<PAGE>
                                
                                
                                
                                
                            FORM 10-Q
                                
               SECURITIES AND EXCHANGE COMMISSION
                                
                     WASHINGTON, D.C.  20549
                                


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

For the quarterly period ended January 31, 1996
                               ----------------   

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


For the transition period from               to
                               -------------   ------------


                Commission File Number  033-17921
                                        ---------                             
                                
              Air & Water Technologies Corporation
   __________________________________________________________
     (Exact Name of Registrant as Specified in its Charter)
                                
                                
          Delaware                                  13-3418759
          --------                                  -----------
(State or other Jurisdiction       (I.R.S. Employer Identification Number)
  of Corporation)                              
                                
  U.S. Highway 22 West and Station Road, Branchburg, NJ  08876
  ------------------------------------------------------------
            (Address of Principal Executive Offices)
                                
                   Telephone:  (908) 685-4600
                                
                                
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  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 the number of shares outstanding of each of the issuer's
classes of common stock, as of January 31, 1996.

Class A

$.001 Par Value Common Stock                         32,018,004
----------------------------                         ----------
(Title of Class)                           (Number of Shares Outstanding)




<PAGE>

PART I.   FINANCIAL INFORMATION
ITEM I.   FINANCIAL STATEMENTS
                                
              AIR & WATER TECHNOLOGIES CORPORATION
              ------------------------------------
 CONSOLIDATED BALANCE SHEETS AS OF JANUARY 31, 1996 AND OCTOBER 31, 1995
 ----------------------------------------------------------------------- 
               (in thousands , except share data)
                --------------------------------

[CAPTION]
<TABLE>
             ASSETS                                         1996         1995
             ------                                         ----         ----
                                                         (unaudited)
                                                           --------
<S>                                                     <C>         <C>
CURRENT ASSETS:
  Cash and cash equivalents                              $  11,210   $  11,168
  Accounts receivable, net                                  98,283     102,360
  Costs and estimated earnings in excess of
      billings on uncompleted contracts                     40,400      44,730
  Inventories                                               12,644      13,047
  Prepaid expenses and other current assets                 12,357      10,806
   Net  current  assets  of discontinued  operations           917       1,029
                                                          --------    --------
      Total current assets                                 175,811     183,140

PROPERTY, PLANT AND EQUIPMENT, net                          37,576      37,498
INVESTMENTS  IN  ENVIRONMENTAL TREATMENT FACILITIES         22,449      22,545
DEFERRED DEBT ISSUANCE COSTS                                 3,288       3,334
GOODWILL                                                   274,498     276,549
NET  NON-CURRENT  ASSETS  OF  DISCONTINUED  OPERATIONS         580         580
OTHER ASSETS                                                24,499      24,271
                                                          --------    --------
      Total assets                                       $ 538,701   $ 547,917
                                                          ========    ========

           LIABILITIES AND STOCKHOLDERS' EQUITY
           ------------------------------------

CURRENT LIABILITIES:
  Current installments of long-term debt                 $     353   $     366
  Accounts payable                                          63,126      65,425
  Accrued expenses                                          94,225     101,278
  Billings in excess of costs and estimated earnings on
      uncompleted contracts                                 25,607      25,862
  Income taxes payable                                       2,768       2,777
                                                          --------    --------
      Total current liabilities                            186,079     195,708
                                                          --------    --------
LONG-TERM DEBT                                             293,565     289,120
                                                          --------    --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
  Preferred stock, par value $.01 authorized, 2,500,000
   shares;issued 1,200,000 shares; liquidation value
   $60,000                                                      12          12
  Common stock par value $.001 authorized 100,000,000
   shares; issued 32,107,906 shares                             32          32
  Additional paid-in capital                               427,028     427,028
  Accumulated deficit                                     (367,635)   (363,865)
  Common stock in treasury, at cost                           (108)       (108)
  Cumulative currency translation adjustment                  (272)        (10)
                                                          --------    --------
      Total stockholders' equity                            59,057      63,089
                                                          --------    --------
      Total  liabilities and stockholders' equity        $ 538,701   $ 547,917
                                                          ========    ========
</TABLE>
The accompanying notes are an integral part of these statements.
                                
