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

                                  Form 10-Q

             X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
           -----
                       OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the Quarterly Period Ended: June 30, 1997

                 TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d)
           -----
                       OF THE SECURITIES EXCHANGE ACT OF 1934

                          Commission File Number: 0-20179

                             RECYCLING INDUSTRIES, INC.
                 ------------------------------------------------------ 
                 (Exact Name of Registrant as Specified in its Charter)


             Colorado                                        84-1103445
--------------------------------                       ---------------------  
 (State or Other Jurisdiction of                        (I.R.S. Employer 
 Incorporation or Organization)                         Identification Number)


384 Inverness Drive South, Suite 211    
        Englewood, Colorado                                         80112
------------------------------------------------                -------------- 
(Mailing Address of Principal Executive Offices)                  (Zip Code)

Registrant's Telephone Number, Including Area Code:  (303) 790-7372

Securities Registered Pursuant to Section 12(b) of the Act:  None

Securities Registered Pursuant to Section 12(g) of the Act:  
Common Stock, $.001 Par Value

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, and (2) has been subject to such 
filing requirements for the past 90 days.

                   Yes   X     No      
                       -----      -----

Indicate the number of shares outstanding of each of the Issuer's classes of 
common stock as of the close of the period covered by this Report.

                                         NUMBER OF SHARES OUTSTANDING AS OF:
           CLASS                                    June 30, 1997               
----------------------------            -----------------------------------
Common Stock, $.001 Par Value                        13,884,000






                               TABLE OF CONTENTS


PART I -- FINANCIAL INFORMATION                                         PAGE
-------------------------------                                         ----

    Item 1. Financial Statements*

        Consolidated Balance Sheets -June 30, 1997
          and September 30, 1996                                         1-2

        Consolidated Statements of Operations for the three and nine
          months ended June 30, 1997 and 1996                            3-4

        Consolidated Statement of Stockholders' Equity for the 
          nine months ended June 30, 1997                                 5

        Consolidated Statements of Cash Flows for the nine 
          months ended June 30, 1997 and 1996                             6

        Notes to the Consolidated Financial Statements                    7

     Item 2. Management's Discussion and Analysis of Financial 
             Condition and Results of Operations                         8-10

PART II -- OTHER INFORMATION
----------------------------

        Item 1.  Legal Proceedings                                       11

        Item 2.  Changes in Securities                                   12

        Item 6.  Exhibits and Reports on Form 8-K                        13

        Signatures                                                       15



  * The accompanying interim financial statements have not been audited by an 
independent certified public accountant.  Only those statements corresponding
to a fiscal year-end (September 30) are audited.
 


                   RECYCLING INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      June 30, 1997 and September 30, 1996
                            (Thousands of Dollars)


                                    ASSETS
                                    ------

 
                                               June 30, 1997 September 30, 1996
                                              -------------- ------------------

       
CURRENT ASSETS:    
     Cash                                     $         469       $       1,450 
 Accounts receivable,   
  less allowance for doubtful accounts  
  of $40 and $10                                      7,538               4,379 
 Accounts receivable, related party                     -                    77 
 Inventories                                          4,030               2,473 
 Deferred income taxes                                  810                 - 
 Prepaid expenses and deposits                          402                 392 
                                              -------------       -------------
  Total Current Assets                               13,249               8,771 
                                              -------------       -------------
PROPERTY, PLANT AND EQUIPMENT, net                   32,980              20,492 
                                              -------------       -------------
    
OTHER ASSETS:          
 Deferred income taxes                                  585                 800 
 Other assets, net of amortization                    5,988               4,792 
                                              -------------       -------------
  Total Other Assets                                  6,573               5,592 
                                              -------------       -------------
TOTAL ASSETS                                   $     52,802       $      34,855 
                                              -------------       -------------
                                              -------------       -------------


         See Accompanying Notes to the Consolidated Financial Statements

                                       1              


                    RECYCLING INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                       June 30, 1997 and September 30, 1996
                               (Thousands of Dollars)



