U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

[X]    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
       OF  1934  FOR  THE  QUARTERLY  PERIOD  ENDED  MARCH 31, 1998
                                                     --------------------

[ ]   TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
       ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ____________


                          Commission file number 0-5887
                                                 ------

                                    RTI INC.
       -----------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)

                    NEW YORK                           11-2163152
          ------------------------------            -------------------
         (State or other jurisdiction of            (I.R.S. Employer
          incorporation or organization)            Identification No.)


            P.O.BOX 3048, 301 ANTONE, SUNLAND PARK, NEW MEXICO 88063
            --------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (505) 589-5431
                                 --------------
                (Issuer's telephone number, including area code)


      Check  whether  the issuer (1) filed all  reports  required to be filed by
Section l3 or l5(d) 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 [ ] No
[X]

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

     APRIL 30, 1998  -   1,606,166   shares of common stock
     ----------------     -----------


    Transitional Small Business Disclosure Form    Yes [ ] No [X]


<PAGE>

PART I.  FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                    RTI INC. AND SUBSIDIARIES
                                 CONSOLIDATED FINANCIAL STATEMENTS
                                           (UNAUDITED)
                                        BALANCE SHEET
        ASSETS                                                                 MARCH 31,                 DECEMBER 31,
                                                                                 1998                        1997
CURRENT ASSETS
    Cash and cash equivalents                                                  $ 30,093                   $ 11,712
    Accounts receivable, net of allowance
        of $ 4,876 in 1998, and $16,005 in 1997                                 325,665                    234,993
    Inventory                                                                 1,322,615                  1,979,893
    Prepaid expenses and other                                                  219,786                    163,357
                                                                             ------------               -----------    
               Total current assets                                           1,898,159                  2,389,955

PROPERTY, PLANT AND EQUIPMENT, NET                                            1,891,860                  1,902,066

DUE FROM RELATED PARTIES                                                        135,605                    135,605

INTANGIBLE ASSETS, net of accumulated
        amortization of $21,687 1998 and $72,353 in 1997                      1,132,266                  1,204,193

OTHER ASSETS                                                                    125,277                     38,111
                                                                           --------------               ------------
               Total assets                                                 $ 5,183,167                $ 5,669,930
                                                                             =============               =============
</TABLE>

The Notes to Financial  Statements  are an integral  part of these  consolidated
statements.

<PAGE>
<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                  RTI INC. and SUBSIDIARIES
                                 CONSOLIDATED FINANCIAL STATEMENTS
                                            (Unaudited)

                                            BALANCE SHEET
      
  LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                                MARCH 31,                 DECEMBER 31,
                                                                                  1998                        1997
CURRENT LIABILITIES
    Notes payable to related parties                                          $ 588,383                  $ 593,000
    Due to related parties                                                       94,900                     94,900
    Accounts payable                                                            669,587                    796,521
    Accrued expenses                                                            171,911                    133,886
    Accrued interest                                                              8,338                     49,780
    Other current liabilities                                                   180,000                    180,000
    Current portion of long-term debt                                           314,272                    654,613
                                                                              ----------                 ------------
               Total current liabilities                                      2,027,392                  2,502,700

LONG-TERM DEBT, net of $22,000
    discount in 1997                                                            650,505                    257,344

Provision for future Environmental Cost                                         782,600                    782,600
OTHER LIABILITIES                                                               245,729                    231,485
                                                                              -----------             --------------
               Total liabilities                                              3,706,226                $ 3,774,129
                                                                              ------------            --------------
STOCKHOLDERS' EQUITY
    Preferred stock, $.05 par value - shares
        authorized 2,000,000; shares issued
        and outstanding 100,000                                                   5,000                      5,000
    Common stock; $.08 par value - shares
        authorized 15,000,000, issued and
        outstanding 1,481,166 at year-end  1997
       and 1,606,166 at March 31, 1998                                          128,493                    118,494
    Additional paid-in capital                                               18,170,768                 17,679,579
    Accumulated deficit                                                     (16,827,320)               (15,907,272)
                                                                            -------------              ------------   

   Total stockholders' equity                                                 1,476,941                  1,895,801

   Total liabilities and stockholders' equity                               $ 5,183,167                $ 5,669,930
                                                                            =============              ==============
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                  RTI INC. and SUBSIDIARIES
                                 CONSOLIDATED FINANCIAL STATEMENTS
                                            (Unaudited)