                                
                                
                                
<PAGE>                                
              AIR & WATER TECHNOLOGIES CORPORATION
              ------------------------------------
              CONSOLIDATED STATEMENTS OF OPERATIONS
              -------------------------------------
  FOR THE THREE MONTH PERIODS ENDING JANUARY 31, 1996 AND 1995
  ------------------------------------------------------------
                (in thousands, except share data)
                 -------------------------------
                           (unaudited)
                            ---------  
<TABLE>
<CAPTION>
                                          Three Months
                                       Ending January 31
                                       ----------------

                                           1996       1995
                                           ----       ----

<S>                                    <C>        <C>
SALES                                   $159,206   $148,451

COST OF SALES                            122,351    112,239

 Gross margin                             36,855     36,212

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES                   29,063     33,008

DEPRECIATION AND AMORTIZATION              4,929      4,329
                                         -------    -------

 Operating income (loss)                   2,863     (1,125)

INTEREST EXPENSE                          (5,614)    (5,722)

INTEREST INCOME                              260        121

OTHER EXPENSE, NET                          (131)      (358)
                                         -------    -------

 Loss before income taxes
 and minority interest                    (2,622)    (7,084)

INCOME TAXES                                 323        293

MINORITY INTEREST                              -         16

NET LOSS                                $ (2,945)  $ (7,393)
                                         =======    =======
LOSS PER COMMON SHARE
 (AFTER PREFERRED STOCK DIVIDENDS)          (.12)      (.26)
                                         =======    =======

 Weighted average number of shares
   outstanding                            32,018     32,018
                                         =======    =======
</TABLE>
The accompanying notes are an integral part of these statements.
                                
                                
                                                                
                                
<PAGE>                                
                                
              AIR & WATER TECHNOLOGIES CORPORATION
              ------------------------------------
              CONSOLIDATED STATEMENTS OF CASH FLOWS
              -------------------------------------
  FOR THE THREE MONTH PERIODS ENDING JANUARY 31, 1996 AND 1995
  ------------------------------------------------------------
                         (in thousands)
                          ------------
                           (unaudited)
                            ---------
<TABLE>
<CAPTION>
                                                              1996        1995
                                                              ----        ----
<S>                                                      <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                $  (2,945) $  (7,393)
  Adjustments to reconcile net loss to net cash provided
   by (used for) continuing operations -
      Depreciation and amortization                           4,929      4,329
      Other, net                                                269        194
                                                            -------    -------
                                                              2,253     (2,870)
  Changes in assets and liabilities -
   (Increase) decrease in assets -
      Accounts receivable                                     4,077     (4,884)
      Costs and estimated earnings in excess of
        billings on uncompleted contracts                     4,330      1,812
      Inventories                                               403        338
      Prepaid expenses and other current assets              (3,904)       193
      Other assets                                               76     (1,286)
    Increase (decrease) in liabilities -
      Accounts payable                                       (2,307)     1,999
      Accrued expenses                                       (5,953)   (10,169)
      Billings in excess of costs and estimated
        earnings on uncompleted contracts                      (255)    (4,432)
      Income taxes                                               (9)       391
                                                            -------    -------
      Net cash used for continuing operations                (1,289)   (18,908)
      Net cash provided by (used for) discontinued operations   112       (277)
                                                            -------    -------
      Net cash used for operating activities                 (1,177)   (19,185)
                                                            -------    -------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of business                              2,353     11,588
  Capital expenditures                                       (1,983)    (1,429)
  Investment in environmental treatment facilities              215        (43)
  Other, net                                                 (2,052)    (1,209)
                                                            -------    -------
      Net cash provided by (used for) investing activities   (1,467)     8,907
                                                            -------    -------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payment of notes payable and long-term debt                   (68)       (63)
  Net borrowings under credit facilities                      4,500     11,641
  Cash dividends paid                                          (825)      (825)
  Other, net                                                   (921)    (1,962)
                                                            -------    -------
      Net cash provided by financing activities               2,686      8,791
                                                            -------    -------
      Net increase (decrease) in cash and cash equivalents       42     (1,487)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD             11,168     11,021
                                                            -------    ------- 
CASH AND CASH EQUIVALENTS AT END OF PERIOD                 $ 11,210   $  9,534
                                                            =======    =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the period for interest                 $  7,497   $  7,593
                                                            =======    =======
</TABLE>
The accompanying notes are an integral part of these statements.


<PAGE>

              AIR & WATER TECHNOLOGIES CORPORATION
              ------------------------------------
       NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
       -------------------------------------------------- 
                        JANUARY 31, 1996
                        ----------------
                           (unaudited)
                            ---------
<TABLE>
<CAPTION>
                                
                                
<C>  <S>               
(1)  Basis of Presentation:
     --------------------- 

     The interim consolidated financial statements and  the
     following notes should be read in conjunction with the notes
     to  the  consolidated financial statements of  Air  &  Water
     Technologies  Corporation and its consolidated  subsidiaries
     (the "Company") as included in its Form 10-K filed with  the
     Securities and Exchange Commission for the fiscal year ended
     October  31,  1995.   The interim information  reflects  all
     adjustments, including normal recurring accruals, which are,
     in   the  opinion  of  management,  necessary  for  a   fair
     presentation of the results for the interim period.  Results
     for  the  interim period are not necessarily  indicative  of
     results to be expected for the full year.