                         LIABILITIES AND STOCKHOLDERS' EQUITY
                         ------------------------------------
 
                                              June 30, 1997  September 30, 1996
                                              -------------  ------------------
           
CURRENT LIABILITIES:        
  Current maturities of long  term debt       $       5,631      $       1,707 
  Current maturities of long  term debt, 
     related parties                                  1,201              2,075 
  Accounts payable                                    3,151              2,673 
  Accounts payable - related parties                    -                   61 
  Income taxes - payable                                -                  107 
  Other current liabilities                             654                551 
                                              -------------     -------------- 
        
    Total  Current Liabilities                       10,637              7,174
                                              -------------     --------------  
        
LONG  TERM DEBT:        
  Long  term debt, less current maturities           24,503             10,067 
  Long  term debt - related parties, 
     less current maturities                            685              1,951
                                              -------------     --------------  
    Total Long  Term Debt                            25,188             12,018
                                              -------------     --------------  
    Total Liabilities                                35,825             19,192
                                              -------------     --------------  
        
COMMITMENTS & CONTINGENCIES:        
  Redeemable common stock,      
     $.001 par value, 364,000 shares 
     issued and outstanding                           1,500              1,500 
                                              -------------     --------------
         
STOCKHOLDERS' EQUITY:        
  Preferred stock, no par value, 
     10,000,000 shares authorized      
     Series D, convertible, 10,000, 
     and 0 shares issued and outstanding                500                -  
  Common Stock ($.001 par value), 
     50,000,000 shares authorized,       
     13,884,000 and 13,431,000 shares 
     issued and outstanding                              14                 13 
  Additional paid  in capital                        25,452             25,547 
  Accumulated deficit                               (10,489)           (11,397) 
                                              -------------     --------------
    Total Stockholders' Equity                       15,477             14,163
                                              -------------     --------------  
        
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $      52,802      $      34,855
                                              -------------     --------------  
                                              -------------     --------------  


           See Accompanying Notes to the Consolidated Financial Statements

                                       2



                   RECYCLING INDUSTRIES, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF OPERATIONS
                    Three months ended June 30, 1997 and 1996
                 (Thousands of dollars except per share amounts)


 

                                              June 30, 1997      June 30, 1996
                                              -------------      --------------

Net sales                                     $      17,056      $       6,749

Cost of sales and operating expenses                 14,634              6,993
                                              -------------     ---------------
Gross profit (loss)                                   2,422               (244)

Selling, general and administrative expenses          1,305                664
                                              -------------     ---------------
Operating income (loss)                               1,117               (908) 
                                              -------------     ---------------
Other income (expense):
   Interest expense                                    (645)              (190)
   Miscellaneous                                         23                (28) 
                                              -------------     ---------------
   Total other income (expense)                        (622)              (218) 
                                              -------------     ---------------
Earnings (loss) before income tax benefit               495             (1,126)
Income tax benefit                                      300                  -
                                              -------------     ---------------
Net earnings (loss)                                     795             (1,126)

Preferred stock dividends                                72                  -
                                              -------------     ---------------
Net earnings (loss) available to common 
   shareholders                               $         723       $     (1,126) 
                                              -------------     ---------------
                                              -------------     ---------------

Earnings (loss) per common share              $        0.05       $      (0.11) 
                                              -------------     --------------- 
                                              -------------     ---------------

Weighted average shares outstanding              14,758,000         10,105,000
                                              -------------     ---------------
                                              -------------     ---------------


           See Accompanying Notes to the Consolidated Financial Statements

                                       3


                   RECYCLING INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    Nine months ended June 30, 1997 and 1996
                 (Thousands of dollars except per share amounts)
 

                                              June 30, 1997      June 30, 1996
                                              -------------      --------------

Net sales                                     $      40,558      $      17,484

Cost of sales and operating expenses                 34,447             16,345
                                              -------------      --------------
Gross profit                                          6,111              1,139

