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  SEPTEMBER 30, 1999
                                                     --------------------

[ ]   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]


PART I.  FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS
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<S>     <C>    <C>    <C>    <C>    <C>    <C>


<PAGE>
                                                      RTI INC. AND SUBSIDIARIES
                                                          CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  BALANCE SHEET
       ASSETS                                          SEPTEMBER 30,                               DECEMBER 30,
                                                             1999                             1998

CURRENT ASSETS
    Cash and cash equivalents                                         0                             9361
    Accounts receivable, net of allowance                        997856                           191497
        of $ 12,966 in 1999, and $13,214 in 1998
    Inventory                                                   1468595                          1317649
    Prepaid expenses and other                                   232773                            54228
               Total current assets                             2699224                          1572735

PROPERTY, PLANT AND EQUIPMENT, NET                              1647768                          1787312
DUE FROM RELATED PARTIES                                         102505                           111206
INTANGIBLE ASSETS, net of amortization
        of $63,721 1999 and $72,000 in 1998                     1032868                          1135057
OTHER ASSETS                                                      54053                            31635
               Total assets                                     5536418                          4637945

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

<PAGE>

                                                                                 BALANCE SHEET
            LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                        SEPTEMBER 30,                          DECEMBER 31,
                                                                                 1999                               1998
       CURRENT LIABILITIES
     1     Notes payable to related parties            *                633008.08     0.072486284           627811      0.092482721
     2     Due to related parties BII                  *                   215083     0.024629334           174469      0.025700996
     3     Notes payable TCC                           *                  2151793     0.246403613           606861      0.089396581
     4     Due to customer                             *                    47145     0.005398613           404207      0.059543658
     5     Accounts payable                            *                  1465788     0.167848608          1088297      0.160316828
     6     Accrued expenses                            *                   406499      0.04654854           387208      0.057039538
     7     Accrued warranty                            *                   267196     0.030596837           621312      0.091525355
     8     Accrued interest                            *                   315144     0.036087403           139578      0.020561209
     9    Capital lease obligation                     *                    72317      0.00828108            19987      0.002944281
    10     Other current liabilities                   *                   280000     0.032063034           180000      0.026515766
    11     Bridge loan                                 *                   564002      0.06458434           566502      0.083451304
    12 Current portion of long term debt               *                   682364     0.078138071           667926      0.098392054
                      Total current                                    7100339.08     0.813065757          5484158      0.807870292
                       liabilities
       LONG-TERM DEBT
    13 SBA  & Norwest net from current portion                             447356     0.051227109           209858      0.030914143
    14 Provision for future Environmental Cost                             888955     0.101794979           927140       0.13657682
    15 Convertible notes                                                   240000       0.0274826
    16 Trio deposit ( ACE )                                                 23590     0.002701311                0
    17 Rock away Property Tax net of the current portion                    32558     0.003728244           167258      0.024638745
                      Total liabilities                                8732798.08               1          6788414                1
       STOCKHOLDERS' EQUITY
           Preferred stock, $.05 par value - shares
               authorized 2,000,000; shares issued
               and outstanding 100,000                                       5000                             5000
           Common stock; $.08 par value - shares
               authorized 25,000,000, issued and
               outstanding 1,611,166 at year-end
                1998
              and 1,611,166 at March 31,                                   128894                        128493.28
               1999

           Additional paid-in capital                                  18115261.1                         18115261
           Accumulated deficit                                          -21445536                        -20399223
          Total stockholders' equity                                   -3196380.9                      -2150468.72
          Total liabilities and stockholders' equity                   5536417.18                       4637945.28