(2)  Commitments and Contingencies:
     -----------------------------

     The  Company  and  its subsidiaries are parties  to  various
     legal   actions  arising  in  the  normal  course  of  their
     businesses,  some  of which involve claims  for  substantial
     sums.   The  Company believes that the disposition  of  such
     actions, individually or in the aggregate, will not  have  a
     material   adverse  effect  on  the  consolidated  financial
     position or results of operations of the Company taken as  a
     whole.


(3)  Reclassifications:
     -----------------

     Certain reclassifications have been made to conform the 1995
     consolidated financial statements to the 1996 presentation.



</TABLE>


<PAGE>

ITEM II.

             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             ---------------------------------------
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS
          ---------------------------------------------
     
The  following information should be read in conjunction with the
unaudited interim consolidated financial statements and the notes
thereto  included  in  this Quarterly  Report   and  the  audited
financial statements and Management's Discussion and Analysis  of
Financial  Condition and Results of Operations contained  in  the
Company's  Form  10-K  filed  with the  Securities  and  Exchange
Commission for the fiscal year ended October 31, 1995.

Results of Operations
---------------------

Summarized below is certain financial information relating to the
core segments of the Company (in thousands):

<TABLE>
<CAPTION>
                                          Three Months Ended January 31
                                          -----------------------------
                                             1996             1995
                                             ----             ----
<S>                                      <C>             <C>
Sales:
     PSG (Contract Operations)            $ 64,034        $ 41,785
     Metcalf & Eddy                         47,138          51,185
     Research - Cottrell                    48,649          54,072
     Other and eliminations                  (615)           1,409
                                           -------         -------
                                          $159,206        $148,451
                                           =======         =======

Cost of Sales:
     PSG (Contract Operations)            $ 56,676        $ 35,086
     Metcalf & Eddy                         27,800          31,879
     Research - Cottrell                    38,490          44,532
     Other and eliminations                   (615)            742
                                           -------         ------- 
                                          $122,351        $112,239
                                           =======         =======

Selling, General and Administrative Expenses:
     PSG (Contract Operations)            $  3,478        $  3,396
     Metcalf & Eddy                         15,612          17,901
     Research - Cottrell                     8,320           8,489
     Other and eliminations                      -             542
     Corporate (unallocated)                 1,653           2,680
                                           -------         -------   
                                          $ 29,063        $ 33,008
                                           =======         =======

Depreciation and Amortization:
     PSG (Contract Operations)            $  1,964        $  1,285
     Metcalf & Eddy                          1,464           1,336
     Research - Cottrell                     1,389           1,466
     Other and eliminations                      -              92
     Corporate (unallocated)                   112             150
                                           -------         -------
                                          $  4,929        $  4,329
                                           =======         =======  

Operating Income (Loss):
     PSG (Contract Operations)             $ 1,916        $  2,018
     Metcalf & Eddy                          2,262              69
     Research - Cottrell                       450            (415)
     Other and eliminations                      -              33
     Corporate (unallocated)                (1,765)         (2,830)
                                           -------         -------
                                          $  2,863        $ (1,125)
                                            =======        =======
</TABLE>

<PAGE>
PSG (Contract Operations)
-------------------------
     
Operating  income was $1.9 million during  the  three  month
period ended January 31, 1996 and consistent with the  prior
period.   The  results  include additional  sales  of  $23.4
million  related  to  the  PRASA contract  under  which  PSG
operates,  maintains  and manages Puerto  Rico's  water  and
wastewater treatment facilities.  The profitability of  this
five-year  contract  is  contingent upon  achieving  certain
incentive  revenues and operating efficiencies  in  which  a
significant  amount  is expected to be realized  during  the
later years of the contract.  As a result, this contract has
not  had  a  significant impact on PSG's  current  operating
income.


Metcalf & Eddy
--------------

Operating income increased by $2.2 million during the  three
month  period ended January 31, 1996.  The higher  operating
income was attributable primarily to personnel overhead  and
facilities  cost reductions during the latter  half  of  the
prior  fiscal year which resulted in a decrease in  selling,
general and administrative expenses of $2.3 million.   Sales
decreased  by  $4.0  million during the three  month  period
ended  January 31, 1996 as a result of delays in the release
of  certain  task orders and the severe winter weather.   In
addition,  estimated favorable pricing adjustments  of  $1.3
million offset the impact of the reduced sales volume.