Selling, general, and administrative expenses         3,968              2,169
                                              -------------      --------------
Operating income (loss)                               2,143             (1,030)
Other income (expense):   
   Interest expense                                  (1,534)              (435)
   Miscellaneous                                         57                  - 
                                              -------------      --------------
  Total other income (expense)                       (1,477)              (435) 
                                              -------------      --------------
Earnings (loss) before income tax benefit               666             (1,465)
Income tax benefit                                      595                437 
                                              -------------      --------------
Net earnings (loss)                                   1,261             (1,028)
 
Preferred stock dividends                               353                  - 
                                              -------------      --------------
Net earnings (loss) available to common
     shareholders                             $         908       $     (1,028) 
                                              -------------      --------------
                                              -------------      -------------
Earnings (loss) per common share              $        0.06       $      (0.11) 
                                              -------------      -------------- 
                                              -------------      -------------
Weighted average shares outstanding              14,209,000          9,309,000
                                              -------------      -------------
                                              -------------      -------------



         See Accompanying Notes to the Consolidated Financial Statements
                                       4



                   RECYCLING INDUSTRIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                        Nine months ended June 30, 1997
                             (Thousands of Dollars)

 
 <TABLE>                                                                        Additional
                                     Preferred Stock       Common Stock          Paid-in    Accumulated
                                    Shares     Amount    Shares     Amount       Capital     (Deficit)    Total
                                   --------  --------   --------   -------    -----------   ----------- ---------
<S>                                <C>       <C>        <C>        <C>        <C>           <C>         <C>
Balances, September 30, 1996          -     $    -     13,795,000  $   13     $   25,547    $ (11,397)  $ 14,163

Preferred stock Series C
  issued for cash                   10,000    1,000           -         -            -            -        1,000

Redemption of preferred 
  stock Series C                   (10,000)  (1,000)          -         -            -            -       (1,000)
              
Preferred stock Series D issued     10,000      500           -         -            -            -          500
 for acquisitions             
              
Common stock issued on               
 exercise or conversion of              
 Series I warrants                    -          -        155,000       1             24          -           25
              
Common stock repurchased              -          -        (66,000)      -           (119)         -         (119)
              
Dividends Paid                        -          -           -          -            -           (353)      (353)

Net earnings for the period           -          -           -          -            -          1,261      1,261
                                 ----------  --------  ----------  --------   ------------  ----------- ---------
              
Balances, June 30, 1997             10,000   $  500    13,884,000  $   14     $    25,452   $ (10,489)  $ 15,477
                                 ----------  --------  ----------  --------   -----------   ----------- ---------
                                 ----------  --------  ----------  --------   -----------   ----------- ---------


</TABLE>


See Accompanying Notes to the Consolidated Financial Statements
                                       5


                   RECYCLING INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Nine months ended June 30, 1997 and 1996
                             (Thousands of Dollars)

 
                                              June 30, 1997      June 30, 1996
                                              -------------      -------------

Operating Activities:
   Net Earnings (loss)                        $       1,261      $      (1,028)
   Adjustments to reconcile net earnings    
     to net cash (used in) operating activities:    
      Depreciation and amortization                   1,777                742
      Deferred income taxes                            (595)              (441)
   Changes in Assets and Liabilities:       
      Accounts receivable                            (3,082)              (853)
      Inventories                                    (1,357)              (164)
      Prepaid expenses and deposits                     (10)              (224)
      Accounts payable                                  417              1,392 
      Current liabilities, excluding debt                (4)               171
                                               -------------     --------------
         Net Cash (used in) Operating Activities     (1,593)              (405) 
                                               -------------     --------------

 Investing Activities:
   Capital expenditures, net                         (2,313)            (1,362)
   Note receivable, related party                        -                  28
   Acquisitions                                     (11,200)                -
   Other assets                                      (1,649)            (1,327) 
                                               -------------     --------------
      Net Cash (used in) Investing Activities       (15,162)            (2,661) 
                                               -------------     --------------

