SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB


                     QUARTERLY REPORT UNDER SECTION 13 OR 15
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended June 30, 1998     Commission File Number: 0-10707


                              THERMODYNETICS, INC.
        (Exact name of small business issuer as specified in its charter)


           Delaware                                           06-1042505 
(State or other Jurisdiction of                           (I.R.S. Employer
Incorporation or Organization)                            Identification No.)


   651 Day Hill Road, Windsor, CT             06095             860-683-2005
(Address of Principal Executive Offices)    (Zip Code)      (Telephone Number)


________________________________________________________________________________
              (Former name, former address and former fiscal year,
                         if changed since last report.)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15 of the  Exchange  Act during  the past 12 months  (or for such  shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

         Yes _X_                   No ___

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.


            Class                           Outstanding at June 30, 1998
  ---------------------------               ----------------------------
  Common stock $.01 Par Value                     12,665,276 Shares


<PAGE>


                      THERMODYNETICS, INC. AND SUBSIDIARIES

                                      INDEX

                                                                     Page Number
                                                                     -----------
PART I FINANCIAL INFORMATION

        Item 1.    Financial Statements

                   Consolidated Balance Sheet
                      June 30, 1998 and March 31, 1998...................    3

                   Consolidated Statements of Income and Comprehensive
                      Income Three Months Ended June 30,
                      1997 and 1996......................................    4


                   Consolidated Statement s of Cash Flows
                      Three Months Ended June 30,
                      1997 and 1996......................................    5

                   Notes to Consolidated Financial Statements............  6-7

        Item 2.    Management's Discussion and Analysis .................  8-9


  PART II          OTHER INFORMATION

        Item 1.    Legal Proceedings.....................................   10

        Item 2.    Changes in Securities.................................   10

        Item 3.    Defaults Upon Senior Securities.......................   10

        Item 4.    Submission of Matters to a Vote of Security Holders...   10

        Item 5.    Other Information.....................................   10

        Item 6.    Exhibits and Reports on Form 8-K......................   10


 SIGNATURE PAGE .........................................................   10

                                     Page 2

<PAGE>


                      THERMODYNETICS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                     ASSETS

<TABLE>
<CAPTION>
                                                                           June 30,       March 31,
                                                                            1998             1998
                                                                         (Unaudited)      (Audited)
                                                                          -----------    -----------
<S>                                                                       <C>            <C>        
CURRENT ASSETS
  Cash                                                                    $     2,615    $     2,023
  Accounts Receivable, Net                                                  1,356,232      1,039,078
  Inventories                                                               1,722,040      1,448,420
  Prepaid Expenses and Other Current Assets                                   285,803        240,563
  Deferred Income Taxes                                                       100,000        100,000
                                                                          -----------    -----------
    Total Current Assets                                                    3,466,690      2,830,084
                                                                          -----------    -----------
PROPERTY, PLANT AND EQUIPMENT
  Property, Plant and Equipment - At Cost                                   9,032,389      8,963,252
  Less: Accumulated Depreciation                                            4,530,463      4,450,814
                                                                          -----------    -----------
   Property, Plant, and Equipment - Net                                     4,501,926      4,512,438
                                                                          -----------    -----------
OTHER ASSETS
  Undeveloped Land Held for Investment                                        118,109        116,593
  Intangible Assets - Net of Amortization                                     124,638        127,623
  Officers' Life Insurance                                                  1,049,667      1,022,440
  Deferred Assets                                                               1,450          5,125
  Deposits                                                                      7,893          7,601
  Marketable Equity Securities, at Market                                     306,250        392,000
                                                                          -----------    -----------
    Total Other Assets                                                      1,608,007      1,671,382
                                                                          -----------    -----------
TOTAL ASSETS                                                              $ 9,576,623    $ 9,013,904
                                                                          ===========    ===========
                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts Payable                                                        $   894,575    $   912,435
  Accrued Taxes and Expenses                                                  136,733        120,831
  Current Portion of Long Term Debt                                           291,566        291,566
  Notes Payable - Bank                                                      1,634,354      1,061,747
                                                                          -----------    -----------
    Total Current Liabilities                                               2,957,228      2,386,579
                                                                          -----------    -----------
LONG TERM DEBT                                                              2,292,456      2,366,345
                                                                          -----------    -----------
STOCKHOLDERS' EQUITY
  Common Stock, Par Value $.01/Share,
  Authorized 25,000,000 shares, issued 12,665,276 shares
      At 6/30/98 and 12,569,591 shares at 3/31/98                             126,653        125,696
    Additional Paid-in Capital                                              5,416,051      5,411,524
  Less:  Treasury Stock, at Cost                                              320,521        320,521
  Less:  Valuation Reserve for Long-Term Investments                          281,750        196,000
  Retained Earnings (Deficit)                                                (613,494)      (759,719)
                                                                          -----------    -----------
    Total Stockholders' Equity                                              4,326,939      4,260,980
                                                                          -----------    -----------
TOTAL LIABILITIES AND                                                     $ 9,576,623    $ 9,013,904
                                                                          ===========    ===========
  STOCKHOLDERS' EQUITY
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                     Page 3

