects
and  supervises  subcontractors  for this work.  To date,  the  Company  has not
experienced  difficulties either in obtaining fabricated components incorporated
in its  systems  or in  obtaining  qualified  subcontractors.  It has  been  the
Company's  recent  experience,  however,  that in  times of  recession  or other
industry  downturns,  the Company is more likely to be faced with  subcontractor
performance  problems  and  construction  claims  asserted  by  certain  of  its
subcontractors. In response, the Company is required to more aggressively manage
its  construction  activities and contracts,  and, in some cases,  be subject to
unanticipated costs.
    The Company's  vendor  sources for various  components,  materials and parts
used in its systems,  including control  switches,  electrical  components,  and
other  components,  include a substantial  number of firms. The Company does not
depend on any one of these  vendors to a material  extent,  and in any event the
Company  believes that  alternative  vendors would be available if needed.  With
respect  to  fabricators,   the  Company  has  satisfactory  relationships  with
fabricators throughout the United States and Canada.  Similarly, with respect to
installation  subcontractors,  the Company has satisfactory relations with firms
throughout  the  United  States  and  Canada.  Based on the  number of  vendors,
fabricators, and subcontractors and the availability of alternative sources, the
Company  does not believe  that the loss of its  relationship  with any one firm
would have a material adverse effect on its business.
    The Company  operates under an agreement  with Teco  Industries of Maryland,
Inc., an equipment  manufacturer,  pursuant to which the manufacturer  meets the
Company's domestic requirements for

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production of certain internal components of electrostatic  precipitators (i.e.,
electrodes  and  collecting  plates) at  pre-determined  prices  and terms.  The
agreement expires on June 30, 1997. The loss of this supplier, or the supplier's
inability  to  perform,  could  subject  the  Company to a  temporary  delay and
possible cost increases.  The Company does not believe,  however, that such loss
would have a material  adverse effect on the Company  because the Company has at
least  one  other  adequate  source  for  these  components.   The  Company  has
established  relationships  with  one or more  international  sources  for  such
components in connection with international marketing expansion.
Competition
    The Company faces substantial  competition in each of its principal markets.
Some of the  Company's  competitors  are larger and have greater  financial  and
other resources than the Company. The Company competes primarily on the basis of
its engineering and technological expertise and quality of equipment and service
provided.  The Company believes that the cost of entry into most of its markets,
its experience and reputation for reliability and service,  and its knowledge of
the plants and  operations of its  customers are principal  factors that enhance
its ability to compete  effectively for  rehabilitation and rebuild contracts as
well  as  new  installations.   Additionally,  the  Company  believes  that  the
successful  performance of its installed systems is a key factor in dealing with
its  customers,  which  typically  prefer to make  significant  purchases from a
company with a solid performance history.
    Virtually  all  contracts for the  Company's  systems and  technologies  are
obtained through competitive bidding. Customers typically purchase these systems
and technologies after a thorough evaluation of price, service,  experience, and
quality.  Although  price is an  important  factor  and may in some cases be the
governing  factor,  it is not  always  determinative,  and  contracts  are often
awarded on the basis of life cycle costs and/or product reliability.
Regulation
    Significant  environmental  laws have been  enacted  in  response  to public
concern  about the  environment.  These  laws and the  implementing  regulations
affect  nearly  every  industrial  activity.  The need to comply with these laws
creates demand for the Company's  services.  The principal  federal  legislation
that has created a substantial and growing demand for the Company's  systems and
technologies  and  therefore  has the most  significant  effect on the company's
business is the Clean Air Act of 1970,  as amended  (the "Clean Air Act").  This
legislation  requires compliance with ambient air quality standards and empowers
the  Environmental  Protection Agency ("EPA") to establish and enforce limits on
the emission of various pollutants from specific types of facilities. The states
have primary responsibility for implementing these standards and, in some cases,
have adopted standards more stringent than those established by the EPA.
    In 1990,  amendments to the Clean Air Act were adopted which address,  among
other things, the country's acid rain problem by imposing strict controls on the
emissions  of sulfur  oxides  caused by the  combustion  of coal and other solid
fuels. The power generation market is the first to face the compliance standards
set by the  amendments.  Under the  legislation,  coal-burning  power plants are
required to comply with new emissions  standards in two phases. The first phase,
beginning with enactment of the amendments and generally ending in 1995 or 1996,
required  reduced  emissions  levels  leading to full  compliance,  with limited
exceptions, by the end of the second phase in the year 2000.
    In its operations,  the Company is subject to federal,  state and local laws
and  regulations  concerning  environmental,  safety,  occupational  and  health
standards.  Expenditures  required in fiscal 1997 by such laws were not material
to the Company's  business and the Company is not at a competitive  disadvantage
by reason of compliance with such laws.
Bonding and Insurance
    The Company is from time to time required to provide bonds guaranteeing that
it will enter into  contracts as bid,  guaranteeing  performance of its contract
obligations,   and/or   guaranteeing   prompt