<PAGE>
                                                      RTI INC. AND SUBSIDIARIES
                                                          CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                                        CONSOLIDATED STATEMENTS OF OPERATIONS
                        THREE MONTHS ENDED SEPTEMBER 30,
                                                                   1999                       1998
Net sales                                                        583424                           -12354
Cost of sales                                                    537895                      998402.6828
    Gross profit (loss)                                           45529                     -1010756.683
Selling, general and administrative expenses                     259450                      1320368.934
Research and development expenses                                 41630                            28660
               Total operating expenses                          301080                      1349028.934
               Loss from operations                             -255551                     -2359785.616
Other income (expense)
    Rental income for Rockaway Industrial Park, net                9755                             7926
        of expenses
        in both years                                            -11904                                0
    Interest income (expense)                                   -156452                     -87498.11248
    Other income                                                      0                                0
               Total other income                               -158601                     -79572.11248
                   (expenses)
               Loss from continuing                             -414152                     -2439357.729
               operations

       EXTRAORDINARY INCOME                                       12000
                                                                      0                                0
               Net loss before income taxes                           0                     -2439357.729
Income taxes
Net loss                                                        -402152                     -2439357.729
Weighted Average Shares                                         1611166                      1577356.476
Net loss per share                                         -0.249603082                     -1.546484746

<PAGE>
                                                      RTI INC. AND SUBSIDIARIES
                                                          CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                                        CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                NINE MONTHS ENDED SEPTEMBER 30,
                                                                   1999                       1998
Net sales                                                       2595321                          2296591
Cost of sales                                                   1962003                      3365740.683
    Gross profit (loss)                                          633318                     -1069149.683
Selling, general and administrative expenses                     934018                      2234107.934
Research and development expenses                                 84494                           226667
               Total operating expenses                         1018512                      2460774.934
               Loss from operations                             -385194                     -3529924.616
Other income (expense)
    Rental income for Rockaway Industrial Park, net               -2149                            23830
        of expenses
    Interest income (expense)                                   -541604                     -233463.1125
    Other income                                                      0                              753
               Total other income                               -543753                     -208880.1125
               (expenses)
               Loss from continuing                             -928947                     -3738804.729
                operations
       EXTRAORDINARY INCOME                                      125064
               Net loss before income taxes                           0                     -3738804.729
Income taxes                                                          0                                0
Net loss                                                        -803883                     -3738804.729
Weighted Average Common Shares Outstanding                      1611166                      1577356.476
Net loss per share                                         -0.498944864                     -2.370297891

<PAGE>

                                                             RTI INC. AND SUBSIDIARIES
                                                          CONSOLIDATED FINANCIAL STATEMENTS
                                                                      (UNAUDITED)
                                                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                NINE MONTHS ENDED SEPTEMBER 30,
CASH FLOWS FROM OPERATING ACTIVITIES:
       Net Loss                                                 -803883                     -3738804.729
       Adjustments to reconcile net loss to
       net cash applied to operating activities:
            Depreciation and amortization                        373539                      226043.3976
            Allowance for doubtful accounts                       12966                            12092
            Allowance for warranty expense                                                        746175
            Imputed interest on note payable                                                           0
            (Increase) decrease in:
              Accounts receivable                               -806359                           163808
               Restricted deposits                                                                     0
               Due from affiliate                                     0                            34160
               Inventories                                      -150946                         763299.6
            Other assets                                         -16793
               Prepaid expenses and other                       -161752                        -198198.5
            Increase (decrease) in:
            Due to relative parties                               45811                            85485
            Due to customer                                     -357062
            Accrued warranty                                    -354116
            Accounts payable                                     377491                           806717
            Accrue interest                                      175566
            Accrue expenses                                       19291                           127938
               Other liabilities                                 100000                              899
                TOTAL ADJUSTMENTS                               -742364                      2768418.698
                Net cash applied to operating                  -1546247                     -970386.0313
                activities
CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchases of fixed assets                             -230825.47                        -134217.6
       Reduction in notes receivable                                  0                                0
       Purchase of business, net of cash acquired                     0                                0
       Purchases of other assets                                 -22418                  21742.9
                Net cash applied to
                    investing activities                     -253243.47                        -112474.7
CASH FLOWS FROM FINANCING ACTIVITIES:
       Proceeds from sale of common stock                             0                           490439
       Proceeds from notes payables                             1784932                            68000
       Increase in notes to related parties                        5197                            -4617
       Payments on notes to related parties                           0                           -26511
       Changes in short-term borrowings                               0                           579502
       Payments on long term debt                                                                 -35664
                Net cash provided by financing                  1790129                          1071149
                activities
Net increase (decrease) in cash and cash equivalents              -9361                      -11711.7313
Cash and cash equivalents, beginning of period                     9361                            11712
Cash and cash equivalents, end of period                              0                                0


