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

                                    FORM 10-K

                    For the Fiscal Year ended March 31, 1999

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                   (I.R.S. Employer
of incorporation or organization)             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 10K.
     |X|

The aggregate market value of Common Stock held by non-affiliates of the
registrant as of June 4, 1999 was approximately $19.2 million based upon the
closing price of $3.5625. The number of shares outstanding of the registrant's
Common Stock as of June 4, 1999 was 7,092,205.

                       Documents Incorporated by Reference
Portions of the definitive Proxy Statement relating to registrant's Annual
Meeting of Stockholders to be held July 30, 1999 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, 1999 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 the Company's 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 design and process engineering for its systems that
remove gaseous or particulate matter. The Company determines the size, geometry,
mechanical, electrical and structural characteristics of the device needed to
meet its contractual obligations, and creates the detail design and

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develops specifications for all structural, electrical, mechanical, piping, and
chemical components necessary to make the system. In performing its contracts
the Company purchases various components (either standard inventory items or
items made by vendors to the Company's design and specifications), enters into
and supervises subcontracts for field construction (if included in the scope of
the Company's contract), 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 aftermarket 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. The Company provides such products
and services from its headquarters and, beginning in fiscal 1999, from regional
maintenance centers located near its customers. The Company believes that its
strategy related to aftermarket products and services represents a significant
long-term opportunity. Accordingly, during fiscal 1999

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the Company established three new regional maintenance centers in Florida,
Virginia and Texas, and intends to establish additional maintenance centers
where it believes that additional business can be gained or customer
relationships can be enhanced.

    In fiscal 1997 the Company entered into its first alliance agreement with a
customer. Under this agreement the Company provides dedicated engineering and
field service personnel who perform inspection, engage in problem-solving and
material planning, and make parts recommendations on a system-wide basis, with a
goal of reducing our customer's total life cycle costs. During fiscal 1998, the
alliance resulted in a large order from the customer for new systems upgrades.
During fiscal 1999 the alliance resulted in a multi-year contract with the
customer to provide engineering services, new equipment, and systems upgrades in
order to achieve compliance with new regulations governing nitrogen oxide
emissions promulgated by the Environmental Protection Agency in September, 1998.
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 principal sources: the 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. In fiscal 1998, the Company received two additional
orders for equipment and the Company signed international license

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agreements in South Korea, Finland, Russia and India.

    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
successful in marketing its fabric filter systems to private power projects that
either cogenerate electricity and thermal energy or generate electricity alone
for sale to utilities. In addition, in response to anticipated substantial
demand for solutions to the 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, the Company
successfully placed into operation an emissions system on a municipal and
medical waste incinerator in England and a waste-to-energy facility in New York.
Also in fiscal 1997, the Company was awarded a contract to retrofit a
waste-to-energy facility in Georgia and, in fiscal 1998, was awarded a contract
to retrofit a waste-to-energy facility in Florida. 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 1999 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 $475,000, $317,000, and $139,000, on product
development during fiscal 1999, 1998, and 1997, respectively. Among other
important product development activities, the Company has developed and


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acquired patent protection of 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. This technology has undergone full-scale commercial demonstration
during fiscal 1998 and 1999, and is being marketed to commercial customers
worldwide. The Company has also developed and introduced into the utility market
wide plate spacing precipitators and has developed precipitator dust plates
which are shipped and site-assembled more easily than earlier generation dust
plates. The Company, in fiscal 1998, developed a software-based voltage
controller with adaptive programming capabilities to enhance precipitator
performance.

    The Company has recently advanced its research and development operations
beyond its historical product development activities to funded research
programs. Through a Cooperative Research and Development Agreement with the U.S.
Department of Energy, the Company is working on the enhancement of particulate
removal capabilities in certain applications. Under a Department of Energy SBIR
grant, the Company is augmenting its CDS capabilities for mercury and fine
particulate control, and under a U.S. Department of Defense STTR grant the
Company is studying glow discharge plasma technology.

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 many individual patents are not considered
material to the conduct of the Company's business as a whole, the Company views
its newly acquired patent protection with respect to its Fine Particulate
AgglomeratorTM 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.

SALES AND MARKETING

    The Company's sales and marketing efforts are organized to provide emphasis
and focus by both market and product area. Primary market areas include the
power industry, the industrial market, and aftermarket products and services.
The Company has integrated its maintenance and field service resources with a
regional sales network, linked to its regional service centers, allowing it to
build long-term customer relationships and provide solutions to customers' needs
in a highly responsive manner. The sales efforts are technical in nature and
involve its sales and marketing professionals, supported by the Company's senior
technical and management professionals, who provide product-based expertise to
all regional and market areas. 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 56% of the Company's sales in fiscal
1999, no customer accounted for more than 10% of the Company's sales in fiscal
1998 and three customers accounted for 33% of the Company's sales in fiscal
1997. At fiscal year end 1999, approximately 56% of the Company's accounts and
retainages receivable were due from companies within the power industry and
approximately 23% were due from companies within the pulp and paper industry.