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payment of its  suppliers  and  subcontractors.  The  Company's  current  surety
commitment  is, in  management's  opinion,  sufficient  to support the Company's
current levels of bonded business. In addition, the Company has a bank revolving
credit and letter of credit  agreement which provides for issuance of letters of
credit for various purposes, including as substitutes for performance or payment
bonds.
    The Company  currently  maintains  different  types of insurance,  including
comprehensive  liability  and property  coverages.  The Company does not carry a
separate errors and omissions policy,  but limited errors and omissions coverage
is provided under its comprehensive  liability policy.  While a successful claim
or claims in an amount in  excess of the  Company's  insurance  coverage  or for
which there is no coverage (including claims arising out of the provision by the
Company of engineering services without a product) could have a material adverse
effect on the Company, the Company believes that it presently maintains adequate
insurance coverage for its business as presently constituted. To the extent that
the Company  performs or will perform  engineering  only services for customers,
the Company will, to the extent  practicable,  obtain the benefit of contractual
terms which limit or eliminate the exposure which would  otherwise be insured by
an errors and omissions policy.
Employees
    As of March 31, 1997, the Company had 134 full-time  employees,  of whom 121
were engineers and other professionals and technical employees. The Company also
hires  contract  and  other  temporary  personnel  to meet the  requirements  of
particular  contracts,  as well as contract  personnel to carry out construction
supervisory  functions.  The  Company's  professional  staff  includes  chemical
engineers,  electrical  engineers,  mechanical engineers,  civil engineers,  and
computer scientists.  Although the Company depends on professional employees for
performance of its services,  it has not experienced any difficulty in employing
such personnel to satisfy its requirements.  None of the Company's  employees is
represented by a union.  The Company  considers its relations with its employees
to be good.

ITEM 2.  PROPERTIES
    Substantially  all of the Company's  operations,  including  administration,
engineering,  design,  and sales  operations  are  conducted  from its Baltimore
headquarters,  located in a modern office  building with  approximately  100,000
square feet of leased space.  The Company occupies  approximately  50,000 square
feet of this space and subleases a portion of the remaining space. See Note 6 of
the "Notes to  Consolidated  Financial  Statements" in the Company's 1997 Annual
Report to Shareholders,  incorporated by reference herein,  for a description of
the rent and other lease terms.
    The Company  additionally leases  approximately 31,000 square feet of office
and warehouse space in Baltimore, Maryland for its research and development, and
aftermarket operations.
    Shortly  after the close of fiscal 1997,  the Company  sold a 20,000  square
foot office and light manufacturing facility located in Jeffersonville, Indiana,
which was previously  used in its aftermarket  business,  which was relocated to
Baltimore during fiscal 1996.
    In fiscal  1995,  the Company  sold its  privatized  waste  water  treatment
facility in East Aurora, New York, which it previously treated as a discontinued
operation. The Company maintains limited operational responsibility.  See Note 2
of the "Notes of Consolidated Financial Statements" in the Company's 1997 Annual
Report to Shareholders.
    The Company  believes that its existing  facilities are adequate to meet its
current needs and that suitable additional or substitute space will be available
as needed to accommodate any expansion of operations.

                                       8


<PAGE>

ITEM 3.  LEGAL PROCEEDINGS
    The Company is from time to time a party to various legal actions arising in
the  ordinary  course of its  business,  some of which may  involve  claims  for
substantial sums.  Management considers that any liability from pending lawsuits
and  claims  will not have any  material  effect on the  financial  position  or
results of operations of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    There were no matters  submitted  to a vote of security  holders  during the
fourth quarter of fiscal year 1997.

