<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 April 30, 1997
                              ---------------   

        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 of Corporation)      (I.R.S. Employer 
                                                    Identification Number)
                                
                                
  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 April 30, 1997.

Class A

$.001 Par Value Common Stock                           32,019,254
----------------------------                 ---------------------------    
     (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 APRIL 30, 1997 AND OCTOBER 31, 1996
         ---------------------------------------------------------------------
                               (in thousands, except share data)
                               ----------------------------------
[CAPTION]
<TABLE>

             ASSETS                               1997         1996
             -----                                ----         ----
                                               (unaudited)
                                                ---------
<S>                                            <C>         <C>
CURRENT ASSETS:
  Cash and cash equivalents                      $ 13,836    $ 12,667
  Accounts receivable, net                         89,735     100,933
  Costs and estimated earnings in excess of
      billings on uncompleted contracts            43,262      48,097
  Inventories                                      11,973      11,319
  Prepaid expenses and other current assets        11,484      12,027
                                                  -------     -------
      Total current assets                        170,290     185,043

PROPERTY, PLANT AND EQUIPMENT, net                 29,690      35,432
INVESTMENTS IN ENVIRONMENTAL TREATMENT 
  FACILITIES                                       21,968      22,062
GOODWILL                                          244,236     265,860
OTHER ASSETS                                       23,002      29,873
                                                  -------     -------
      Total assets                               $489,186    $538,270
                                                  =======     =======

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

CURRENT LIABILITIES:
  Short-term borrowings and current
   installments of long-term debt                $ 11,872    $    378
  Accounts payable                                 78,949      73,951
  Accrued expenses                                 87,523      76,656
  Billings in excess of costs and estimated
   earnings on uncompleted contracts               28,160      23,995
  Income taxes payable                              2,366       2,507
                                                  -------     -------
      Total current liabilities                   208,870     177,487
                                                  -------     -------
LONG-TERM DEBT                                    305,097     306,542
                                                  -------     -------
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 32,109,156 and
    32,107,906 shares                                 32          32
  Additional paid-in capital                     427,036     427,036
  Accumulated deficit                           (450,599)   (372,433)
  Common stock in treasury, at cost                 (108)       (108)
  Cumulative currency translation adjustment      (1,154)       (298)
                                                 -------    --------
      Total stockholders' equity                 (24,781)     54,241
                                                 -------    --------
      Total liabilities and stockholders' 
       equity                                  $ 489,186    $538,270
                                                ========    ========
</TABLE>
The accompanying notes are an integral part of these statements.
                                
<PAGE>                                                          
                                
                                
                                
                                
                 AIR & WATER TECHNOLOGIES CORPORATION
                 ------------------------------------
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                 -------------------------------------
     FOR THE THREE AND SIX MONTH PERIODS ENDED APRIL 30, 1997 AND 1996
     -----------------------------------------------------------------
                 (in thousands, except per share data)
                  -----------------------------------
                             (unaudited)
                              ---------

                                Three Months           Six Months
                               Ended April 30        Ended April 30
                               --------------        --------------
                                 1997      1996       1997      1996
                                 ----      ----       ----      ---- 
[CAPTION]
<TABLE>
<S>                            <C>       <C>        <C>       <C>
SALES                           $148,275  $167,491   $295,234  $326,697

COST OF SALES                    136,596   133,500    259,351   261,924
                                 -------   -------    -------   -------

 Gross margin                     11,679    33,991     35,883    64,773

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES           37,561    24,057     62,755    47,047

DEPRECIATION AND AMORTIZATION      6,799     5,147     12,028    10,076

IMPAIRMENT CHARGES                25,000         -     25,000         -
                                 -------    -------   -------   -------

 Operating income (loss)         (57,681)    4,787    (63,900)    7,650

INTEREST EXPENSE                  (5,985)   (5,618)   (11,953)  (11,232)

INTEREST INCOME                      121       334        235       594

OTHER EXPENSE, NET                  (139)     (482)      (465)     (613)
                                 -------    -------   -------    ------

 Loss before income taxes        (63,684)     (979)   (76,083)   (3,601)

INCOME TAXES                         302       326        433       649
                                 -------   -------    -------   -------

NET LOSS                        $(63,986) $ (1,305)  $(76,516) $ (4,250)
                                 =======   =======    =======   =======

LOSS PER COMMON SHARE
 (AFTER PREFERRED STOCK
    DIVIDENDS)                  $  (2.02) $   (.07)  $  (2.44) $  (.18)
                                 =======   =======    =======   =======