    All of the Company's overseas foreign sales are generated through royalties
from international licensees or from export sales, which were less than 10% of
consolidated sales in fiscal years 1999, 1998, and 1997. In order to take
advantage of certain overseas market opportunities, the Company has

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established licensing agreements with companies in the People's Republic of
China, India, Russia, South Korea, Finland, and Brazil 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 licenses, the Company has established, with its Chinese licensee, a joint
venture in China, which commenced production, in fiscal 1998, of certain
precipitator components for use by the Company and its licensee. With its Indian
licensee, during fiscal 1999, the Company trained certain of the licensee's
engineers to perform engineering activities for global application, including
both international projects and projects delivered in North America.

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 certain electrodes, collecting plates, 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.

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 repair 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, technical content,
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

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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. During 1997, the
EPA approved regulations that are expected to significantly increase the number
of companies subject to regulation for ozone related emissions, and for
emissions of particles at a much smaller size than previously regulated. During
1998, the EPA issued regulations requiring utilities in 22 states to
significantly reduce emissions of nitrogen oxides (NOx) by the year 2003, in
order to control smog creation.

    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 1999 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 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 coverage. 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
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. 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, 1999, the Company had 142 full-time employees, of whom more
than 90% were engineers and other professionals and technical employees. The
Company also hires contract and other

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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 56,000 square
feet of this space and subleases substantially all of the remaining space. See
Note 6 of the "Notes to Consolidated Financial Statements" in the Company's 1999
Annual Report to Shareholders, incorporated by reference herein, for a
description of the rent and other lease terms.

    In addition, the Company leases approximately 28,000 square feet of office
and warehouse space in Baltimore, Maryland for its research and development, and
inventory operations.

    The Company is a party to a joint venture which, commencing in the 1998
fiscal year, operates a factory in Bengbu, Anhui Province, China, which
fabricates precipitator components.

    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.

    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.

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

    The following matters were submitted to a vote of securities holders at the
Annual Meeting of Stockholders held on July 31, 1998:

(a)  The stockholders elected Richard E. Hug a Class II director, by a vote
     of 6,004,313 for, 109,460 against and 11,118 abstaining, for a
     three-year term ending at the 2001 Annual Meeting, or until his
     successor is duly elected and qualified. The names of all other
     directors whose term of office as a director continued after the
     meeting are as follows: Edward H. Verdery, F. Bradford Smith, John C.
     Nichols, Barry Koh, James S. Potts and Samuel T. Woodside.
(b)  The stockholders ratified the 1998 Environmental Elements Corporation
     Stock Option Plan and the reserving of shares for issuance under the
     Plan, by a vote of 5,265,439 for, 836,926 against and 22,527
     abstaining.
(c)  The stockholders ratified the selection of Arthur Andersen LLP to serve
     as independent public

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     accountants of the Company for the fiscal year ending March 31, 1999. The
     matter was approved by a vote of 6,097,901 for, 13,660 against and 13,331
     abstaining

There were no matters submitted to a vote of security holders during the fourth
quarter of fiscal year 1999.

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                                     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 4, 1999, there were 231 record holders of the Company's Common
Stock. The closing price of the Common Stock on June 4, 1999 was $3.5625.

    The additional information required by this item is contained under
"Investor Information" on page 25 and in Note 9 of the "Notes to Consolidated
Financial Statements" on page 21 of the Company's 1999 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 24 of the
Company's 1999 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
1999 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 10 and 11 of the
Company's 1999 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 12 through 21 of the Company's 1999 Annual Report to Shareholders. The
Quarterly Financial Data appears in Note 9 of the "Notes to Consolidated
Financial Statements" appearing on page 21 of the Company's 1999 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.


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                                    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 1999 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 certain executive officers of
the Company appears in the Company's definitive proxy statement for the 1999
Annual Meeting of Stockholders.

    (c) 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, 1999, 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.

ITEM 11.  EXECUTIVE COMPENSATION

    The information required by this item is incorporated herein by reference to
the Registrant's 1999 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 1999 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 1999 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."

                                       12
<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 1999
Annual Report to Shareholders for the year ended March 31, 1999 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, 1999, 1998, and 1997                          12
     Consolidated Balance Sheets as of March 31, 1999
      and 1998                                                      13
     Consolidated Statements of Cash Flows for the
      years ended March 31, 1999, 1998, and 1997                    14
     Consolidated Statements of Stockholders' Investment
      as of  March 31, 1999, 1998, and 1997                         15
     Notes to Consolidated Financial Statements                     16-21
     Management's Responsibility for Financial Statements           22
     Report of Independent Public Accountants                       23

                                                                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, 1999, 1998, and 1997 (Schedule II)                 S-2

                                       13
<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-    Omitted.