Financing Activities:
   Proceeds from borrowings                          23,560              9,506
   Principal payments on borrowings                  (7,339)            (7,842)
   Deferred offering costs                               -                (678)
   Dividends Paid                                      (353)                -
   Net proceeds from issuance of stock                1,025              2,292
   Redemption of preferred stock                     (1,000)                -
   Common stock repurchased                            (119)                -
                                                 -------------     ------------

      Net Cash Provided by Financing Activities      15,774              3,278
                                               -------------     --------------

      Increase (decrease) in Cash                      (981)               212

      CASH, beginning of period                       1,450                184
                                               -------------     --------------
      CASH, end of period                      $        469      $         396
                                               -------------     --------------
                                               -------------     --------------

 

See Accompanying Notes to the Consolidated Financial Statements

                                       6



                   RECYCLING INDUSTRIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



General Information:

I.  The Financial Statements included herein have been prepared by the 
Company without audit except the September 30, 1996 balance sheet, 
which was audited.  The Statements have been prepared pursuant to the 
rules and regulations of the Securities and Exchange Commission and 
reflect all adjustments, consisting of only normal recurring accruals 
which are, in the opinion of management, necessary for a fair 
statement of the results of operations for the periods shown.  These 
Financial Statements should be read in conjunction with the Financial 
Statements and notes thereto included in the Company's latest report 
on Form 10-K, dated September 30, 1996.
 
II.  The results of operations for the nine months ending June 30, 1997, 
and 1996, are not necessarily indicative of the results to be expected 
for the full year.

III.  Inventories as of June 30, 1997, and September 30, 1996, consisted of 
the following:


                             June 30, 1997          September 30, 1996
                            ---------------         ------------------

       Raw materials         $      2,137              $      1,302
       Finished goods               1,721                     1,171
       Other                          172                        -
                             ----------------          ----------------
          Total              $      4,030              $      2,473
                             ----------------          ----------------
                             ----------------          ----------------


                                       7



          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                        AND RESULTS OF OPERATIONS


The following discussion should be read in conjunction with the Company's 
Consolidated Financial Statements and the notes thereto included elsewhere 
herein.  Statements included on the following discussion concerning 
predictions of economic performance and management's plans and objectives 
are forward looking statements.  These statements involve risks and 
uncertainties that could cause actual results to differ materially from 
the forward looking statements.  Factors which would cause or contribute 
to such differences are summarized in the following discussions and include:
downturns in the Company's primary markets; disruptions to the Company's
operations from acts of God or extended maintenance; disruptions in the
availability or pricing of raw materials; transportation difficulties; and 
the unavailability of financing to complete management's plans and objectives.


LIQUIDITY AND CAPITAL RESOURCES

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

                                            June 30,        September 30,
(Dollars in millions)                         1997               1996
-------------------------------------------------------------------------

Current ratio                                1.25:1             1.22:1
Working capital                            $    2.6          $     1.6
-------------------------------------------------------------------------
 

Cash used by operating activities for the nine months ending June 30, 
1997, was $1.6 million, an increase of  $1.2 million compared to the same 
period one year earlier.   The increase in cash used in operating activities 
was primarily related to increases in accounts receivable and inventory. 

The Company invested $2.3 million in property, plant and equipment 
through June 30, 1997, for general modernization and efficiency upgrades. 
Planned capital expenditures during the next year for the Company's 
existing facilities are estimated to be $2 million.  Included in 
this amount are capital expenditures for the Company's shredders and 
materials handling equipment designed to increase capacity and improve 
operating efficiencies.  Management anticipates the capital expenditures 
will be paid with cash from operations and long-term debt financing.