                                   CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                   THREE MONTHS ENDED MARCH 31,
                                                                                 1998                        1997

Net sales                                                                     $ 974,406                  $ 217,537
Cost of sales                                                                 1,163,803                    324,883
                                                                             -------------           ----------------
    Gross profit (loss)                                                        (189,397)                  (107,346)

Selling, general and administrative expenses                                    409,987                    232,359
Research and development expenses                                               250,140                     12,756
                                                                                ---------                ------------
               Total operating expenses                                         660,127                    245,115

               Loss from operations                                            (849,524)                  (352,461)

Other income (expense)

    Rental income                                                                19,510                     20,928
    Expenses of Rockaway Industrial Park,
        including interest expense of $5,500
        in both years                                                           (17,032)                    (8,094)
    Interest income (expense)                                                   (63,005)                    33,988
    Other income                                                                    753                     38,744
                                                                                ---------                  --------

               Total other income (expenses)                                    (59,774)                    85,566

               Loss from continuing operations                                 (909,299)                  (266,895)

Discontinued operations
    Loss from irradiation operations                                                  -                       (427)
                                                                                ----------                ----------
               Net loss before income taxes                                                               (267,322)

Income taxes                                                                                                     -
Net loss                                                                     $ (909,299)                $ (267,322)
                                                                             ============               ===========

Weighted Average Shares                                                       1,507,555                  1,199,083

Net loss per share                                                               ($0.60)                    ($0.22)

</TABLE>

<PAGE>
                                       RTI INC. AND SUBSIDIARIES
                                     CONSOLIDATED FINANCIAL STATEMENTS
                                          (Unaudited)
                               CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                                                                   THREE MONTHS ENDED MARCH 31,
                                                                                1998                        1997
CASH FLOWS FROM OPERATING ACTIVITIES:
        Net Loss                                                             $ (909,299)                $ (267,322)
        Adjustments to reconcile net loss to
        net cash applied to operating activities:
               Depreciation and amortization                                     82,848                     30,550
               Allowance for doubtful accounts                                    4,876                      1,100
               Allowance for warranty expense                                     9,744                          -
               Imputed interest on note payable                                       -                      5,500
               (Increase) decrease in:
                  Accounts receivable                                           (95,548)                  (467,672)
                   Restricted deposits                                                -                    482,944
                   Due from affiliate                                                 -                   (124,695)
                   Inventories                                                  657,278                   (527,614)
                   Prepaid expenses and other                                   (56,429)                     2,235
                Increase (decrease) in:
                   Accounts payable                                            (126,934)                   379,370
                   Accrued expenses                                              38,025                     30,315
                   Other liabilities                                            (41,442)                   (27,247)
                                                                               ---------                  ---------
                   TOTAL ADJUSTMENTS                                            472,420                   (215,214)

                   Net cash applied to operating activities                    (436,879)                  (482,536)

 CASH FLOWS FROM INVESTING ACTIVITIES:
         Purchases of fixed assets                                              (10,206)                  (187,974)
         Reduction in notes receivable                                                -                    615,000
         Purchase of business, net of cash acquired                                                       (663,038)
         Purchases of other assets                                              (19,162)                  (159,553)
                                                                                ---------                 ---------
                    Net cash (applied to) provided by
                    investing activities                                        (29,368)                  (395,565)
                                                                                --------                  ---------
 CASH FLOWS FROM FINANCING ACTIVITIES:
         Proceeds from sale of common stock                                     490,439                    420,500
         Payments on short-term loans                                                                     (850,000)
         Payments on long term debt                                              (5,810)                      -
                                                                                ----------                ---------
                   Net cash provided by (applied to)                            484,629                   (429,500)
                   financing activities                                         ----------               ----------      

 Net increase (decrease) in cash and cash equivalents                            18,382                 (1,307,601)
 Cash and cash equivalents, beginning of period                                  11,712                  2,578,180
                                                                               ---------              -------------     
 Cash and cash equivalents, end of period                                      $ 30,093                $ 1,270,579
                                                                               =========              =============
</TABLE>

<PAGE>

                            RTI INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (Information as of March 31, 1998 and 1997, and
                  for the three months then ended is unaudited)


1.       BASIS OF PRESENTATION

         In the opinion of management of RTI Inc.  (with its  Subsidiaries,  the
"Company"), the accompanying unaudited consolidated financial statements include
all  adjustments  necessary to present  fairly,  in all material  respects,  the
company's financial position as of March 31, 1998, its results of operations and
its cash flows for the three  months  ended March 31, 1998 and 1997.  Results of
operations for the  three-month  period ended March 31, 1998 are not necessarily
indicative of the results to be expected for the year ending December 31, 1998.