<PAGE>


                      THERMODYNETICS, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
                       FOR THE THREE MONTHS ENDED JUNE 30,
                                   (UNAUDITED)

                                                        1998             1997
                                                   ------------    ------------
Net Sales                                            $2,632,455      $2,214,663
Cost of Goods Sold                                    1,887,582       1,579,160
                                                   ------------    ------------
Gross Profit                                            754,873         635,503
Selling, General & Administrative Expenses              507,036         476,430
                                                   ------------    ------------
Income From Operations                                  247,837         159,073
                                                   ------------    ------------
Other Income (Expense)
     Interest Expense, Net                              (96,828)        (90,098)
     Other - Net                                         (4,784)         (6,624)
                                                   ------------    ------------
     Total Other Income (Expense)                      (101,612)        (96,722)
                                                   ------------    ------------
Income Before Income Taxes                              146,225          62,351
Provision for Income Taxes                                  -0-             -0-
                                                   ------------    ------------
Net Income                                              146,225          62,351

Other Comprehensive Income (Loss), net of tax
      Unrealized holding gains during the period        (85,750)        (49,000)
                                                   ------------    ------------
                                                        (85,750)        (49,000)
                                                   ------------    ------------
Comprehensive Income                                    $60,474         $13,351
                                                   ------------    ------------
Earnings per Share-Basic                                   $.01             NIL
                                                   ============    ============
Earnings per Share-Diluted                                 $.01             NIL
                                                   ============    ============
Weighted Average Shares Outstanding- Basic           12,633,731      12,491,484
                                                   ============    ============
Weighted Average Shares Outstanding- Diluted         15,829,128      15,260,027
                                                   ============    ============


   The accompanying notes are an integral part of these financial statements.

                                     Page 4

<PAGE>


                      THERMODYNETICS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                       FOR THE THREE MONTHS ENDED JUNE 30,

                                   (UNAUDITED)

                                                            1998        1997
                                                         ---------    ---------
OPERATING ACTIVITIES:
  Net income                                             $ 146,225    $  62,349
         Adjustments to reconcile net income to net
         cash provided by operating activities:
  Depreciation and amortization                             86,309       88,140
  Changes in operating assets and liabilities:
    Increase (decrease) in accounts payable                (17,861)      57,125
    Decrease (increase) in prepaid expenses                (45,530)     (22,922)
     and other assets
    Decrease (increase) in accounts receivable            (317,154)      54,005
    Decrease (increase) in inventories                    (273,620)    (201,618)
    Increase (decrease) in accrued expenses                 21,385       35,480
                                                         ---------    ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
                                                          (400,246)      72,709
                                                         ---------    ---------
INVESTING ACTIVITIES;
  Purchases of property, plant and equipment               (69,137)     (59,483)
  Increase in other investments                             (1,516)       - 0 -
  Increase in life insurance premiums receivable           (27,227)     (27,227)
                                                         ---------    ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
                                                           (97,880)     (86,710)
                                                         ---------    ---------
FINANCING ACTIVITIES
  Sale of common stock                                         -0-          -0-
  Principal payments on debt obligations                   (73,889)     (87,922)
  Net proceeds from revolving and term debt                572,607      102,007
                                                         ---------    ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
                                                           498,718       14,105
                                                         ---------    ---------
INCREASE (DECREASE) IN CASH                                    592           14
CASH AT BEGINNING OF PERIOD                                  2,023        2,550
                                                         ---------    ---------
CASH AT END OF PERIOD                                    $   2,615    $   2,564
                                                         =========    =========

