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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                 FORM 10-K/A-1

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[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

          For the fiscal year ended December 31, 1997

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
     1934 [NO FEE REQUIRED]

                       Commission File Number: 0-27986

                                   ITEQ, INC.
             (exact name of registrant as specified in its charter)

          DELAWARE                                        41-1667001
   (State or other jurisdiction                              (IRS Employer
of incorporation or organization)                           Identification No.)

                         2727 ALLEN PARKWAY, SUITE 760
                              HOUSTON, TEXAS 77019
          (Address of principal executive offices, including zip code)

                                 (713) 285-2700
              (Registrant's telephone number, including area code)

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

       SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE.

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                                                        NAME OF EACH EXCHANGE
                    TITLE OF EACH CLASS                  ON WHICH REGISTERED
                    -------------------                  -------------------


         COMMON STOCK, $.001 PAR VALUE             NASDAQ NATIONAL MARKET SYSTEM

          Indicate by check mark whether the registrant (i) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (ii) has been subject to
such filing requirements for the past 90 days. Yes [X]  No  [ ]

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

          The aggregate market value of Common Stock held by non-affiliates of
the registrant as of March 18, 1998 was $288,434,136. As of March 18, 1998,
there were 27,044,442 shares of Common Stock, $.001 par value, outstanding.

          Documents incorporated by reference. Certain portions of the
registrant's definitive proxy statement for the 1998 Annual Meeting of
Stockholders are incorporated in Part III by reference.

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                                   SIGNATURES

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

                                    ITEQ, INC.


                                    By: /s/ MARK E. JOHNSON
                                        --------------------------------
                                            Mark E. Johnson,
                                            Chairman of the Board and
                                            Chief Executive Officer