         Information  included in the consolidated  balance sheet as of December
31, 1997 has been  derived from the  Company's  audited  consolidated  financial
statements in its Annual  Report on Form 10-KSB for the year ended  December 31,
1997, to which reference is made.  Certain  information  included in the audited
consolidated  financial statements and related notes prepared in accordance with
generally accepted accounting principles may have been condensed or omitted.


2.       AIR CONDITIONING AND COOLER OPERATIONS

         With its  acquisition  of the  business of Quality Air Inc. in February
1997,  the  Company  engaged  in  the  manufacture,  marketing  and  selling  of
residential coolers and of central air conditioning equipment.  The AC2 utilizes
patented  evaporative  technologies to cool homes and small  businesses with air
conditioning  with  reduced  electricity  usage when  compared to  standard  air
conditioners.  The AC2 is assembled in the Company's Westway,  Texas factory. In
1997,  this factory was  purchased,  equipped for  producing the AC2, and a work
force trained to manufacture the AC2.

         During 1997, and in the first quarter of 1998, the company produced and
sold each of its air conditioning and cooling  products.  During this time there
was a  significant  dedication  of resources to 1) product  development  for the
Company's  new "AC2" central air  conditioner,  including  obtaining  safety and
energy  efficiency  certifications,  2) development of production  capacity at a
factory purchased and equipped for production of the AC2 in Westway,  Texas, and
3) the development of an air conditioner distribution network, currently limited
to the southern  states of the US. In the first quarter,  the development of the
"fill and drain" addition to the AC2 was completed. Distributors were encouraged
to return any remaining  units from the 1997 sales season,  to have the fill and
drain kit added at cost to the Company because of the significant improvement to
the product.  The fill and drain kit enhances the salability of the product,  as
well.

<PAGE>
3.       ROCKAWAY INDUSTRIAL PARK

         The Company  owns a 248 acre parcel of land  ("Parcel  I") in Rockaway,
New Jersey (47 acres of which have been  leased to  SteriGenics  International),
that  is  contiguous  to a 15  acre  operating  parcel  that  is the  site of an
irradiation processing facility leased to SteriGenics  International("Parcel II"
and, with Parcel I, the "Rockaway Industrial Park"). Since 1985, the Company has
been seeking a buyer for Parcel I. However, the Company's ability to sell Parcel
I is impaired until the completion of an  environmental  cleanup and remediation
program,  and its ability to recover its net  investment of $50,000 in 201 acres
of Parcel I is impaired by unpaid  outstanding  non-recourse  property taxes for
the years 1993,  1994,  1995, 1996, 1997, and the first quarter of 1998 totaling
$235,985,  which have been  accrued in the  financial  statements  under  "Other
liabilities".

4.       ENVIRONMENTAL INVESTIGATION AND REMEDIATION

         As a result of engineering tests that commenced in 1981, the New Jersey
Department of  Environmental  Protection  (the "DEP") issued a directive in 1986
ordering a remedial  investigation  and feasibility study (the "Study") designed
to determine the nature and extent of contamination  on the Rockaway  Industrial
Park property. The Company agreed to pay the costs of the Study and entered into
an  Administrative  Consent Order with the DEP. In 1989, the DEP issued a Second
Directive to pay for an additional  environmental study and DEP oversight costs.
In 1993, the Company entered into an  Administrative  Consent Order ("ACO") with
the DEP. Cost  reimbursement  to the DEP under the ACO includes  applicable  DEP
expenditures  beginning July 1, 1982 and future DEP oversight  costs.  In August
1996,  the Company made a payment of $575,000 to the DEP as full  settlement  of
all  outstanding  claims asserted under the ACO. The Company  subsequently  paid
additional claims by the DEP for oversight costs through October 31, 1996.