    The accompanying notes are an integral part of these financial statements

                                     Page 5

<PAGE>


                      THERMODYNETICS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1: BASIS OF PRESENTATION

     The  financial  information  included  herein is unaudited;  however,  such
information  reflects all  adjustments  (consisting  solely of normal  recurring
adjustments)  which are,  in the  opinion of  management,  necessary  for a fair
statement of results for the interim  period.  Certain  information and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with generally  accepted  accounting  principles have been condensed or omitted.
The results of operations  for the three months ended June 30, 1998 and June 30,
1997 are not  necessarily  indicative of the results to be expected for the full
year.

NOTE 2: INVENTORIES

     Inventories consist of the following at June 30:

                                             1998                 1997
                                          ----------           ----------
        Raw materials                     $1,184,613           $  868,037
        Work-in-process                      299,895              208,625
        Finished goods                       237,532              355,522
                                          ----------           ----------
                                          $1,722,040           $1,432,184
                                          ==========           ==========

NOTE 3: EARNINGS PER SHARE

     The  Company  has  adopted  "Statement  of  Accounting  Standards  No. 128,
Earnings  per Share"  (SFAS 128).  Earnings per share for the three months ended
June 30,  1998 and June 30,  1997 have been  computed  in  accordance  with this
pronouncement,  based on the weighted  average of outstanding  shares during the
periods.  The  weighted  average  number  of  shares  outstanding  used  in  the
calculations are as follows:

                                                     Three Months Ended
                                                June 30, 1998    June 30, 1997
                                                -------------    -------------

Weighted Average Shares Outstanding-
                  (Basic )                       12,633,731       12,491,484

Assumed Conversion of Stock Options               3,195,397        2,768,543
                                                 ----------       ----------
Weighted Average Shares Outstanding-
                  (Diluted)                      15,829,128       15,260,027
                                                 ----------       ----------

                                     Page 6

<PAGE>


NOTE 4: INCOME TAXES

     The Company adopted "Statement of Accounting  Standards No. 109, Accounting
For Income Taxes" (SFAS 109)  effective  April 1, 1994.  The statement  requires
that deferred  income taxes reflect the future tax  consequences  of differences
between the tax bases of assets and  liabilities  and their bases for  financial
reporting purposes. In addition, SFAS 109 requires the recognition of future tax
benefits,  such  as  net  operating  loss  carryforwards,  to  the  extent  that
realization of such benefits are more likely than not.

     The primary components of the Company's deferred tax assets and liabilities
and the related valuation allowance are as follows:

Assets:
  Uniform capitalization adjustment                                   $    (621)
  Net operating loss carryforward                                       426,695
  Other                                                                   4,545
                                                                      ---------
                                                                        430,619
Liabilities:
  Accelerated depreciation                                               (2,534)
                                                                      ---------
                                                                         (2,534)
                                                                      ---------
Net deferred tax asset before valuation allowance                       433,153

Less: Valuation allowance                                              (333,153)
                                                                      ---------
Net deferred tax asset                                                $ 100,000
                                                                      =========


     The Company continually reviews the adequacy of the valuation allowance and
recognizes a benefit from income taxes only when reassessment  indicates that it
is more likely than not that the benefits  will be realized.  In fiscal 1998 the
Company reduced the valuation  allowance  applied against the net operating loss
carryforwards,  based upon  reasonable  and prudent tax planning  strategies and
future income projections.

     At June 30,  1998,  the Company had net  operating  loss  carryforwards  of
$1,255,000  expiring  from 2001 to 2007.  In  addition,  unused  tax  credits of
$144,000 expire from 1999 to 2001 and are also being carried forward.

NOTE 5: CASH FLOW INFORMATION AND NON CASH INVESTING ACTIVITIES

     The  following  supplemental  information  is  disclosed  pursuant  to  the
requirements of Financial  Accounting Standards Board's "Statement of Accounting
Standards No 95, Statement of Cash Flows".