Date: April 2, 1998
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                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
          3.1            -- Amended and Restated Certificate of Incorporation of the
                            Registrant. (Filed as Appendix E to the Joint Proxy
                            Statement/Prospectus of the Registrant and Astrotech on
                            October 3, 1997 and incorporated herein by reference).
          3.2            -- Amended and Restated Bylaws of the Registrant. (Filed as
                            an exhibit to Form 10-Q for the quarter ended September
                            30, 1997 and incorporated herein by reference).
          4.1            -- See Exhibits 3.1 and 3.2 for provisions of the
                            Certificate of Incorporation and Bylaws of the Registrant
                            defining the rights of holders of Common Stock.
          4.2            -- Revolving Credit Agreement dated as of October 28, 1997
                            by and among the Registrant, the Guarantors and various
                            lending institutions including Deutsche Bank AG as
                            Documentation Agent and BankBoston, N.A. as Agent. (Filed
                            as an exhibit to Form 10-Q for the quarter ended
                            September 30, 1997 and incorporated herein by reference).
          4.3            -- Warrant Agreement, dated November 18, 1996, between the
                            Registrant and International Mezzanine Capital, B.V.
                            ("Mezzanine"). (Filed as an exhibit to Form 8-K dated
                            December 5, 1996 and incorporated herein by reference).
          4.4            -- Warrant Agreement dated November 18, 1996, between the
                            Registrant and First Commerce Corporation ("First
                            Commerce"). (Filed as an exhibit to Form 8-K dated
                            December 5, 1996 and incorporated herein by reference).
          4.5            -- Registration Rights Agreement dated November 18, 1996,
                            among the Registrant, Mezzanine, and First Commerce.
                            (Filed as an exhibit to Form 8-K dated December 5, 1996
                            and incorporated herein by reference).
          4.6            -- Warrant Agreement, dated April 24, 1996, between the
                            Registrant and Sanders Morris Mundy, Inc. (Filed as an
                            exhibit to Form 10-Q for the quarter ended September 30,
                            1996 and incorporated herein by reference).
          4.7            -- Warrant Agreement, dated December 1992, between
                            Registrant and Pennsylvania Merchant Group, Ltd. (Filed
                            as an exhibit to Form 10-K for fiscal year ending March
                            31, 1993 and incorporated herein by reference).
         10.1            -- Plan and Agreement of Merger dated as of June 30, 1997,
                            by and between the Registrant and Astrotech International
                            Corporation ("Astrotech"). (Filed as Appendix A to the
                            Joint Proxy Statement/Prospectus of the Registrant and
                            Astrotech on October 3, 1997 and incorporated herein by
                            reference).
         10.2            -- Stock Purchase Agreement dated as of April 30, 1997, by
                            and between Jared A. Trussler, Ray E. Crosno and Leslie
                            D. Scott ("Sellers") and Astrotech
                            (predecessor-in-interest to the Registrant). (Filed as an
                            exhibit to Form 8-K of Astrotech dated as of May 14, 1997
                            and incorporated herein by reference).
         10.3            -- Stock Purchase Agreement, dated April 24, 1997, among the
                            owners of Exell Inc. ("Exell") and the Registrant. (Filed
                            as an exhibit to Amendment No. 2 to the Registrant's
                            Registration Statement on Form S-2 (No. 333-23245) and
                            incorporated herein by reference).
         10.4            -- First and Second Amendment to Exell Stock Purchase
                            Agreement among the owners of Exell and the Registrant.
                            (Filed as an exhibit to Form 10-Q for the quarter ending
                            June 30, 1997 and incorporated herein by reference).
         10.5            -- Amendment No. 2, as of February 28, 1997, to the Stock
                            Purchase Agreement dated February 7, 1994, by and among
                            Astrotech (predecessor-in-interest to the Registrant),
                            Brown-Minneapolis Tank & Fabricating Company ("BMT") and
                            Irwin Jacobs. (Filed as an exhibit to Form 10-Q for the
                            quarter ended March 31, 1997 of Astrotech and
                            incorporated herein by reference).
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<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
         10.6            -- Purchase and Sale Agreement, dated as of the Effective
                            Date (as defined therein), between Babel, Miller &
                            Blackwell Partnership (the "Partnership") and the
                            Registrant. (Filed as an exhibit to Form 8-K dated August
                            28, 1997 and incorporated herein by reference).
         10.7            -- First Amendment to Purchase and Sale Agreement, effective
                            August 13, 1997, among the Partnership, Beaumont Franklin
                            Street Properties, L.L.C. ("BFSP"), Neches Street
                            Properties, L.L.C. ("NSP") and the Registrant. (Filed as
                            an exhibit to Form 8-K dated August 28, 1997 and
                            incorporated herein by reference).
         10.8            -- Agreement and Plan of Merger dated September 19, 1996,
                            among the Registrant, Air-Cure Acquisition, Inc. and
                            Ohmstede, Inc. (Filed as an exhibit to Form 10-Q for the
                            quarter ended September 30, 1996 and incorporated herein
                            by reference).
         10.9            -- Stock Purchase Agreement dated March 7, 1996, by and
                            among Astrotech (predecessor-in-interest to the
                            Registrant), Timothy J. McDavid, Graver Holding Company
                            and Graver Tank & Mfg. Co. (Filed as an exhibit to
                            Astrotech's Form 8-K dated April 10, 1996 and
                            incorporated herein by reference).
         10.10           -- Agreement and Plan of Merger dated October 13, 1995,
                            among the Registrant, Air-Cure Acquisition Corporation,
                            Allied Industries, Inc., Mark E. Johnson and Pierre S.
                            Melcher. (Filed as an exhibit to Post-Effective Amendment
                            No. 1 to Form S-4 Registration Statement (No. 33-92308)
                            and incorporated herein by reference).
         10.11           -- Employment Agreement dated September 30, 1997 for Mark E.
                            Johnson. (Filed as an exhibit to Form 10-Q for the
                            quarter ended September 30, 1997 and incorporated herein
                            by reference).
         10.12           -- Employment Agreement dated May 15, 1997, between the
                            Registrant and John Camardella. (Filed as an exhibit to
                            Form 10-Q for the quarter ended June 30, 1997 and
                            incorporated herein by reference).
         10.13           -- Employment Agreement dated March 1, 1996, between the
                            Registrant and Lawrance W. McAfee. (Filed as an exhibit
                            to Form 10-Q for the quarter ended September 30, 1996 and
                            incorporated herein by reference).
         10.14           -- Employment Agreement dated March 1, 1995, between the
                            Registrant and John P. Fitzpatrick. (Filed as an exhibit
                            to Form 10-K for the year ended December 31, 1994 and
                            incorporated herein by reference).
         10.15           -- Employees Stock Purchase Plan, as amended, dated December
                            15, 1994. (Filed as an exhibit to Form 10-K for year
                            ended December 31, 1994 and incorporated herein by
                            reference).
         10.16           -- Director Stock Option Plan, as amended. (Plan filed as an
                            exhibit to Proxy Statement for Annual Meeting of
                            Stockholders held on June 29, 1995, and amendment filed
                            as an exhibit to Form 10-Q for the quarter ended June 30,
                            1996 both of which are incorporated herein by reference).
         10.17           -- Amended and Restated ITEQ 1990 Stock Option Plan. (Filed
                            as Appendix D to Joint Proxy Statement/Prospectus of the
                            Registrant and Astrotech on October 3, 1997 and
                            incorporated herein by reference).
         10.18           -- 1984 Stock Option Plan. (Filed as an exhibit to
                            Astrotech's Registration Statement on Form S-8 (No.
                            33-3360) and incorporated herein by reference).
         10.19           -- 1989 Stock Incentive Plan. (Filed as an exhibit to
                            Astrotech's Registration Statement on Form S-8 (No.
                            33-2975) and incorporated herein by reference).
         10.20           -- The 1994 Stock Option Plan for the Employees of BMT.
                            (Filed as an exhibit to Astrotech's Registration
                            Statement on Form S-8 (No. 33-85106) and incorporated
                            herein by reference).
</TABLE>
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<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
         10.21           -- 1995 Non-Employee Directors' Stock Option Plan. (Filed as
                            an exhibit to Astrotech's Proxy Statement of Astrotech
                            for the Annual Meeting of Shareholders filed on or about
                            April 10, 1995 and incorporated herein by reference).
         10.22           -- Lease, dated August 13, 1997 among Beaumont Franklin
                            Street Properties, L.L.C., Neches Street Properties,
                            L.L.C. and Exell. (Filed as an exhibit to Form 8-K dated
                            August 28, 1997 and incorporated herein by reference).
         10.23           -- Lease Agreement dated May 25, 1994, between Halligan and
                            Labbe Enterprises, L.L.C. and Amerex Industries, Inc.
                            (Filed as an exhibit to Form 10-K for the year ended
                            December 31, 1994 and incorporated herein by reference).
         10.24           -- License and Technical Assistance Agreement dated August
                            28, 1991, between Interel Environmental Technologies,
                            Inc. and Heinrich Luhr Staubtechnik GmbH & Co. (Filed as
                            an exhibit to Form S-1 (No. 33-44205) and incorporated
                            herein by reference).
        *21.1            -- List of Subsidiaries of the Registrant.
         23.1            -- Consent of Arthur Andersen LLP.
         23.2            -- Consent of Coopers & Lybrand, L.L.P.
         27              -- Financial Data Schedule.
</TABLE>
 
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* Filed herewith.