</TABLE>

<PAGE>



                         RTI INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information  as of September 30, 1999 and 1998, for the three months then ended
and for the six-months then ended is unaudited).

   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                         OPERATIONS

The following  "Management's  Discussion and Analysis of Financial Condition and
Results of Operations "includes"  forward-looking statements "within the meaning
of the Private  Securities  Litigation  Reform Act of 1995.  This Act provides a
"safe harbor" for  forward-looking  statements to encourage companies to provide
prospective  information  about  themselves  so  long  as  they  identify  these
statements  as  forward-looking  and provide  meaningful  cautionary  statements
identifying important factors that could cause actual results to differ from the
projected  results.  All statements  other than statements of historical fact we
make in this Form 10-Q are forward-looking. In particular, the statements herein
regarding  industry  prospects and our future results of operations or financial
position are forward-looking statements.  Forward-looking statements reflect our
current expectations and are inherently uncertain. Our actual results may differ
significantly from our expectations.  The section entitled  "Additional  Factors
That May Affect Future Results" describes some, but not all, of the factors that
could cause these differences.


OVERVIEW

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 September 30, 1999,  its results of operations and its
cash flows for the nine months  ended  September  30, 1999 and 1998.  Results of
operations  for  the  nine-month   period  ended  September  30,  1999  are  not
necessarily  indicative  of the  results  to be  expected  for the  year  ending
December 31, 1999.

Information  included in the consolidated  balance sheet as of December 31, 1998
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, 1998, 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 air condition homes and small  businesses
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


<PAGE>




force trained to manufacture  the AC2. During the first half of 1999 the company
was focused on recovering  confidence in the "AC2" central air  conditioner  and
pushing  the  Aireze  product  line as hard as  possible.  In  April of 1999 the
company  finally  prested its new product," The Trio" which is an upgraded of an
evaporative unit and give the service as a refrigeration unit with the advantage
of the cost service and maintance of an evaporative unit.

3. ROCKAWAY INDUSTRIAL PARK (Superfund Site)

For a more detailed  description of the Rockaway "Superfund" site please see the
companies 10K report for the year ended December 1998.

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  current  book value of $50,000 in 201
acres of Parcel I is impaired by unpaid outstanding  non-recourse property taxes
for the years 1993,1994,1995,1996,1997,1998 and the nine months of 1999 totaling
$332,558,  which have been accrued in the financial  statements  under  "current
portion of long term debt $300,000 and Rockaway property tax $32,558.

As a result of  engineering  tests that commenced in 1981, the property has been
named an EPA "Superfund  Site" and there have been ongoing  cleanup  operations.
There is a  remediation  proposal  to complete  the cleanup  over the next eight
years.

Rockaway sales commitment

On April 20, 1999 the Company signed an agreement to sell the property. The sale
will provide no funds to RTI and is  essentially an assumption of liabilities in
exchange  for  the  property,  with  no  cash to  RTI.  The  buyer  will  assume
liabilities,  including the environmental and taxes. As the sale of the Rockaway
industrial park is consumated the  responsibility  of cleaning the contamination
will be at the expense of the buyer.  The buyer is in a due diligence period and
the Company  believes the sale will close during the fourth  quarter of 1999, no
anssurance of it.