 Weighted average number
   of shares outstanding          32,019    32,018     32,019   32,018
                                 =======   =======    =======  =======
                                
The accompanying notes are an integral part of these statements.
</TABLE>
                                
<PAGE>                                
                                
                                                                
                                
                                
              AIR & WATER TECHNOLOGIES CORPORATION
              ------------------------------------
              CONSOLIDATED STATEMENTS OF CASH FLOWS
              -------------------------------------
     FOR THE SIX MONTH PERIODS ENDED APRIL 30, 1997 AND 1996
     -------------------------------------------------------
                         (in thousands)
                          ------------
                           (unaudited)
                            ---------

                                                          1997          1996
[CAPTION]
<TABLE>
                                                          ----          ----
<S>                                                 <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                            $ (76,516)      $ (4,250)
  Adjustments to reconcile net loss to net cash 
  provided by (used for) continuing operations -
     Depreciation and amortization                       12,028         10,076
     Impairment charges and other, net                   27,298            395

      Changes in assets and liabilities -
      (Increase) decrease in assets -
      Accounts receivable, net                           11,074          4,651
      Costs and estimated earnings in excess of
        billings on uncompleted contracts                 4,835          2,704
      Inventories                                          (654)          (181)
      Prepaid expenses and other current assets
                                                            337           (371)
      Other assets                                        6,187            184
      Increase (decrease)
        in liabilities -
      Accounts payable                                    4,965         (4,949)
      Accrued expenses                                    6,504        (12,722)
      Billings in excess of costs and estimated
        earnings on uncompleted contracts                 4,165          3,077
      Income taxes                                         (138)          (160)
                                                        -------        -------
      Net cash provided by (used for) continuing
        operations                                           85         (1,546)
      Net cash provided by discontinued operations
                                                            392            485
                                                        -------        -------
      Net cash provided by (used for) operating
         activities                                         477         (1,061)
                                                        -------        -------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of business                            373          2,353
  Capital expenditures                                   (3,817)        (3,739)
  Investment in environmental treatment facilities          234            336
  Start up costs and other, net                          (3,389)        (4,290)
                                                        -------        -------
     Net cash used for investing activities              (6,599)        (5,340)
                                                        -------        -------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payment of notes payable and long-term debt              (133)          (132)
  Net borrowings under credit facilities                 10,182          9,000
  Cash dividends paid                                    (1,650)        (1,650)
  Other, net                                             (1,108)        (1,066)
                                                        -------        -------
     Net cash provided by financing activities            7,291          6,152
                                                        -------        -------
     Net increase (decrease) in cash and cash
      equivalents                                         1,169           (249)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD         12,667         11,168
                                                        -------        -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD             $ 13,836       $ 10,919
                                                        =======        =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid during the period for interest          $ 11,389       $ 10,902
                                                        =======        =======
</TABLE>
The accompanying notes are an integral part of these statements.
                                
<PAGE>                                
       
                      AIR & WATER TECHNOLOGIES CORPORATION
                      -------------------------------------
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
               --------------------------------------------------
                                April 30, 1997
                                --------------
                                  (unaudited)
                                   ---------
                                
                                
(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,  1996.   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 1996
     consolidated financial statements to the 1997 presentation.

(4)  Recent Developments:
     -------------------
     These  interim  financial  statements  should  be  read   in
     conjunction  with management's discussion  and  analysis  of
     financial  condition and results of operations, including  a
     discussion  on the current period charges, revised  business
     strategy  and  waivers and amendments related  to  the  Bank
     Credit Facility.

<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, 1996.

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

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

[CAPTION]
<TABLE>
                                    Three Months Ended       Six Months Ended
                                           April 30              April 30
                                    -------------------     -----------------

                                        1997       1996      1997       1996
                                        ----       ----      ----       ----
<S>                                <C>        <C>        <C>        <C>
Sales:
  Professional Services Group        $ 67,139   $ 63,273   $129,727   $127,307
  Metcalf & Eddy                       41,908     50,964     86,499     98,102
  Research - Cottrell                  39,644     54,326     79,966    102,975
  Other and eliminations                 (416)    (1,072)      (958)    (1,687)
                                     --------   --------   --------   --------
                                     $148,275   $167,491   $295,234   $326,697
                                     ========   ========   ========   ========