On April 7, 1997, the Company acquired for $5.7 million substantially all 
the assets of Addlestone Recycling Corporation (ARC) located in Metter, 
Georgia.  The purchase was financed with $5.2 million of proceeds from 
the Company's existing credit facility and $.5 million or 10,000 shares 
of the Company's Series D Convertible Preferred Stock (the "Series D 
Shares").  The Series D Shares will automatically convert on April 1, 
1999 into the number of shares of the Company's common stock whose 
average market price for the ten trading days preceding the date of 
conversion is equivalent to $0.5 million plus the amount of all accrued 
and unpaid dividends on the Series D Shares to the date of conversion.   
If a consolidation or merger of the Company with or into another company 
or entity occurs and the Company is not the surviving entity, the Series 
D Shares will convert immediately into the number of shares the Company's 
common stock whose average market price for the ten trading days 
preceding the date of consolidation or merger is equivalent to $0.5 
million plus the amount of all accrued and unpaid dividends on the Series 
D Shares to the date of conversion.  Holders of the Series D Shares are 
entitled to dividends on a cumulative basis at an annual rate of eight 
percent, payable quarterly in cash.   At anytime prior to April 1, 1999, 
the Company shall have the right to redeem the outstanding shares of 
Series D Preferred Stock, in whole or in part, at a cash redemption price 
equal to the sum of $50 per share, and the amount of all accrued but 
unpaid dividends on the Series D Preferred Stock.  The Company has not 
assumed or guaranteed any of the liabilities of  ARC.

                                       8
On June 25, 1997, the Company acquired for $6 million substantially all 
the assets of Addlestone International Corporation (AIC) located in 
Georgetown, South Carolina.  The purchase was financed with the proceeds 
from a $7 million convertible note due on July 3, 1998, and bears 
interest at prime plus four percent per annum until December 20, 1997, 
and thereafter will increase by one percent per annum each month.  If not 
paid on or before its maturity, the note is convertible into common stock 
of the Registrant at 90 percent of the average closing price of the 
Common Stock then listed for the ten trading days immediately prior to 
the Conversion Date.  The discount provision is recognized as imputed 
interest in the amount of $0.8 million recognized as additional interest 
expense on a pro rata basis from the date of issuance to the first 
conversion date that the conversion can occur.  In connection with the bridge
financing, the Company issued Warrants to purchase 990,000 shares of Common
Stock at $2.00 per share, exercisable until June 20, 2002. The Company has not
assumed or guaranteed any of the liabilities of AIC.

At September 30, 1996, the Company had $8.4 million outstanding under a 
three year credit facility with a lending institution totaling $10
million.  During the quarter, the Company increased the existing credit 
facility to $25 million with maturity terms ranging from six months to 
three years.   As of June 30, 1997, the Company had $20.1 million 
outstanding under the new credit facility.   The Company borrowed $9.9 
million against the credit facility during the quarter, the proceeds of 
which  were used with other borrowings to fund acquisitions and for other 
general corporate purposes.   Utilization of the credit facility is 
limited by existing debt covenants.

On December 31, 1996, the  Company completed a private placement of $1 
million of Series C Convertible Preferred Stock ("Series C Preferred").  
Net proceeds to the Company were $907,000.  For the quarter ending June 
30, 1997, the Company redeemed the Series C Preferred for $1.3 million 
with a combination of existing cash and financing from the Company's 
credit facility.  Included in the redemption price was a dividend in the 
amount of $0.3 million.    

During the quarter, the Board of  Directors of Recycling Industries, Inc. 
authorized the repurchase of up to 700,000 shares of common stock in open 
market transactions.  As of June 30, 1997, the Company had acquired 
66,000 shares for $0.1 million with cash from operations.  

The Company is required to implement Financial Accounting Standards Board 
Statement No. 128,  "Earnings per Share," in fiscal year 1998.   
Application of the new rules would not have a significant impact upon the 
financial statements of the Company for the three and nine months ending 
June 30, 1997. 

Management intends to continue seeking opportunities for expansion in the 
metals recycling business and believes that the Company's liquidity, 
capital resources and borrowing capabilities are adequate for its current 
operations.   The Company may, however, need to raise additional capital 
to fund the acquisition and integration of additional metals recycling 
businesses which is an integral component of the Company's strategy.  The 
Company may raise such funds through warrant exercises, bank financing or 
public or private offerings of its securities.  There can be no assurance 
that the Company will be able to secure such additional financing. If the 
Company is not successful in securing such financing, the Company's 
ability to pursue its acquisition strategy may be impaired and the 
results of operations for future periods may be adversely affected.