RTI  did  not  generate  the   contamination  and  has  not  been  charged  with
contributing to the contamination of the property.  RTI has suffered the expense
of this  superfund  site because it purchased  the property from Thiokol and RTI
was the legal owner when the  contamination  was  discovered.  Some of the major
expenses associated with RTI owning the facility have been:



         Rockaway  Property  (including   improvements  @  current  book  value)
         $485,532 August 1996 payment to the New Jersey Department of
                  Environmental Protection (NJDEP)                    $575,000
         Non Recourse Property Tax Accrued                            $332,558
         Note to Thiokol (interest included)                          $318,004


<PAGE>




         Accrued for environmental provision (as of September 30, 1999)
$888,955
                                     Listed Items                    $2,016,624

There have also been other expenses for studies, consultants, and other cleaning
expenses that have been borne by RTI.




Some of the major liabilities RTI may be relieved of by the sale are:
<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>


         Cash to be realized by RTI                                                                          $0
         Non Recourse Property Tax Accrued                                                            $332,558
         Note to Thiokol (interest included)                                                          $318,004
         Accrued for environmental provision (as of Sept. 30, 1999)                                   $888,955
         Less: Rockaway Book Value net of Depreciation                                               ($354,598)
                                    Listed Items                                                    $1,184,919
</TABLE>

An writing request to buy the property has been presented from a potential buyer
and the board of directos  approved  the sale , as November  8,1999 the sale has
not close yet. The property is a lush forested area of New Jersey that the buyer
plans to  develop.  There is current  income from the  property  tenants and the
buyer has met with local officials to obtain permission for additional  tenants.
A second  potential buyer has expressed  interest in the property if the present
sales  commitment is not closed.  The signing of the sales  commitment  does not
provide  assurance  that the  transaction  will be  completed or that all or all
parts of the above liabilities will be removed.  No effect has been given to the
pending sale in the company's financial records.


5.       SHORT TERM BORROWINGS

         The Company had a related party note outstanding at September 30, 1999,
for $588,383 with its former Chairman and CEO, Theo W. Muller (Muller Note), and
another for $26,511 with Frellum Corporation  (Frellum Note), which is owned 51%
by  Mr.  Muller.  These  notes,  which  were  due on  February  20,  1998,  were
renegotiated  effective  February  21,  1998.  The terms of the Muller  Note was
increasing to a 12% annual interest rate up to August 20 of 1998 and an 18% rate
thereafter.  The terms of the Frellum Note are 12% annual interest,  the balance
along with accrued interest are due and payable on February 20, 2000.

The company has a related  party note  outstanding  at September  30, 1999,  for
$18,114 with its current President Rick Bacchus( Rick's note). The interest rate
of Rick's Note is 16%,  the balance  along with  accrued  interest  are due upon
request.

The Company entered into a factoring  arrangement with Texas Capital Corporation
(TCC) of Austin, Texas 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 September 30, 1999, the Company had factored
accounts receivable in the approximate amount of $594,508.

The Company also obtained a credit line of up to $1.81  million with TCC,  using
the  inventory  as  collateral,  As of  September  30, 1999 the Company had used
$1,338,749 of the credit line.



<PAGE>




On June 16,  1999 the  Company  issued a  convertible  note  offering  for up to
$800,000,  in $25,000  convertible notes. As of September 30 of 1999 the company
received funds of $240,000. The company has 8 notes outstanding that will accrue
12% annual interest rate for 18 months and the notes are convertible into shares
during this time or at the end of the period.


6.       STATEMENT OF CASH FLOWS

  Supplemental disclosures of cash flow information are as follows:

                                Nine months ended Septemmber 30,
                                     1999          1998
                                 -----------    ----------
         Interest                 $541,604       $64,564
         Income taxes                --             --



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

RTI  is a  developer  and  manufacturer  of  high  efficiency  air  conditioning
equipment.  RTI has patented technology and patents pending. RTI has the highest
efficiency  air  conditioning  equipment  rated  under  ARI  Standard  210  (Air
Conditioning and Refrigeration Institute).  RTI's AC2 technology has achieved an
efficiency  increase  that Pacific Gas & Electric  Company  measured as being an
average  of  102%  better  than  10  SEER  "High   Efficiency"  air  cooled  air
conditioners  (70% plus of US sales).  The AC2  technology is cost  efficient to
manufacture and AC2's initial price is competitive with premium  performance air
conditioners from the existing manufacturers.