Cost of Sales:
  Professional Services Group        $ 62,830   $ 55,336   $120,789   $112,012
  Metcalf & Eddy                       38,695     35,442     70,745     69,315
  Research - Cottrell                  35,487     43,794     68,775     82,284
  Other and eliminations                 (416)    (1,072)      (958)    (1,687)
                                     --------   --------   --------   --------
                                     $136,596   $133,500   $259,351   $261,924
                                     ========   ========   ========   ========

Selling, General and Administrative Expenses:
  Professional Services Group        $  9,307   $  3,740   $ 13,128  $   7,218
  Metcalf & Eddy                       18,074     10,737     29,126     20,276
  Research - Cottrell                   8,274      7,770     16,526     16,090
  Other and eliminations                    -          -          -          -
  Corporate (unallocated)               1,906      1,810      3,975      3,463
                                     --------   --------   --------   --------
                                     $ 37,561   $ 24,057   $ 62,755   $ 47,047
                                     ========   ========   ========   ========

Depreciation and Amortization:
  Professional Services Group        $  2,047   $  2,079   $  4,093   $  4,043
  Metcalf & Eddy                        3,251      1,511      4,963      2,975
  Research - Cottrell                   1,371      1,443      2,714      2,832
  Other and eliminations                    -          -          -          -
  Corporate (unallocated)                 130        114        258        226
                                     --------   --------   --------   --------
                                     $  6,799   $  5,147   $ 12,028   $ 10,076
                                     ========   ========   ========   ========

Impairment Charges:
  Research - Cottrell                $ 25,000   $      -   $ 25,000   $      -
                                     ========   ========   ========   ========
Operating Income (Loss):
  Professional Services Group        $ (7,045)  $  2,118   $ (8,283)  $  4,034
  Metcalf & Eddy                      (18,112)     3,274    (18,335)     5,536
  Research - Cottrell                 (30,488)     1,319    (33,049)     1,769
  Other and eliminations                    -          -          -          -
  Corporate (unallocated)              (2,036)    (1,924)    (4,233)    (3,689)
                                     --------    --------   --------  --------
                                     $(57,681)  $  4,787   $(63,900)  $  7,650
                                     ========   ========   ========   ========

</TABLE>
<PAGE>



Professional Services Group
---------------------------
     
The  operating  losses sustained during the  three  and  six
month periods ended April 30, 1997 were primarily the result
of   additional   provisions  and  asset  write-offs   which
approximated  $9.3  million.  These charges  were  primarily
related to revised estimates of direct project costs of $2.8
million required under the PRASA contract; professional fees
of  $5.3 million related to marketing consultants, the  U.S.
Department  of Justice investigation and certain  litigation
matters;   and  provisions  of  $1.2  million  for   revised
collectibility   estimates  for  certain  non-current   note
receivables.

Excluding  the  effect  of the aforementioned  charges,  the
operating  results were $.5 million and $3.0  million  lower
than  the three and six month comparable prior periods ended
April  30, 1996 due to a reduction in gross margin rates  of
1.9%   and   3.0%,  or  $1.3  million  and   $3.9   million,
respectively.   Additional direct  project  costs  including
certain   higher   non-recoverable  costs   resulting   from
competitive   pricing  pressures  and  timing   of   certain
contractual  incentive clauses for the PRASA project  caused
the   lower  gross margin rates.  Partially off-setting  the
reduced  margin rates in the three month period ended  April
30,  1997 was the impact of slightly higher sales volume and
reduced administrative overhead.

The  Company's sales have remained comparable to  the  prior
periods  as a result of the privatization market  developing
more slowly than anticipated.  Although the Company has been
successful  in obtaining contract renewals, it continues  to
experience  delays in negotiating and closing  new  business
opportunities   due  to  municipal  clients'  implementation
schedules.  Excluding the impact of the aforementioned  $9.3
million  charges, results are expected to improve moderately
throughout  the  year and be more comparable  to  the  prior
period  results due to new contracts and certain contractual
incentive clauses which are expected to be realized later in
the fiscal year.

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

The  operating  losses sustained during the  three  and  six
month periods ended April 30, 1997 were primarily the result
of  $5.4 million of provisions required in order to properly
reflect   the   Company's   revised   estimates   for    the
collectibility  of  certain  receivables  based  on   recent
adverse developments in contract negotiations and collection
efforts,  $6.3  million of increases  to  its  reserves  for
litigation,  professional  liability  and  certain   project
contingencies  due  to  revised estimates  of  the  expected
outcome  of  certain  unasserted  and  asserted  claims  and
litigation  incurred in the normal course of business,  $3.4
million  of  equipment  write-offs, a  $1.7  million  charge
related  to  a cancellation penalty for a high  cost  leased
facility  (recorded in the first quarter) and  other  direct
and indirect costs of $2.6 million.