                                       9

<PAGE>


                                     PART II

ITEM5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
    The Company's  Common Stock is traded on the New York Stock  Exchange  under
the symbol "EEC."
    As of June 6, 1997,  there were 248 record  holders of the Company's  Common
Stock. The closing price of the Common Stock on June 6, 1997 was $2.25.
    The  additional  information  required  by  this  item  is  contained  under
"Investor  Information"  on page 25 and in Note 10 of the "Notes to Consolidated
Financial  Statements"  on  page  21 of the  Company's  1997  Annual  Report  to
Shareholders. Such information is incorporated herein by reference to the Annual
Report.

ITEM 6.  SELECTED FINANCIAL DATA
    The  selected  consolidated  financial  data  provided  on  page  23 of  the
Company's 1997 Annual Report to Shareholders  should be read in conjunction with
"Management's Discussion and Analysis" and the Consolidated Financial Statements
and the "Notes to Consolidated  Financial  Statements" included in the Company's
1997 Annual Report to Shareholders.

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
    The information  required by this item is contained on pages 8 through 10 of
the  Company's  1997  Annual  Report  to   Shareholders.   Such  information  is
incorporated herein by reference to the Annual Report.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    The  information  required  by this item is  contained  in the  Consolidated
Financial Statements and Notes to Consolidated Financial Statements appearing on
pages 11 through 21 of the Company's 1997 Annual Report to Shareholders  and the
Quarterly  Financial  Data  appearing  in Note 10 of the "Notes to  Consolidated
Financial  Statements"  appearing on page 21 of the Company's 1997 Annual Report
to  Shareholders.  Such  information is incorporated  herein by reference to the
Annual Report.

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE
    None.

                                       10

<PAGE>


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
    (a) Directors - The information  with respect to Directors  required by this
item is incorporated by reference to the Registrant's 1997 Proxy Statement to be
filed with the Securities and Exchange Commission,  under the headings "Election
of  Directors,"  "Directors  Continuing  in Office,"  and  "Certain  Information
Regarding the Board of Directors and Committees of the Board."
    (b) Executive  Officers -  Information  regarding  executive  offices of the
Company appears in the Company's  definitive proxy statement for the 1997 Annual
Meeting of Stockholders.
    In addition,  the following information is being provided in response to the
requirements  of Item 405 of  Regulation  S-K.  To the  Registrant's  knowledge,
during the fiscal year ended March 31, 1997, all filing requirements  applicable
to officers,  directors,  and greater than 10%  beneficial  owners of the common
shares of the Registrant  under Section 16(a) of the Securities  Exchange Act of
1934, as amended,  were complied with, except that each of Mr. F. Bradford Smith
and Mr. E. H. Verdery, directors and executive officers of the Registrant, filed
one late report relating to one transaction.

ITEM 11.  EXECUTIVE COMPENSATION
    The information required by this item is incorporated herein by reference to
the  Registrant's  1997  Proxy  Statement  to be filed with the  Securities  and
Exchange  Commission,  under the headings  "Executive  Compensation  and Related
Information."

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
    The information required by this item is incorporated herein by reference to
the  Registrant's  1997  Proxy  Statement  to be filed with the  Securities  and
Exchange Commission, under the heading "Security Ownership."

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
       The information required by this item is incorporated herein by reference
to the  Registrant's  1997 Proxy  Statement to be filed with the  Securities and
Exchange  Commission,  under the  heading  "Certain  Relationships  and  Related
Transactions" and under the heading "Employment and Non-Competition Agreements."

                                       11

<PAGE>


                                     PART IV


ITEM 14.  EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as a part of this report:
    1. The  following  consolidated  financial  statements  included in the 1997
Annual Report to Shareholders for the year ended March 31, 1997 are incorporated
herein by reference under Item 8 of this Report:

                                                                  Page Number in
                                                                   Annual Report

         Consolidated Statements of Operations for the years
           ended March 31, 1997, 1996, and 1995                          11
         Consolidated Balance Sheets as of March 31, 1997
           and 1996                                                      12
         Consolidated Statements of Cash Flows for the
           years ended March 31, 1997, 1996, and 1995                    13
         Consolidated Statements of Stockholders' Investment
           as of  March 31, 1997, 1996, and 1995                         14
         Notes to Consolidated Financial Statements                      15-21
         Management's Responsibility for Financial Statements            22
         Report of Independent Public Accountants                        22