       10.3(a)- Omitted.

       10.3(b)- The Registrant's Replacement 401(k) Retirement Savings Plan,
                dated July 1, 1997 (incorporated by reference to the
                Registrant's Form 10-K filed with the Commission on June 25,
                1998).

       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, (incorporated by reference to Form 10-K filed with the
                Commission on June 23, 1997).

                                       14
<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 Co
                (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, (incorporated by reference to Form 10-K filed with the
                Commission on June 23, 1997).

       10.6(f-  First Amendment to Security Agreement, Second Amendment to Line
                of Credit Promissory Note, and Third Amendment to Revolving
                Credit and Letter of Credit Agreement dated June 12, 1998,
                between Registrant and Mercantile-Safe Deposit and Trust Company
                (incorporated by reference to the Registrant's Form 10-K filed
                with the Commission on June 25, 1999).

       10.7-    Omitted.

       10.8-    The Registrant's 1998 Stock Option Plan 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
                E. H. Verdery (incorporated by reference to Form 10-K filed with
                the Commission on June 26, 1996).

       10.11-   Omitted.

       10.12-   Omitted

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

       13-      A copy of the 1999 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."

                                       15
<PAGE>
       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, 1999.

                                   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
Principal Accounting and 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 25, 1999
-----------------                                            -------------
E. H. Verdery                                                Date
Chairman of the Board of Directors,
President and Chief Executive Officer

/s/ S. Michael Dunseith                                      June 25, 1999
-----------------------                                      -------------
S. Michael Dunseith                                          Date
Executive Vice President and Chief Operating Officer

/s/ Richard E. Hug                                           June 25, 1999
------------------                                           ------------------
Richard E. Hug                                               Date
Director

/s/ Barry Koh                                                June 25, 1999
--------------------                                         ------------------
Barry Koh                                                    Date
Director

/s/ John C. Nichols                                          June 25, 1999
-------------------                                          ------------------
John C. Nichols                                              Date
Director and Secretary

/s/ James S. Potts                                           June 25, 1999
------------------                                           ------------------
James S. Potts                                               Date
Director

/s/ F. Bradford Smith                                        June 25, 1999
---------------------                                        ------------------
F. Bradford Smith                                            Date
Director

                                       16
<PAGE>

/s/ Samuel T. Woodside                                       June 25, 1999
----------------------                                       ------------------
Samuel T. Woodside                                           Date
Director

                                       17
<PAGE>
              REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES

      To the Board of Directors and Shareholders of 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 14,
1999. 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 14, 1999

                                       S-1

<PAGE>
                                                                     SCHEDULE II

                       ENVIRONMENTAL ELEMENTS CORPORATION
                        VALUATION AND QUALIFYING ACCOUNTS
                FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997


                                                                   RESERVE FOR
                                                 ALLOWANCE FOR    DISCONTINUED
                                             DOUBTFUL ACCOUNTS      OPERATIONS
                                             -----------------      ----------


  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                 --
  Charged (credited) to profit and loss                 --                 --
     (Deductions) additions                        105,000                 --
                                           -----------------     ---------------

  Balance, March 31, 1998                          218,000
Charged (credited) to profit and loss              (58,000)                --
     (Deductions) additions                         61,000                 --
                                           -----------------     ---------------

  Balance, March 31, 1999                    $     221,000         $       --
                                           ==================    ===============

                                       S-2

<PAGE>
                                  EXHIBIT INDEX

    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-    Omitted.

       10.3(a)- Omitted.

       10.3(b)- The Registrant's Replacement 401(k) Retirement Savings Plan,
                dated July 1, 1997 (incorporated by reference to the
                Registrant's Form 10-K filed with the Commission on June 25,
                1998).

       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).
<PAGE>
       10.5(a)  Environmental Elements Corporation Supplemental Pension
                Agreement dated July 1, 1996 between Registrant and John C.
                Nichols, (incorporated by reference to Form 10-K filed with the
                Commission on June 23, 1997).

       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 Co
                (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, (incorporated by reference to Form 10-K filed with the
                Commission on June 23, 1997).

       10.6(f)- First Amendment to Security Agreement, Second Amendment to Line
                of Credit Promissory Note, and Third Amendment to Revolving
                Credit and Letter of Credit Agreement dated June 12, 1998,
                between Registrant and Mercantile-Safe Deposit and Trust Company
                (incorporated by reference to the Registrant's Form 10-K filed
                with the Commission on June 25, 1999).

       10.7-    Omitted.

       10.8-    The Registrant's 1998 Stock Option Plan 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
                E. H. Verdery (incorporated by reference to Form 10-K filed with
                the Commission on June 26, 1996).

       10.11-   Omitted.

       10.12-   Omitted.
<PAGE>
       11-      Statement re: Computation of Earnings per Share, filed herewith.

       13-      A copy of the 1999 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.)