RESULTS OF OPERATIONS

The Company's operating results depend in large part on its ability to  
effectively manage the purchase, processing and sale of scrap metals.  
The  demand for processed ferrous and non-ferrous material  is subject to 
general  economic, industry and market-specific conditions beyond the 
Company's  control which may result in periodic fluctuations in the sales 
prices of 

                                       9

the Company's products.  The Company seeks to maintain its 
operating margins by  adjusting the purchase price for raw ferrous and 
non-ferrous metals in  response to such fluctuations, subject to local 
market conditions.  Although  the Company is unable to hedge against 
changes in market prices, it seeks to  minimize this risk by maintaining 
low inventory levels of raw and processed material.

Net sales for the three months ended June 30, 1997, were $17.1 million, 
an increase of $10.3 million compared to the same period one year 
earlier.  The increase is primarily related to the acquisition of 
Weissman Iron and Metal ("Weissman") in August 1996 and ARC in April 1997.
Net sales for the nine months ended June 30, 1997, were $40.6 million, an 
increase of $23.1 million compared to the same period one year ago.  The 
increase is primarily related to the acquisition of Anglo, Mid-America 
Shredding, Weissman and ARC.  The average sales price per ton of prepared 
ferrous material increased by twelve percent and seven percent for the three 
and nine months ending June 30, 1997, respectively, compared to the same 
periods one year earlier.  The increase in the average selling price is 
primarily attributable to increased demand for ferrous materials.

Gross profit for the three months ended June 30, 1997, was $2.4 million, 
an increase of $2.7 million compared to the same period one year earlier. 
The increase was primarily related to the acquisition of Weissman and 
ARC.  Gross profit for the nine months ended June 30, 1997, was $6.1 
million, an increase of  $5 million compared to the same period one year 
earlier.  The increase resulted primarily from the acquisition of 
Mid-America Shredding, Weissman and ARC. 

Operating income for the three and nine months ending June 30, 1997, 
increased by $2 million and $3.2 million, respectively, compared to the 
same periods one year earlier.  The increase for the three months resulted 
primarily from the acquisition of Weissman and ARC.  The year-to-date increase
resulted from the acquisition of Mid-America Shredding, Weissman, and ARC.

Selling, general and administrative (SG&A) expenses for the three and 
nine months ended June 30, 1997, were $1.3 million and $4 million, 
respectively.  SG&A increased by $0.6 million and $1.8 million  for the 
three and nine months, respectively, compared to the same periods one 
year earlier.  The increase was primarily the result of acquisitions.  As 
a  percent of sales, SG&A declined by two percent for the three and nine 
months ended June 30, 1997, compared to the same periods one year 
earlier.  As a result of continued emphasis on productivity improvements, 
the Company has managed to achieve increases in sales without 
significant increases in support costs as a percentage of sales.
  
Interest expense increased for the three and nine months ended June 30, 
1997, by $0.5 million and $1.1 million, respectively, compared to the 
same periods one year earlier.  The increases were primarily related to 
increases in long-term debt to finance the acquisitions of  Weissman, 
ARC, Anglo and Mid-America Shredding. 

During the quarter, the Company recorded a $0.3 million income tax 
benefit as a result of utilizing a net operating loss carryforward to 
offset anticipated taxable income.  Remaining net operating loss carry-
overs available through the year 2011 are approximately $9 million.

Earnings (loss) per common share amounts were computed by dividing 
earnings (loss) after deduction of preferred stock dividends by the 
average number of common and dilutive equivalent shares outstanding.  
Fully diluted per-common-share amounts assume conversion of the Preferred 
Stock and the issuance of common stock for all other potentially dilutive 
Common Stock equivalents outstanding.