                                                                     Page Number
                                                                       in 10-K
    2.  Financial Statement Schedules (included on pages
         S-1 of this Report):
         Report of Independent Public Accountants on Schedules           S-1
         Valuation and Qualifying  Accounts for the years ended
         March 31, 1997, 1996, and 1995 (Schedule II)                    S-2

                                       12

<PAGE>


    All other  schedules  have been omitted,  since the required  information is
included in the consolidated financial statements,  including the notes thereto,
or the circumstances requiring inclusion of such schedules are not present.
    3. Exhibits
       3.1-     Restated   Certificate  of   Incorporation   of  the  Registrant
                (incorporated  by reference to Form S-1  Registration  Statement
                (File No. 33-35802) filed with the Commission on May 25, 1990).

       3.2-     Certificate  of Amendment  of the  Registrant  (incorporated  by
                reference  to Form 10-K  filed with the  Commission  on June 24,
                1991).

       3.3-     Bylaws of the Registrant  (incorporated by reference to Form S-1
                Registration  Statement  (File  No.  33-35802)  filed  with  the
                Commission on May 25, 1990).

       4.1-     Articles  IV,  V, VI,  VIII,  IX,  X and XI of the  Registrant's
                Restated  Certificate of Incorporation,  as amended (included in
                Exhibit 3.1 and Exhibit 3.2).

       4.2-     Articles I, II, V and VII of the  Registrant's  Bylaws (included
                in Exhibit 3.3).

      10.1-     Articles of Lease dated April 15, 1975 between Balkop Properties
                Corp., as landlord, and Koppers Company, Inc., and Assignment of
                Lease dated June 20, 1989 to Registrant, as assignee, and Beazer
                Materials  and  Services,  Inc.,  as assignor  (incorporated  by
                reference to Form S-1 Registration Statement (File No. 33-35802)
                filed with the Commission on May 25, 1990).

      10.2-     The Registrant's  Retirement  Plan, as amended  (incorporated by
                reference  to Form 10-K  filed with the  Commission  on June 28,
                1995).

      10.2(a)-  First  Amendment,  dated December 28, 1995, to the  Registrant's
                Retirement  Plan, as amended  (incorporated by reference to Form
                10-K filed with the Commission on June 26, 1996).

      10.2(b)-  Second  Amendment,  dated December 28, 1995, to the Registrant's
                Retirement  Plan, as amended  (incorporated by reference to Form
                10-K filed with the Commission on June 26, 1996).

      10.3-     The  Registrant's  401(k)  Retirement  Savings  Plan, as amended
                (incorporated by reference to the  Registrant's  Form 10-K filed
                with the Commission on June 28, 1995).

      10.3(a)-  First  Amendment,  dated December 28, 1995, to the  Registrant's
                401(k)  Retirement  Savings  Plan, as amended  (incorporated  by
                reference  to Form 10-K  filed with the  Commission  on June 26,
                1996).

      10.4-     The  Registrant's   Employee  Stock  Option  Plan,  as  amended,
                (incorporated  by reference to Form S-8  Registration  Statement
                (File No.  33-38400)  filed with the  Commission on December 21,
                1990).

      10.5-     Environmental   Elements   Corporation    Supplemental   Pension
                Agreement dated March 1, 1995, between Registrant and Richard E.
                Hug  (incorporated  by  reference  to Form 10-K  filed  with the
                Commission on June 26, 1996).

      10.5(a)-  Environmental   Elements   Corporation    Supplemental   Pension
                Agreement  dated  July 1, 1996  between  Registrant  and John C.
                Nichols, filed herewith.

                                       13

<PAGE>

      10.6-     Revolving  Credit and Letter of Credit  Agreement dated November
                24, 1993 between the Registrant and Mercantile-Safe  Deposit and
                Trust Company (incorporated by reference to Form 10-Q filed with
                the Commission on February 14, 1994).

      10.6(a)-  Waiver and Amendment dated May 26, 1994, to the Revolving Credit
                and Letter of Credit  Agreement  dated November 24, 1993 between
                the  Registrant  and  Mercantile-Safe  Deposit and Trust Company
                (incorporated   by   reference  to  Form  10-K  filed  with  the
                Commission on June 29, 1994).