Research-Cottrell
-----------------

Operating  income increased by $.9 million during the  three
month  period ended January 31, 1996.  The increase resulted
from  the incremental operating income ($1.1 million) earned
in  several  business units, primarily,  R-C  International,
Custodis, Ecodyne and Flex-Kleen.  These business units  had
higher  sales  volumes of $8.8 million. In  addition,  REECO
generated  an additional $.6 million of operating income  on
slightly   lower  sales  volume  due  to  improved   project
execution.  Partially offsetting these improved results were
lower  operating  income generated in  APCD  and  KVB  ($1.0
million)  which  combined, had lower sales volume  of  $12.9
million.   KVB's  reduced volume resulted  from  significant
shipments and services required in the prior period to  meet
the  demand requirements of utility customers under the 1990
Clean  Air Act.  KVB continues to make progress in resolving
software  issues  on systems previously shipped  to  certain
utilities   which  have  created  problems   in   collecting
receivables  due  to claims and back-charges;  it  has  also
continued to incur additional software, warranty and project
close-out costs in resolving this situation.  APCD's reduced
sales  volume and profitability reflects delays in new order
bookings in both the utility and industrial markets.


Corporate and Other
-------------------

The    corporate   (unallocated)   selling,   general    and
administrative expenses decreased by $1.0 million during the
three  month  period  ended January 31,  1996  due  to  cost
reduction  efforts, including personnel  related  costs  and
professional fees.


Financial Condition
-------------------
     
Cash  used  by  operations for the three month period  ended
January 31, 1996 amounted to $1.2 million primarily  due  to
cash  outlays for the previously established unusual  charge
reserves.   The Company also utilized $3.8 million  of  cash
for   capital  expenditures,  investments  in  environmental
treatment facilities and other investment activities  during
the  period. These cash requirements were funded principally
through  proceeds from the prior year sale of its  hazardous
waste  transfer station operations and borrowings under  the
Company's credit facility discussed below.

<PAGE>

The  Company  has a  three-year $130 million Senior  Secured
Credit  Facility ("Credit Facility") with First Chicago  and
Societe  Generale acting as co-agents for a syndicate  which
includes seven additional banks. It is primarily designed to
finance  working  capital requirements  and  allow  for  the
issuance  of  letters of credit, both subject to limitations
and  secured  by a first security interest in  substantially
all of the assets of the Company.

Of  the total commitment, borrowings are limited to the  sum
of   a   percentage   of   certain   eligible   receivables,
inventories, net property, plant and equipment and costs and
estimated  earnings in excess of billings and bear  interest
at  LIBOR (currently 5.25%), as defined, plus .725% or at  a
defined  bank  rate  approximating prime (currently  8.25%).
The  Credit  Facility  also allows  for  certain  additional
borrowings, including, among other things, project financing
and  foreign  borrowing facilities, subject to  limitations.
The  Credit  Facility contains certain financial  and  other
restrictive   covenants  with  respect   to   the   Company,
including,  among other things, the maintenance  of  certain
financial  ratios,  and restrictions on  the  incurrence  of
additional  indebtedness, acquisitions, the sale of  assets,
the  payment of dividends and the repurchase of subordinated
debt.  In addition, the agreement requires CGE to maintain a
minimum 40% ownership interest in the Company.

Under  the  Credit Facility at January 31, 1996 the  Company
had  outstanding  borrowings of $48.0 million  (capacity  of
$66.5  million) and issued and outstanding letters of credit
of  $20.5  million (capacity of $63.5 million). The  Company
expects  its operations to generate sufficient cash  in  the
near   term   to   fund   its  estimated   working   capital
requirements, capital expenditures and cash outlays for  the
reserves  established in connection with  fiscal  year  1994
unusual  charges.   The Company believes  that  it  has  the
ability to manage its cash needs and is currently continuing
its  efforts to control its expenses as well as reducing its
working capital requirements.

The businesses of the Company have not historically required
significant  ongoing  capital expenditures.  For  the  three
months  ended  January 31, 1996 and the years ended  October
31,  1995  and  1994  total capital expenditures  were  $2.0
million,  $7.9  million and $5.5 million, respectively.   At
January  31,  1996, the Company had no material  outstanding
purchase commitments for capital expenditures.


<PAGE>

PART II.  OTHER INFORMATION


ITEM  I.    Legal Proceedings


     The  Company  and its subsidiaries are parties to various  legal
     actions  arising in the normal course of their businesses,  some
     of  which  involve  claims for substantial  sums.   The  Company
     believes  that the disposition of such actions, individually  or
     in the aggregate, will not have a material adverse effect on the
     consolidated financial position or results of operations of  the
     Company taken as a whole.

ITEM 2-5

     There are no reportable items under Part II, items 2 through 5.


ITEM 6.    Exhibits and Reports on Form 8-K

(a)  Exhibits.

  Exhibit 11.  Computation of per share earnings.

  Exhibit 27.  Financial Data Supplement                               
                                                        
                                  
                                  
                                  
                                                               
<PAGE>         
                                  
                              SIGNATURE
                              ---------                            

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.


                                         AIR & WATER TECHNOLOGIES CORPORATION
                                         ------------------------------------
                                                     (registrant)



Date   February 27, 1996                         /s/ Alain Brunais
       -----------------                         -----------------
                                                 Alain Brunais
                                                 Chief Financial Officer