The Company does not believe its businesses have been adversely affected 
by general inflation.

                                       10

PART II - OTHER INFORMATION 

Item 1 - Legal Proceedings

On June 18, 1997, litigation was commenced against the Company for breach of 
contract, quantum meruit, negligence, fraud and violation of federal and state
securities laws arising out of investments made with an individual named John 
Silvia, Jr. and into Caside Associates, Recycling Associates Trust and/or 
Environmental Recovery Systems of Somerset, Inc., a former subsidiary of the 
Company.  The litigation, filed in the Massachusetts Trial Court, Bristol 
Division and captioned William C. Mitchell et al. v. Recycling Industries, 
Inc., seeks damages in excess of $2,000,000.  The Company believes the 
plaintiff's claims to be without merit and is vigorously defending this 
matter.

On May 31, 1996, litigation was commenced against the Company seeking a 
temporary injunction against the Company prohibiting the Company's operations 
at its Harlingen, Texas facility from throwing debris and scrap metal onto an 
adjoining parcel of property and a permanent injunction enjoining the Company 
from operating its scrap metal business at the Harlingen facility. The 
litigation was brought in the Texas District Court for Cameron County, Texas 
and is captioned Yarbroughs, Inc. v. Recycling Industries, Inc. d/b/a Anglo 
Iron & Metals, Inc.  The Company believes the allegations in the complaint are
without merit and is vigorously defending this action.

                                       11


Item 2 - Changes in Securities

Recent Sales of Unregistered Securities

During the quarter ended June 30, 1997, the Company completed the following 
sales of its securities pursuant to the exemption from the registration 
requirements of the Securities Act of 1933, as amended (the "Securities Act") 
provided by Section 4(2) of the Securities Act and Regulation D promulgated 
thereunder.  Based upon representations made to the Company and further 
investigation by the Company, the Company believes that each purchaser in the 
following transactions was an accredited investor as that term is defined 
under Rule 501(a) of Regulation D:

  1.   In connection with the Company's acquisition of substantially all of 
the assets of ARC, on April 7, 1997, the Company issued 10,000 shares of 
Series D Convertible Preferred Stock (the "Series D Shares") to Addlestone 
Recycling Corporation, as payment of $500,000 of the purchase price for that 
acquisition.  

       The Series D Shares will automatically convert on April 1, 1999 into 
that number of shares of the Company's common stock whose average market price
 for the ten trading days preceding the date of conversion is equivalent to 
$500,000 plus the amount of all accrued and unpaid dividends on the Series D 
Shares to the date of conversion.  Holders of the Series D Shares are entitled
to dividends on a cumulative basis at an annual rate of eight percent, payable 
quarterly in cash. 

  2.   On April 7, 1997, the Company issued warrants to acquire up to 128,000 
shares of its common stock to Coast Business Credit in connection with an 
increase in the Company's credit facility from $12 million to $20 million.
Each warrant is exercisable at a price of $1.5625 per share.

  3.   On June 23, 1997, the Company issued warrants to acquire up to 990,000 
shares of its common stock to Siena Capital Partners, L.P. and BankBoston, 
N.A., in connection with a $7 million short-term bridge loan.  The exercise 
price for 650,000 of these warrants is $2.00 per share.  The exercise prices 
for the remaining 340,000 warrants will be determined at various dates through
June 23, 1998.

                                       12


Item 6 - Exhibits and Reports on Form 8-K

Exhibits

  3.1   Amended Bylaws of Recycling Industries, Inc.*

  4.1   Designation of Preferences, Limitations and Relative Rights of the 
Series D Convertible Preferred Stock of Recycling Industries, Inc., 
incorporated by reference to Exhibit 4.1 to the Company's Current Report on 
Form 8-K reporting an event of April 7, 1997, as amended June 20, 1997 on 
Form 8-K/A, Commission File No. 0-20179.