      10.6(b)-  Extension  Agreement  dated  November 18, 1994 to the  Revolving
                Credit and Letter of Credit  Agreement  dated  November 23, 1993
                between the  Registrant  and  Mercantile-Safe  Deposit and Trust
                Company  (incorporated  by reference to Form 10-K filed with the
                Commission on June 28, 1995).

      10.6(c)-  Second  Amendment  to  Revolving  Credit  and  Letter  of Credit
                Agreement, First Amendment to Line of Credit Promissory Note and
                Security   Agreement,   dated   October  25,  1995  between  the
                Registrant  and   Mercantile-Safe   Deposit  and  Trust  Company
                (incorporated   by   reference  to  Form  10-Q  filed  with  the
                Commission on February 14, 1996).

      10.6(d)-  Amendment  to  Revolving  Credit and Letter of Credit  Agreement
                dated May 10, 1996 between the  Registrant  and  Mercantile-Safe
                Deposit and Trust  Company  (incorporated  by referenced to Form
                10-K filed with the Commission on June 26, 1996).

      10.6(e)-  Letter  Amendment  dated May 5,  1997 to  Revolving  Credit  and
                Letter  of  Credit   Agreement   between  the   Registrant   and
                Mercantile-Safe  Deposit and Trust  Company  dated  November 23,
                1993.

      10.7-     License,  Cooperation  and  Supply  Agreement  dated May 5, 1988
                between  the   Registrant  and   Komline-Sanderson   Engineering
                Corporation  (incorporated by reference to Form S-1 Registration
                Statement  (File No.  33-35802) filed with the Commission on May
                25, 1990).

      10.8-     Description of Executive  Bonus Plan,  with respect to executive
                officers, adopted February 19, 1997, filed herewith.

      10.9-     Shareholders'  Agreement dated February 2, 1990 by and among the
                Registrant   and   certain   shareholders   of  the   Registrant
                (incorporated  by  reference  to  Amendment  No.  1 to Form  S-1
                Registration  Statement  (File  No.  33-35802)  filed  with  the
                Commission on July 5, 1990).

      10.10-    Employment Agreement dated March 29, 1996 between Registrant and
                Edward H. Verdery  (incorporated by reference to Form 10-K filed
                with the Commission on June 26, 1996).

      10.11-    Separation  and  Non-Competition  Agreement  dated April 1, 1997
                between Registrant and F. Bradford Smith, filed herewith.

      10.12-    Agreement  dated May 26, 1993  between the  Registrant  and Teco
                Industries of Maryland, Inc. filed with the Commission on August
                13, 1993.

      11-       Statement re: Computation of Income per Share, filed herewith.

      13-       A copy of the 1997  Annual  Report to  Shareholders  is attached
                hereto. Such report, except for those portions thereof which are
                incorporated  by reference in this Form 10-K,  is furnished  for
                the information of the Commission and is not deemed "filed."

      21-       Subsidiaries  of the  Registrant  (incorporated  by reference to
                Form 10-K filed with the Commission on June 26, 1996).

(b) No reports on Form 8-K were filed during the quarter ended March 31, 1997.

                                       14

<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Environmental Elements Corporation
(Registrant)


/s/ James B. Sinclair
-------------------------------------
James B. Sinclair
Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.

/s/ E. H. Verdery                                          June 16, 1997
-------------------------------------                      -------------
E. H. Verdery                                              Date
Chairman of the Board of Directors,
President and Chief Executive Officer

                                                           June   , 1997
-------------------------------------                      -------------
Fred Hittman                                               Date
Director

/s/ Richard E. Hug                                         June 18, 1997
-------------------------------------                      -------------
Richard E. Hug                                             Date
Director

/s/ Russell R. Jones                                       June 16, 1997
-------------------------------------                      -------------
Russell R. Jones                                           Date
Director

/s/ John C. Nichols                                        June 18, 1997
-------------------------------------                      -------------
John C. Nichols                                            Date
Director and Secretary

                                                           June   , 1997
-------------------------------------                      -------------
F. Bradford Smith                                          Date
Director

/s/ Samuel T. Woodside                                     June 18, 1997
-------------------------------------                      -------------
Samuel T. Woodside                                         Date
Director

                                       15

<PAGE>

              REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES



    To  Board  of  Directors  and  Shareholders  of the  Environmental  Elements
Corporation:




    We have audited in accordance with generally  accepted  auditing  standards,
the consolidated  financial  statements  included in the Environmental  Elements
Corporation  and  subsidiaries'  annual report to  shareholders  incorporated by
reference in this Form 10-K,  and have issued our report  thereon  dated May 19,
1997.  Our  audits  were made for the  purpose  of  forming  an opinion on those
consolidated  financial  statements taken as a whole. The schedule listed in the
index above is the  responsibility of the Company's  management and is presented
for purposes of complying with the Securities  and Exchange  Commission's  rules
and is not  part of the  basic  financial  statements.  This  schedule  has been
subjected  to the  auditing  procedures  applied  in  the  audits  of the  basic
financial statements and, in our opinion, fairly states in all material respects
the  financial  data  required to be set forth  therein in relation to the basic
financial statements taken as a whole.





                                                       Arthur Andersen, LLP





    Baltimore, Maryland,

    May 19, 1997

                                       S-1


<PAGE>



                                                                     Schedule II


                       ENVIRONMENTAL ELEMENTS CORPORATION
                        VALUATION AND QUALIFYING ACCOUNTS
                FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995



                                                                   Reserve for
                                                Allowance for     Discontinued
                                              Doubtful Accounts    Operations
                                              -----------------    ----------


        Balance, March 31, 1994                  $   502,000       $  319,000
        Charged (credited) to profit and loss       (248,000)              --
           (Deductions) additions                     (4,000)        (211,000)
                                                 ------------      -----------



        Balance, March 31, 1995                      250,000          108,000
        Charged (credited) to profit and loss         46,000               --
           (Deductions) additions                         --          (17,000)
                                                 -----------       -----------


        Balance, March 31, 1996                      296,000           91,000
        Charged (credited) to profit and loss        (59,000)              --
           (Deductions) additions                   (124,000)         (91,000)
                                                 ------------      -----------


        Balance, March 31, 1997                  $   113,000       $       --
                                                 ===========       ===========




                                       S-2

<PAGE>

                                  EXHIBIT INDEX

       3.1-     Restated   Certificate  of   Incorporation   of  the  Registrant
                (incorporated  by reference to Form S-1  Registration  Statement
                (File No. 33-35802) filed with the Commission on May 25, 1990).

       3.2-     Certificate  of Amendment  of the  Registrant  (incorporated  by
                reference  to Form 10-K  filed with the  Commission  on June 24,
                1991).

       3.3-     Bylaws of the Registrant  (incorporated by reference to Form S-1
                Registration  Statement  (File  No.  33-35802)  filed  with  the
                Commission on May 25, 1990).

       4.1-     Articles  IV,  V, VI,  VIII,  IX,  X and XI of the  Registrant's
                Restated  Certificate of Incorporation,  as amended (included in
                Exhibit 3.1 and Exhibit 3.2).

       4.2-     Articles I, II, V and VII of the  Registrant's  Bylaws (included
                in Exhibit 3.3).

      10.1-     Articles of Lease dated April 15, 1975 between Balkop Properties
                Corp., as landlord, and Koppers Company, Inc., and Assignment of
                Lease dated June 20, 1989 to Registrant, as assignee, and Beazer
                Materials  and  Services,  Inc.,  as assignor  (incorporated  by
                reference to Form S-1 Registration Statement (File No. 33-35802)
                filed with the Commission on May 25, 1990).

      10.2-     The Registrant's  Retirement  Plan, as amended  (incorporated by
                reference  to Form 10-K  filed with the  Commission  on June 28,
                1995).

      10.2(a)-  First  Amendment,  dated December 28, 1995, to the  Registrant's
                Retirement  Plan, as amended  (incorporated by reference to Form
                10-K filed with the Commission on June 26, 1996).

      10.2(b)-  Second  Amendment,  dated December 28, 1995, to the Registrant's
                Retirement  Plan, as amended  (incorporated by reference to form
                10-K filed with the Commission on June 26, 1996).

      10.3-     The  Registrant's  401(k)  Retirement  Savings  Plan, as amended
                (incorporated by reference to the  Registrant's  Form 10-K filed
                with the Commission on June 28, 1995).

      10.3(a)-  First  Amendment,  dated December 28, 1995, to the  Registrant's
                401(k)  Retirement  Savings  Plan, as amended  (incorporated  by
                reference  to Form 10-K  filed with the  Commission  on June 26,
                1996).