Excluding  the  effect  of the aforementioned  charges,  the
operating  results were $4.0 million and $4.4 million  lower
than  the three and six month comparable prior periods ended
April  30,  1996 due to lower sales volume and gross  margin
rates.   The  lower sales volume of $9.1 million  and  $11.6
million during the periods reduced the operating results  by
$2.8  million  and $3.4 million due to delays  in  obtaining
task  order  releases primarily within the  hazardous  waste
remediation service lines and several contracts  which  were
awarded  to  competitors.   Delays  are  increasing  due  to
funding  and  administrative issues with certain  government
agencies  (e.g.  Environmental Protection Agency  "EPA"  and
Department  of  Defense).   The  lower  gross  margin  rates
reduced  the  operating  results in  both  periods  by  $1.6
million  primarily  due  to  favorable  pricing  adjustments
reflected in the prior periods.

The  results are expected to improve moderately  during  the
second   half  of  this  fiscal  year,  and  excluding   the
aforementioned charges, be more comparable to the respective
prior  year periods due to recent overhead reductions  which
may  off-set  the  expected lower sales volume.   Full  year
sales levels are expected to be approximately 15% below  the
comparable  prior  year period due to continuing  delays  in
work releases.

<PAGE>

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

The  operating  losses sustained during the  three  and  six
month periods ended April 30, 1997 were primarily the result
of  a  $25.0  million  impairment charge  discussed  in  the
"Revised   Business  Strategy"  section  below,  and   other
receivable  and warranty provisions of $4.0 million  related
to its Ecodyne and Custodis operations due to recent adverse
developments on two specific projects.  Excluding the effect
of  the  aforementioned charges, the operating results  were
$2.8  million and $5.8 million lower than the three and  six
month   comparable  prior  periods  ended  April  30,   1996
primarily due to lower sales volume and reduced margin rates
to a lesser extent.  The lower sales volume of $14.7 million
and  $23.0 million during the aforementioned periods reduced
the  operating  income  by $2.9 million  and  $4.6  million,
respectively.   The  lower  sales  volumes  were   reflected
primarily in the REECO, Ecodyne, Custodis and KVB operations
which  approximated 80% of the variance in the  three  month
period  and  substantially all of the variance  in  the  six
month  period.   These  operations are experiencing  reduced
volume  as a result of fewer bid opportunities due to delays
in  issuing  new air quality standards by the EPA,  lack  of
enforcement  of existing standards and price pressures  from
highly competitive markets.  The adjusted gross margin rates
have  also decreased by .7% and 2.1% ($.3 million  and  $1.7
million)   during   the  three  and   six   month   periods,
respectively,  due  to price pressures, unfavorable  product
line mix and project execution.

Although  the  results  are  expected  to  improve  slightly
throughout   the   year  (excluding  the   effect   of   the
aforementioned charges), the unfavorable trend  compared  to
the  prior  periods related to volume and  margin  rates  is
expected to continue due to the reasons previously stated.

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

The  unallocated  corporate costs were $.1 million  and  $.5
million  higher  than the comparable prior  periods  due  to
increased  outside  services.  In addition,  higher  average
borrowings resulted in increased interest expense.

Revised Business Strategy
-------------------------

The   Company  has  recently  completed  a  review  of   its
operations' three year business plans.  These plans included
a  detailed  analysis of markets, growth  opportunities  and
forecasted  three  year operating results,  cash  flows  and
return on capital employed for each business segment.

As   a  result  of  this  review,  management  is  currently
considering the actions necessary to redeploy its capital to
its  core  water business (Professional Services  Group  and
Metcalf   &   Eddy).   This  action  reflects   management's
assessment  of the greater market opportunities  and  growth
potential  in  these sectors compared to the  air  pollution
markets.    Among   other  factors  contributing   to   this
conclusion were recent tax law changes which may expand  the
duration of operations, maintenance and management contracts
and  create  additional opportunities within the  water  and
wastewater  treatment markets which are the primary  markets
for  Professional Services Group and Metcalf & Eddy.   These
enhanced  opportunities are in contrast to  the  air  sector
where continuing delays in issuing new air quality standards
by the EPA and lack of enforcement of existing standards are
expected  to limit the growth opportunities within  the  air
pollution control markets targeted by Research-Cottrell.