In April  1996,  the DEP  responded  to the  Company's  petition  to change  the
Remedial  Action Work Plan under the Record of Decision  (ROD),  and advised the
Company that a pilot test of the CleanOx remediation program,  undertaken by the
Company on its Rockaway property,  was not considered  conclusive.  In September
1996,  the  Company   completed  a  second  CleanOx  test,   which  reduced  the
contamination, but did not result in remediation of the groundwater. On March 7,
1997, the DEP reaffirmed its requirement that the Company comply with the ROD.

In November of 1997, the Company  submitted a Proposed Remedial Action Work Plan
to the NJDEP.  This plan,  which required the  installation of a single recovery
well,  rather than three wells as was previously  required,  was reviewed by the
NJDEP and accepted in February 1998, subject to certain modifications. Under the
modified  plan, the  "Clean-Ox"  technology  was permitted,  and required RTI to
begin  implementing  the plan according to the proposed  schedule.  In 1998, the
installation of the ground water recovery system was to occur, with ground water
remediation  to  follow  for a  five-year  time  frame,  subject  to  regulatory
concurrence  based upon favorable  results as groundwater is monitored.  RTI has
accepted the modified  plan,  but requested a 90 delay to the original  schedule
for  administrative  purposes.  The Company has accrued  $962,600  for long term
environmental expenses under "Other liabilities".

         Considering the ongoing remediation and DEP involvement in this matter,
there can be no  assurances  that the cleanup,  remediation,  and DEP  oversight
accruals will represent the Company's ultimate liability.

<PAGE>
5.       SHORT TERM BORROWINGS

            The Company had two related party notes  outstanding at December 31,
1997, one for $543,000 with its former  Chairman and CEO, Theo W. Muller (Muller
Note), and another for $50,000 with Frellum Corporation  (Frellum Note). Frellum
is a corporation,  which is 51% owned by Mr. Muller. These notes, which were due
on February 20, 1998,  were  subsequently  renegotiated  effective  February 21,
1998,  for  principal  and  accrued  interest in the  amounts of  $588,383,  and
$53,022,  respectively.  The terms of the Muller  Note are 12%  annual  interest
payable quarterly, and installments of $100,000 each six months beginning August
20,  1998,  until  principal  is fully  paid.  The Muller Note is secured by the
patents owned by the Company. Should the Company complete a private placement of
equity securities, the Company will prepay $143,000 principal on the Muller Note
but be  relieved  of the first  payment  due August 20,  1998.  The terms of the
Frellum  Note are 12% annual  interest,  with a payment of $26,511 due on August
20,  1998,  and the  balance  along with  accrued  interest  due and  payable on
February 20, 1999.  However,  the terms of the note provide that, if the Company
received a bridge loan pursuant to a private placement of equity securities,  it
would prepay principal of $26,511 plus accrued  interest,  but would be relieved
of its payment  obligation on August 20, 1998. The Company  received bridge loan
funds  pursuant to a private  placement,  and the  Company  paid  principal  and
interest  of  $27,713  to Frellum in April  1998,  and is thus  relieved  of its
obligation for the August 20, 1998 payment.

         The Company  entered into a factoring  arrangement  with Texas  Capital
Corporation  in February 1998. The terms are for interest of 2.75% for the first
30 days, with an additional charge of 1% for each additional 15 days the invoice
is  outstanding.  As of March  31,  1998,  the  Company  had  factored  accounts
receivable in the approximate amount of $237,000.


6.       STATEMENT OF CASH FLOWS

         Supplemental disclosures of cash flow information are as follows:

                                Three months ended March 31,
                                     1998          1997
                                 -----------    ----------
         Interest paid            $64,564          $1,938
         Income taxes paid           --              --
<PAGE>

ITEM 2.  MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS


COMPARISON  OF  OPERATIONS  FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1998 AND
1997.

         Net sales for the three months ended March 31, 1998, were $974,406,
Compared to $217,537 in 1997. Sales of the AC2 unit in 1998 were $655,394. There
were no AC2 sales in the first  quarter of 1997.  The  Company is  applying  its
major resources to the AC2. The Company has encountered  lower than expected AC2
production  early in the year due to a supplier's  inability to provide  certain
components of the new "fill and drain" kit. There were a series of technical and
supply  setbacks  for the fill and drain  kits in the first  quarter,  which now
appear to be fully resolved. The resulting low production has held first quarter
sales in 1998 back somewhat.