RTI defines five market segments: 1) Residential Evaporative {Aireze & Trio}, 2)
Residential  Split  Systems 2 - 8 ton  capacity  {AC2 & S1},  3) E2Pak and E3Pak
Systems  (commercial  Trio), 4) Industrial/  Institutional 50 - 300 ton capacity
{Water  Chiller  Venture}  and, 5)  Commercial  3 - 30 ton  capacity  {primarily
package units}.  Please note that E3Pak, Water Chillers,  and Commercial Package
units are all in various stages of  development  and are not yet being sold. RTI
does not currently  include window air conditioners or motel units in its market
segments. The following table shows the sales by market segment.

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

$ in thousands of US
Dollars

sales of the mayor
segments

                   April-Jun      April-Jun          %           Jan-March       Jan-March          %
                     1999           1998           Change          1999            1998           Change
AC2/Evapco            462            655           -29%             136             637           468%
Aireze                620            621         -0.20%             694             323           115%
E2pk                   76             52            50%               0              36           100%
Trio                   12              0            N/A                               0




<PAGE>






                    Jul-Sep        Jul-Sep           %            Jan-Sep         Jan-Sep           %
                     1999           1998           Change          1999            1998           Change
AC2/Evapco           115           -267           232%             713            1025           -30%
Aireze               230            225             2%            1544            1169            32%
E2pk                  17             30           -43%              95             118           -19%
Trio                 225              0            N/A             237               0            N/A
                                                                  2589            2312

</TABLE>

In 1997 the AC2 was certified for  performance (by ARI) and safety (by ETL to UL
standard  1995),  just  after the  cooling  season.  For this  reason  there was
essentially no field installation experience on the newly designed AC2 units. In
1998 the AC2 product line had substantial field problems  primarily related to a
freeze protection  control system.  The problems emerged at the beginning of the
1998  cooling  season  after  nearly  3,000 AC2 units  had been  built.  The AC2
controls problems would shut units down erratically and a series of five recalls
were made to attempt to correct the flaws with "immediately available" alternate
controls components. The recalls and the associated  re-manufacturing of the AC2
units to attempt rushed corrections during the 1998 summer cooling season led to
a severe loss in 1998.  The controls  malfunctions  were  primarily  caused by a
water level sensing device and a submerged temperature sensing device.

Since the summer of 1998,  RTI has redesigned the AC2 unit controls to eliminate
problems  experienced  in 1998,  insure high  reliability  in the controls,  and
simplify  the controls  system.  RTI has taken field  experience  to enhance the
total AC2 reliability and these enhancements were laboratory  verified with good
results. A 1999 AC2 unit Field test program to check operation was briefly field
verified, and then the units in inventory were upgraded. A Field Upgrade Program
is being implemented and units are being upgraded in the field.  During 1998 the
repeated  controls  failures were happening in the field within a few weeks.  At
this point the field  results  have been very good with more than half of season
of use, but the controls  have not yet been field proven for a full season,  and
the field upgrades are still in progress.