                                                         3 Months Ended June 30,
                                                           1998          1997
                                                           ----          ----
Cash payments for interest                               $ 96,828      $ 90,098
Issuance of common stock to 401(k) plan                  $  5,483      $  8,423
Valuation reserve to reflect long-term equity
      securities at market                               $(85,750)     $(49,000)


NOTE 6: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

     The  Company  has  adopted  "Statement  of  Accounting  Standards  No. 130,
"Reporting  Comprehensive  Income" (SFAS 130), which  establishes  standards for
reporting and display of comprehensive income and its components (i.e. revenues,
expenses, gains and losses) in a complete set of financial statements. All prior
periods have been restated to conform to the provisions of this statement.

                                     Page 7

<PAGE>


                      THERMODYNETICS, INC. AND SUBSIDIARIES

                      MANAGEMENT'S DISCUSSION AND ANALYSIS

     RESULTS OF OPERATIONS

     Net sales for the three months ended June 30, 1998 totaled $2,632,455 which
amount is the highest level of net sales  achieved for any three month period in
the Company's  history.  This  represents an increase of $477,109 over the prior
quarter  and  $417,  822 over the  comparable  period of the  prior  year.  This
significant growth in shipments is attributable to further improvements in sales
to existing  markets  and the  addition of new  applications  for the  Company's
tubing and coaxial coil product line.

     Sales  during the year ended  March 31, 1998 were  adversely  affected by a
persistence of moderate  temperature  conditions,  largely caused by the El Nino
weather  patterns  in the  continental  United  States.  The  absence of extreme
ambient conditions  retarded the demand for space conditioning  products,  which
represents the largest market served by the Company. As temperatures returned to
more seasonal  conditions in the 1998 spring months, the pent-up demand for HVAC
products  created  a surge  in  orders  for  condenser/evaporators  used in both
residential  and commercial  applications.  Additionally,  the continued  strong
performance of domestic  economic  indicators has resulted in an increase in the
construction of industrial  facilities that require heating and air conditioning
systems.

     During the latest  fiscal  quarter,  the Company  commenced  shipments of a
newly developed line of coils to a new customer for use in their  commercial ice
cube machines.  This new application for condenser coils is expected to generate
significant sales for the balance of the fiscal year and future periods as well.
Other markets,  including  swimming pool heat pumps and marine air  conditioning
products have also exhibited strong growth during the period.

     Cost of sales improved to 72% of sales for the current quarter  compared to
74% for the year  ended  March  31,  1998.  Improvements  in  efficiencies  were
realized both through the continued refinement of the operation of manufacturing
cells and the higher production volumes during the period. The Company is in the
process  of  further  rearrangement  of  manufacturing   resources  to  maximize
utilization of production equipment and improve material handling capabilities.

     Selling,  general and  administrative  expenses increased by $67,418 or 15%
and $30,606 or 6% over the three  months ended March 31, 1998 and June 30, 1997,
respectively.  Engineering and laboratory test expenses increased to satisfy the
growing demand to support new product development and research activities. Sales
commissions  also increased  during the period as a function of higher  shipping
levels.  Additional  investments in engineering and technical  support staff are
anticipated to be expended during the balance of the year.

     Interest expense remained  relatively constant for all periods resulting in
little  fluctuation  in total  other  expenses.  A series  of  refinancings  was
completed  in the  prior  year  and no  significant  activity  in  this  area is
contemplated at the present time.

     Other comprehensive loss adjustments for both the current quarter and prior
year  comparable  period  consisted of  unrealized  holding  losses on long-term
investments.

                                     Page 8


<PAGE>


     LIQUIDITY AND CAPITAL RESOURCES

     Working capital at June 30, 1998 was $509,132 compared to $443,505 at March
31, 1998 and  $299,443 at June 30,  1997.  During the current  quarter,  current
assets  increased  by  $636,606,  largely  due  to  higher  levels  of  accounts
receivable and inventories  needed to support  increased  shipments.  During the
same period current  liabilities  increased by $570,649 consisting of additional
borrowings  under the  revolving  line of credit.  These  advances  were used to
finance the additional  investments in operating assets and capital expenditures
during the quarter.

     As a result of the large  increases  in  current  assets,  net cash used in
operating  activities  totaled  $400,246 for the current quarter compared to net
cash generated of $72,709 in 1997. Although inventory increased in both periods,
the need to increase raw material  stock in fiscal 1999 to satisfy  order levels
resulted in overall higher levels at June 1998. Accounts receivable increased by
$317,154 for the current three months,  reflecting the  substantial  increase in
shipments.   Days  receivables  outstanding  remained  unchanged  from  year-end
reflecting no deterioration in the collection of amounts due from customers.