         Cost of sales  increased  from  $324,883  in the first  quarter of 1997
compared  to  $1,163,083  for the same  period  in  1998.  Air  cooling  and air
conditioning  production  represents  a full 3 months in 1998,  while 1997 first
quarter  operations  began on February 24, 1997, the date of the  acquisition of
Quality Air,  Inc.  Additionally,  the 1998 costs include costs to upgrade prior
year units.

         The air cooling and air conditioning  business is highly seasonal,  and
the first  quarter is not an indicator of results for the year.  The majority of
Company sales take place in the second and third quarters of the year.

         Selling,  general &  administrative  costs were  $409,987  in the first
quarter of 1998  compared to $232,359 in the same period of 1997.  Research  and
development  costs totaled  $250,140 in the quarter ended March 31, 1997,  while
they were  $12,756  in the same  quarter  of 1998.  The cost  increases  compare
favorably  with the Company's  business  plan, as it staffs for the  anticipated
growth in 1998.

         1998 rental income from the Rockaway  Industrial  Park, net of expenses
was down by approximately $1,000 compared to the same period in 1997.

         Because of the costs described  above, the Company incurred a loss from
operations  of  $909,299 in the first  quarter of 1998.  This  compares  with an
operating loss of $266,895 for the same period last year.

         For the three  months  ended March 31, 1998 the  Company  incurred  net
interest expense of $63,005, as compared with net interest income of $33,988
in the first quarter of 1997.  Interest expense has increased due to the Company
factoring  its  receivables  to fund  operations  and the  buildup  of  accounts
receivable and inventory for in anticipation of seasonal sales in the second and
third  quarters  of  1998,  reflecting  working  capital  demands  of a  growing
business. In 1997, the Company earned interest income on the funds received from
the sale of the contract irradiation line of business.

         The net loss of $909,299,  or $0.60 per share for the first  quarter of
1998, compares with a loss of $267,322,  or $0.22 per share in the first quarter
of 1997.


<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         During the first three months of 1998, the Company  generated  $657,000
in cash from its inventories,  and applied that primarily to operations and also
reduced accounts payable by $126,000.

         Net proceeds of  approximately  $490,000 were received from the private
placement  of 130,000  shares of common stock sold in units of 5,000 shares at a
purchase price of $20,000 per unit.

         The net cash of $11,712 was increased slightly to $30,093 by the end of
the first quarter.

The Company will have significant capital and working capital needs in 1998. The
anticipated sales levels require the infusion of additional  equity capital,  as
well  as a  line  of  credit  to  meet  the  working  capital  needs  due to the
seasonality  of the air cooling and air  conditioning  business.  The Company is
presently seeking financing through an asset-based  lender. The Company has also
entered  in to an  agreement  with a  capital  investment  regarding  a  private
placement of preferred  stock with  anticipated  gross proceeds of $1.5 million.
The Company,  subsequent  to the  reporting  date,  has  received  approximately
$500,000  of  those  funds  through  a bridge  loan  pursuant  to a  convertible
promissory  note  bearing  interest at the rate of 10% per annum  ("Note").  The
conversion of the Note into Common Stock and the completion of such private
placement are subject to shareholder approval at the next shareholders' meeting.
There can be no assurance that the negotiations with the asset-based lender will
be successful or that such private placement  will be  consummated.  Should the
Company  be  unable  to  obtain  any such  financing,  it may have to limit  its
operations and inventories, and therefore its future sales volume.

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
         There were no new legal proceedings during the quarter.

ITEM 2.  CHANGES IN SECURITIES

             None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits: None

         (b) Reports on Form 8-K

The Company filed a Report on Form 8-K dated  February 2, 1998 regarding Item 6,
Resignation of Registrant's Directors (File No. 0-5887)


<PAGE>

                                    SIGNATURE


         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



                                     RTI  INC.




Date: May 20, 1998                      By: /s/ RICK E. BACCHUS
                                      ---------------------------
                                          Rick E. Bacchus
                                          Acting Chief Executive Officer



                                  By: /s/ JAMES M. CAYLOR
                                      ----------------------------
                                          James M. Caylor
                                          Controller and Principal
                                          Accounting Officer