  10.1   Agreements related to the acquisition of Addlestone International 
Corporation:

  10.1.1   Asset Purchase Agreement dated February 16, 1997 by and among 
Recycling Industries of Georgia, Inc., Recycling Industries, Inc., Addlestone 
Recycling Corporation, Nathan Addlestone, Keith Rosen and Susan Berlijn, 
incorporated by reference to Exhibit 10.1 to the Company's Current Report on 
Form 8-K reporting an event of April 7, 1997, as amended June 20, 1997 on 
Form 8-K/A, Commission File No. 0-20179.

  10.2   Agreements related to the Acquisition of Addlestone International 
Corporation:

  10.2.1   Asset Purchase Agreement dated April 8, 1997 by and among Recycling
Industries of South Carolina, Inc., Recycling Industries, Inc., Addlestone 

International Corporation and Nathan Addlestone, incorporated by reference to 
Exhibit 10.1 to the Company's Current Report on Form 8-K reporting an event of
June 25, 1997, Commission File No. 0-20179.

  10.2.2   First Amendment to the Asset Purchase Agreement dated June 24, 1997
by and among Recycling Industries of South Carolina, Inc., Recycling 
Industries, Inc., Addlestone International Corporation and Nathan Addlestone, 
incorporated by reference to Exhibit 10.2 to the Company's Current Report on 
Form 8-K reporting an event of June 25, 1997, Commission File No. 0-20179.

  10.2.3   Site Maintenance and Indemnification Agreement dated June 24, 1997 
by and among Recycling Industries of South Carolina, Inc., Recycling 
Industries, Inc., Addlestone International Corporation and Nathan Addlestone, 
incorporated by reference to Exhibit 10.3 to the Company's Current Report on 
Form 8-K reporting an event of June 25, 1997, Commission File No. 0-20179.

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  10.3   Second Amended and Restated Loan and Security Agreement dated April 7,
1997, by and among Recycling Industries, Inc.; Nevada Recycling, Inc.; 
Recycling Industries of Texas, Inc.; Recycling Industries of Missouri, Inc.;
Recycling Industries of Georgia, Inc.; Weissman Industries, Inc.; and Coast 
Business Credit,  incorporated by reference to Exhibit 10.19 to the Company's 
Registration Statement on Form S-1, as amended June 24, 1997, Commission File 
No. 333-20289.

  10.4   Agreements related to the Siena Capital Partners, L.P. short-term 
bridge loan:

  10.4.1   Securities Purchase Agreement dated June 20, 1997, by and among 
Recycling Industries, Inc. and Siena Capital Partners, L.P.*

  10.4.2   Form of $7,000,000 Promissory Note from Recycling Industries, Inc. 
to Siena Capital Partners, L.P.*

  10.4.3   Form of Warrant Agreement.*

  27  Financial Data Schedule.*


*  Filed Herewith



Reports of Form 8-K

  1.   Current Report on Form 8-K dated April 21, 1997, reporting the 
acquisition of substantially all of the assets of Addlestone Recycling 
Corporation on April 7, 1997. 

  2.   Current Report on Form 8-K/A dated June 20, 1997, amending the Current 
Report on Form 8-K dated April 21, 1997 to filed the following financial 
statements:

       (a)   Audited Combined Financial Statements as of December 31, 1996 and
1995 and for the years ended December 31, 1996, 1995 and 1994 of Addlestone 
Recycling Corporation and Addlestone International Corporation; 

       (b)   Unaudited Pro-forma Consolidated Financial Statements for 
Recycling Industries, Inc. and Subsidiaries as of March 31, 1997 and for the 
12 months ended September 30, 1996.

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                                   SIGNATURES

Pursuant to the requirements 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.  




                           DATE: AUGUST  18, 1997

                           RECYCLING INDUSTRIES, INC.



                           By:  /s/ Thomas J. Wiens  
                           --------------------------------------------------- 
                           Thomas J. Wiens, Chairman & Chief Executive Officer





                           By: /s/ Brian L. Klemsz
                           ---------------------------------------------------
                           Brian L. Klemsz, Principal Financial Officer


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