     Cash used in investing  activities increased from $86,710 in fiscal 1997 to
$97,880  for the three  months  ended June 1998,  due to an  increase in capital
expenditures  in  the  current  quarter.  Anticipated  purchases  of  production
equipment  are  expected to run  slightly  higher than the prior year due to the
need to add production capacity in support of higher sales levels.

     As previously  indicated the  additional  investments  in  inventories  and
accounts  receivable  were funded  through  advances  under the  revolving  debt
facility.  The line of credit also served to finance capital  projects and other
equipment  purchases  during  the  quarter.  It is  anticipated  that the latter
financings will be converted to term debt later in the year,  which will provide
additional availability, if needed, under the revolving line of credit.

     Inflation  and other cost  increases  continue  to play a minor role in the
Company's day to day  operations.  Improvements to  manufacturing  processes and
procedures,  coupled with small  increases in purchased  goods and services have
enabled the Company to maintain  its current  cost  structure.  Stability in the
precious metals markets has also enabled the Company to continue to purchase raw
materials  at  competitive  prices  for  conversion  into  products  shipped  to
customers.  As the Company  continues its conversion to cellular  manufacturing,
further cost  reductions are  anticipated  which should offset future effects of
inflation for the balance of the fiscal year.

     FORWARD LOOKING STATEMENTS

     This quarterly report contains certain forward-looking statements regarding
the Company,  its business  prospects and results of operations that are subject
to certain risks and  uncertainties  posed by many factors and events that could
cause the  Company's  actual  business,  prospects  and results of operations to
differ  materially  from those that may be anticipated  by such  forward-looking
statements.  Factors that may affect such  forward-looking  statements  include,
without limitation: the Company's ability to successfully and timely develop and
finance new projects,  the impact of competition on the Company's revenues,  and
changes in unit  prices,  supply and demand for the  Company's  tubing  products
especially in applications  serving the  commercial,  industrial and residential
construction industries.

     When used words such as "believes," "anticipates," "expects," "intends" and
similar expressions are intended to identify forward-looking statements, but are
not the exclusive means of identifying forward-looking  statements.  Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this report.  The Company  undertakes no obligation
to  revise  any  forward-looking  statements  in  order  to  reflect  events  or
circumstances that may subsequently arise. Readers are urged to carefully review
and consider the various  disclosures  made by the Company in this report,  news
releases,  and other reports filed with the Securities  and Exchange  Commission
that  attempt to advise  interested  parties of the risks and  factors  that may
affect the Company's business.

                                     Page 9

<PAGE>


                      THERMODYNETICS, INC. AND SUBSIDIARIES

                           PART II - OTHER INFORMATION


Item 1. Legal Proceedings.

     There are no material  legal  proceedings  known or threatened  against the
Company.

Item 2. Change in Securities.

     No class of  registered  securities  of the  Company  have been  materially
modified,  and no class of registered securities have been materially limited or
qualified by the issuance or  modification  of any other class of  securities of
the Company.

Item 3. Defaults Upon Senior Securities.

     There have been no defaults of any terms of the Company's securities.

Item 4. Submission of Matters to a Vote of Security Holders.

     No  matters  were  submitted  to a vote of the  Securities  Holders  of the
Company during the quarterly period for which this report is filed.

Item 5. Other Information.

     None

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

     (a)  No Exhibits have been submitted with this report

     (b)  No reports on Form 8-K were filed  during the  quarter  for which this
          report is filed.

                                    Page 11

<PAGE>


                      THERMODYNETICS, INC. AND SUBSIDIARIES

                                 SIGNATURE PAGE


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant has caused this report to be signed on its behalf by the  undersigned
thereunto duly authorized.


                              THERMODYNETICS, INC.



 Date: August 4, 1998         By:      /s/  Robert A. Lerman                 
                                     ----------------------------------------
                                     Robert A. Lerman
                                     President


 Date: August 1, 1998         By:      /s/  Robert I. Lieberman              
                                     ----------------------------------------
                                     Robert I. Lieberman
                                     Treasurer and Chief Financial Officer