Furthermore,  the  returns on capital  employed  within  the
Professional Services Group and Metcalf & Eddy segments  are
forecasted to be greater than the returns for the  Research-
Cottrell segment.  From a competitive standpoint, management
also  believes  that  the  Company has  greater  competitive
advantages  and market penetration through its  Professional
Services  Group and Metcalf & Eddy businesses than what  has
been achieved by its Research-Cottrell operations.

<PAGE>

As a result of the above, management is assessing the impact
of de-emphasizing the Research-Cottrell business segment and
redeploying  its capital to its Professional Services  Group
and  Metcalf & Eddy segments. A financial advisor  has  been
retained  to  assist  the  Company  in  exploring  strategic
alternatives  related to this redeployment.  The  successful
implementation of a redeployment program could  include  the
divestiture of portions or substantially all of the Research-
Cottrell segment over the next few years, although  no  such
definitive decision to divest has been made by the Company's
Board of Directors at this time.

Based on the recent downturn in the operating performance of
certain  of  the Research-Cottrell businesses,  the  Company
reviewed  the expected future cash flows of these businesses
and  reassessed their fair value.  In connection  with  this
review, the Company has reflected a $25.0 million impairment
charge  including  a  goodwill writedown  of  $17.4  million
related to the Ecodyne and KVB businesses during the  second
quarter  of fiscal 1997.  The impairment has been determined
in   accordance  with  Statement  of  Financial   Accounting
Standards   No.   121  by  taking  into  consideration   the
operations' fair values based on expected future cash  flows
discounted at a rate commensurate with the risks involved.

The realizability of goodwill and other long lived assets is
an   estimate  based  on  the  underlying  assets  remaining
estimated  useful lives, projected operating cash flows  and
ultimate  disposition assumption (held for use or  held  for
sale).   Although  the  impairment  charge  described  above
represents  management's best estimate at this time,  it  is
reasonably  possible that this estimate will change  in  the
near  term  as  a  consequence of further  deterioration  in
market  conditions and operating results or the  divestiture
of all or part of the Research-Cottrell segment.  The effect
of  the change would be material to the financial statements
since a significant additional charge may be required.

Financial Condition
-------------------
     
Net  financial  debt  (debt less  cash)  increased  by  $8.9
million   during the six month period ended April 30,  1997.
In  addition to the preferred stock dividend payment of $1.7
million,  the  Company utilized $6.6  million  of  cash  for
capital expenditures, investments in environmental treatment
facilities  and other investment activities including  start
up  costs  during  the period. These cash requirements  were
funded  principally through borrowings under  the  Company's
credit facilities discussed below.

The  Company  maintains  a $60 million  unsecured  revolving
credit  facility  with Anjou International  Company  ("Anjou
Credit  Facility"), an affiliated company.   The  borrowings
under the Anjou Credit Facility bear interest at LIBOR  plus
 .6%.   The  Company also maintains a  Senior Secured  Credit
Facility ("Bank Credit Facility") which was increased by $20
million  to $70 million as of April 28, 1997.  As  of  April
30,  1997,  the Company's outstanding borrowings  under  the
Anjou  Credit  Facility totaled $60  million  and  the  Bank
Credit  Facility  totaled $10 million  (unused  capacity  of
$36.9 million).  Outstanding letters of credit totaled $23.1
million on April 30, 1997.

The  Bank  Credit Facility is primarily designed to  finance
working capital requirements and provide 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 lesser of $50 million or 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
(5.7%  at  April 30, 1997), as defined, plus 1.0%  or  at  a
defined  bank  rate approximating prime (8.5% at  April  30,
1997).   The  Bank Credit Facility also allows  for  certain
additional   borrowings,  including,  among  other   things,
project  financing and foreign borrowing facilities, subject
to  limitations  and  contains certain financial  and  other
restrictive  covenants, 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.  As a result of the charges previously
noted,  and in conjunction with the aforementioned  increase
in its Bank Credit Facility, the Company was required to and
did  obtain  certain  waivers  as  of  April  28,  1997  and
amendments  to  the financial covenants of the  Bank  Credit
Facility  which  expires March 31, 1998.  The  Company  will
need to replace this facility at that time.

<PAGE>

In  addition, the related agreement requires CGE to maintain
its  support  of  the  Company,  including,  a  minimum  40%
ownership interest in the Company and its right to designate
its  proportionate share of the Company's Board of Directors
as  well  as the Chief Executive Officer and Chief Financial
Officer.