Feedback from AC2 dealers  (installing  contractors)  indicated  that the energy
efficiency goals had been achieved in the field, but that AC2 reliability had to
substantially improve in order for AC2 sales to grow instead of declining. The 2
- 5 ton size air  conditioning  market in the United States is  approximately  5
billion  dollars per year.  Management  desires to achieve a substantial  market
share (5% plus) over the next five years and Management's  main goal for 1999 is
to  overcome  the  problems  related  to the AC2 units  and  prove the  reliable
operation  of  AC2  units  in the  field.  As a  consequence  of  achieving  the
reliability goal in 1999,  marketing efforts were cut and an overhead  reduction
plan was implemented to keep the operating loss for 1999 below 1 million dollars
verses  a  nearly  4.5  million  loss in  1998.  The AC2  portion  of  marketing
expenditures were dramatically cut while efforts were focused on solving product
problems and proving the solutions with field results.  The Aireze Marketing was
slightly  increased and refocused to increase sales strength in the local market
and begin expanding sales into the Southwest  market area. The net total Selling
and  marketing  expenses  were  cut by  almost  35% for the  period  Janaury  to
September of 1999 verses the same period in 1998. Accordingly the AC2 sales were
down 31%  while  Aireze  sales  were up 48% for the same  period.  Aireze  sales
increases were primarily from strengthening sales in the New Mexico & El Paso


<PAGE>




market.  E2Pak sales were down 19% for the first nine  months  because the major
customer had a sales slump in its  business  such that there were no E2Pak sales
in the first  quarter and the second  quarter E2Pak sales were up 50% verses the
same period in 1998 for the third  quarter the sales were down 56 % compare with
the same period of last year.

Management is pleased with the AC2 field results and is working to achieve field
results  that can enable the  Company to raise much  needed  capital  and become
profitable in 2000.

The company  signed an agreement with the EPA to be an EPA "Energy Star Partner"
and RTI is now listed on the EPA Energy  Star Web page under the  manufacturer's
section for "labeled heating & cooling  equipment" for the "Air Source Heat Pump
and Central Air Conditioning Manufacturers". RTI's AC2, EvapCon and new products
which meet the Energy Star  guidelines can now receive  favorable  financing and
other advantages of the "Energy Star" program.

The company's  development  department achieved  laboratory  performance results
indicating an efficiency of  approximately  40 EER at the SEER  efficiency  test
conditions on a new product line trade named "Trio".  This  efficiency  level is
more than double that of the  companies'  AC2 product  line and believed to be a
substantial  advance. The Trio product line has been field tested in the El Paso
area and begun  sales in the El Paso  market  only.  The  sales  for the  second
quarter account  $11,905,However  for the third quarter the sales reach $225,489
which represt for the third quarter almost 39% of company net sales, the company
plan is to keep the trio in the El Paso  area and New  Mexico  for year 2000 and
start a regional campain in early 2001 for the Southwest states of the union.

The gross  profit of 24% for the nine months of 1999 verses the negative 47% for
the same period in 1998  reflects a dramatic  turnaround.  Cost of sales dropped
from  $998,403 in the third  quarter of 1998 to $537,895  for the same period in
1999. Better material usage on Aireze and standard  production of the AC2 helped
make that possible.  The primary  reason for the  improvement in gross margin is
the AC2 units were not having new field  problems  that  required  redesigns  of
components  in 1999 and the 1999 costs to upgrade  prior year units were applied
to Warranty  reserve,  and the company upgraded  approximately  250 units in the
third quarter with a cost of $110,418  (~$441 each).  During the nine months the
company upgraded  approximately 1,150 units with a cost of $354,116 (~$307 each)
which includes labor, materials, freight and overhead.

The company has  manufacturing  facilities in Sunland Park, New Mexico,  Westway
Texas, and Juarez Mexico. These facilities are operating far under capacity with
the present  sales level and  management  is working on several  programs to cut
costs and increase  gross margins to a target of 30% - 40% (depending on product
line).  The plans being  considered  include  keeping all the facilities to have
available plant space for future growth,  and plans to sell the Westway facility
and consolidate  operations  into Juarez.  The Westway plant has been listed for
sale in  accordance  with the planning,  As November  8,1999 the company has not
received a formal resonable offer to buy West way plant.