      10.4-     The  Registrant's   Employee  Stock  Option  Plan,  as  amended,
                (incorporated  by reference to Form S-8  Registration  Statement
                (File No.  33-38400)  filed with the  Commission on December 21,
                1990).

      10.5-     Environmental   Elements   Corporation    Supplemental   Pension
                Agreement dated March 1, 1995, between Registrant and Richard E.
                Hug  (incorporated  by  reference  to Form 10-K  filed  with the
                Commission on June 26, 1996).

      10.5(a)-  Environmental   Elements  Corporation   Supplemental  Pension
                Agreement  dated  July 1, 1996  between  Registrant  and John C.
                Nichols, filed herewith.



<PAGE>

      10.6-     Revolving  Credit and Letter of Credit  Agreement dated November
                24, 1993 between the Registrant and Mercantile-Safe  Deposit and
                Trust Company (incorporated by reference to Form 10-Q filed with
                the Commission on February 14, 1994).

      10.6(a)-  Waiver and Amendment dated May 26, 1994, to the Revolving Credit
                and Letter of Credit  Agreement  dated November 24, 1993 between
                the  Registrant  and  Mercantile-Safe  Deposit and Trust Company
                (incorporated   by   reference  to  Form  10-K  filed  with  the
                Commission on June 29, 1994).

      10.6(b)-  Extension  Agreement  dated  November 18, 1994 to the  Revolving
                Credit and Letter of Credit  Agreement  dated  November 23, 1993
                between the  Registrant  and  Mercantile-Safe  Deposit and Trust
                Company  (incorporated  by reference to Form 10-K filed with the
                Commission on June 28, 1995).

      10.6(c)-  Second  Amendment  to  Revolving  Credit  and  Letter  of Credit
                Agreement, First Amendment to Line of Credit Promissory Note and
                Security   Agreement,   dated   October  25,  1995  between  the
                Registrant  and   Mercantile-Safe   Deposit  and  Trust  Company
                (incorporated   by   reference  to  Form  10-Q  filed  with  the
                Commission on February 14, 1996).

      10.6(d)-  Amendment  to  Revolving  Credit and Letter of Credit  Agreement
                dated May 10, 1996 between the  Registrant  and  Mercantile-Safe
                Deposit and Trust  Company  (incorporated  by referenced to Form
                10-K filed with the Commission on June 26, 1996).

      10.6(e)-  Letter  Amendment  dated May 5,  1997 to  Revolving  Credit  and
                Letter  of  Credit   Agreement   between  the   Registrant   and
                Mercantile-Safe  Deposit and Trust  Company  dated  November 23,
                1993.

      10.7-     License,  Cooperation  and  Supply  Agreement  dated May 5, 1988
                between  the   Registrant  and   Komline-Sanderson   Engineering
                Corporation  (incorporated by reference to Form S-1 Registration
                Statement  (File No.  33-35802) filed with the Commission on May
                25, 1990).

      10.8-     Description of Executive  Bonus Plan,  with respect to executive
                officers, adopted February 19, 1997, filed herewith.

      10.9-     Shareholders'  Agreement dated February 2, 1990 by and among the
                Registrant   and   certain   shareholders   of  the   Registrant
                (incorporated  by  reference  to  Amendment  No.  1 to Form  S-1
                Registration  Statement  (File  No.  33-35802)  filed  with  the
                Commission on July 5, 1990).

      10.10-    Employment Agreement dated March 29, 1996 between Registrant and
                Edward H. Verdery  (incorporated by reference to Form 10-K filed
                with the Commission on June 26, 1996).

      10.11-    Separation  and  Non-Competition  Agreement  dated April 1, 1997
                between Registrant and F. Bradford Smith, filed herewith.

      10.12-    Agreement  dated May 26, 1993  between the  Registrant  and Teco
                Industries of Maryland, Inc. filed with the Commission on August
                13, 1993.

      11-       Statement re: Computation of Income per Share, filed herewith.

      13-       A copy of the 1997  Annual  Report to  Shareholders  is attached
                hereto. Such report, except for those portions thereof which are
                incorporated  by reference in this Form 10-K,



<PAGE>

                is furnished for the  information  of the  Commission and is not
                deemed "filed."

      21-       Subsidiaries  of the  Registrant  (incorporated  by reference to
                Form 10-K filed with the Commission on June 26 , 1996.)