The businesses of the Company have not historically required
significant ongoing capital expenditures. For the six  month
period ended April 30, 1997, and the years ended October 31,
1996  and 1995 total capital expenditures were $3.8 million,
$7.5  million and $7.9 million, respectively.  At April  30,
1997,  the  Company  had  no material  outstanding  purchase
commitments for capital expenditures.  As of June 11,  1997,
the  Company has borrowed an additional $11.0 million during
the   third   quarter  of  fiscal  1997  under  its   credit
facilities.  Current cash flow forecasts reflect  additional
borrowing  requirements of approximately $25 million  during
the  second  half of this fiscal year which in  addition  to
potential letters of credit requirements would, by year end,
approximate   the   Company's   credit   capacity    (before
consideration  of  the  impact, if any,  of  the  successful
outcome of the programs described below).  The expected cash
usage   is  primarily  due  to  additional  working  capital
requirements for anticipated fourth quarter sales growth and
payments   required   under  certain   insurance   programs.
Management  is  addressing its forecasted cash  requirements
through  a  series  of  programs,  for  which  there  is  no
assurance of success, directed at improving working  capital
management by focusing on, among other things, collection of
Metcalf  & Eddy past due receivables and unreimbursed  costs
on  certain   significant  contracts,  including  the  PRASA
contract,  increased  emphasis on capital  redeployment  and
asset  divestitures and the restructuring and  strengthening
of its current capital structure.

Statement Regarding Forward Looking Disclosures
-----------------------------------------------

Statements  contained in this report, including Management's
Discussion and Analysis, are forward looking statements that
involve a number of risks and uncertainties which may  cause
the  Company's actual operating results to differ materially
from  the  projected amounts.  Among the factors that  could
cause  actual results to differ materially are risk  factors
listed  from  time  to  time in the  Company's  SEC  reports
including:

       -    the Company's highly competitive marketplace,
       -    changes  in  as well as enforcement  levels  of
            federal,  state  and local environmental  legislation
            and  regulations that change demand for a significant
            portion of the Company's services,
       -    the  ability to obtain new contracts (some  of
            which are significant) from existingand new clients,
       -    the execution of the expected new projects  and
            those  projects in backlog within the most recent
            cost estimates and
       -    the  resolution  of  existing  claims
            arising in the ordinary course of business.

<PAGE>

PART II.  OTHER INFORMATION


ITEM  1.    Legal Proceedings


     In  connection with a broad investigation by  the  U.S.
     Department of Justice into alleged illegal payments  by
     various persons to members of the Houston City Council,
     the  Company's subsidiary, Professional Services  Group
     (PSG),  received a federal grand jury subpoena  on  May
     31,  1996  requesting documents regarding  certain  PSG
     consultants and representatives that had been  retained
     by  PSG  to  assist  in advising the  City  of  Houston
     regarding  the  benefits that  could  result  from  the
     privatization of Houston's water and wastewater system.
     PSG  has cooperated and continues to cooperate with the
     Justice Department which has informed the Company  that
     it   is  reviewing  transactions  among  PSG  and   its
     consultants.   The Company promptly initiated  its  own
     independent investigation into these matters and placed
     PSG's  chief  executive officer, Michael M.  Stump,  on
     administrative leave of absence with pay.   Mr.  Stump,
     who  has  denied any wrongdoing, resigned from  PSG  on
     December  4,  1996.   In  the  course  of  its  ongoing
     investigation, the Company became aware of questionable
     financial transactions with third parties and  payments
     to  certain PSG consultants and other individuals,  the
     nature  of  which requires further investigation.   The
     Company  has brought these matters to the attention  of
     the  Department of Justice and continues  to  cooperate
     fully with its investigation.

     No  charges of wrongdoing have been brought against PSG
     or  any PSG executive or employee by any grand jury  or
     other   government  authority.   However,   since   the
     government's  investigation is still  underway  and  is
     conducted largely in secret, no assurance can be  given
     as   to   whether   the  government  authorities   will
     ultimately determine to bring charges or assert  claims
     resulting  from this investigation that could implicate
     or  reflect adversely upon or otherwise have a material
     adverse effect on the financial position or results  of
     operations of PSG or the Company taken as a whole.

     The Company and its subsidiaries are parties to various
     other  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 various 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.

ITEMS 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   June 12, 1997                /s/ Alain Brunais
       -------------                ------------------
                                    Alain Brunais
                                    Chief Financial Officer