The General and Administrative expenses were cut from $2,234,108 for nine months
of 1998 to  $934,018  thousand  for the same  period  in 1999.  This  $1,300,090
reduction  reflects  substantial  improvements  in the utilization of accounting
information  to make overhead cuts and the  combination of jobs to reduce costs,
plus the warranty accrued in 1998 for $727,000 that did not happen in 1999.


<PAGE>




For the quarte  ending in  September  30, 1999 the totaled  expenes were 259,450
compares with 1,320,369 of same period of 1998.

Research and development  costs totaled $84,494 in the nine months period ending
September  30,1999  while they were  $226,667 in the same  quarter of 1998.  The
expense  decrease in Research and  development  compares  favorably  because the
company  capitalized  $34,580 for plugs and molds for the new "Trio"  product in
the second  quarter,but also because the wise utilization of the human resources
in double function and recycling of material.  The company  capitalized  $15,052
from Selling, general & administration for the same purpose in the same period.
 Research  and  development  costs  totaled  $41,630  in the  quarter  endend in
September 30, 1999 compare with 28,660 of the same period of 1998.

For the third quarter of 1999 rental income from the Rockaway  Industrial  Park,
was $2,149 negative  compared with the net income of $7,926 in 1998 for the same
period.  For the nine  months  period of 1999 rental  income  from the  Rockaway
Industrial  Park, was $2,149 negative  compared with the net income of 23,830 in
1998.

The biggest negative factor is the increase in interest  expense.  For the three
months ending  September  30,1999 the Company  incurred net interest  expense of
$156,452 as compared with net interest  expenses of $87,498 in the third quarter
of 1998. The interest  expense  increased from $233 thousand for the nine months
period of 1998 (10% of sales) to $541  thousand for the same period in 1999 (21%
of sales).  Interest  expense has  increased  due to the Company  factoring  its
receivables  and obtaining  inventory loans to fund  operations,  the buildup of
accounts receivable,  and inventory. These additional financings to fund working
capital, in addition to the previous notes caused the interest expense to go up.
See 5-Short term borrowings

Because  of the costs  described  above,  the  Company  incurred  a loss  before
interest,  other  income  and  extraordinary  income of  $255,551  for the third
quarter compared to a loss of 2,359,786 for the same period in 1998.

Extraordinary  income of $12,000 was posted  during  September of 1999.  Bacchus
industries  (a Related  company)  and RTI agreed that Bacchus  Industries  would
assume the Spec Air Lease and pay for the  equipment  that was directly  leased.
The $12,000  charge is for the lease amounts from  July,August  and September of
1999.  Bacchus  Industries  will pay  $4,000  a month  with no  cash-in  for the
company, Bacchus industries will pay this payment with future royalties accrued.

The net loss of  $402,152  or $0.25 per share  for the  third  quarter  of 1999,
compares  with a loss of  $2,439,358  or $1.55 per share in the third quarter of
1998.

Because  of the costs  described  above,  the  Company  incurred  a loss  before
interest,  other income and extraordinary income of $385,194 for the nine months
period of 1999 compared to a loss of $3,529,925 for the same period of 1998. The
net loss of  $3,738,805  or $2.37 per share for the nine months  period of 1998,
compares with a loss of $803,883 or $0.50 per share in the same period in 1999.

The air cooling and air conditioning business is highly seasonal,  and the third
quarter is not an indicator of results for the year.

LIQUIDITY AND CAPITAL RESOURCES



<PAGE>




During the nine  months  period  ending in  September  30 of 1999,  the  Company
generated  $1,784,932 in cash from its notes payable to TCC,  notes from related
parties, and convertible notes, and applied that primarily to operations such as
building inventory, accounts receivables and interest.

The net cash of zero as of September  30,1999 was decreased  compared to $11,712
at the end of the Third quarter of 1998.

The Company has  significant  equity capital and working  capital needs in 1999.
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.

On June 26, 1999 the company issued a convertible notes offering for 800,000. As
September  30,  1999  the  company  had  received  $240,000.  The  term  of  the
convertible  notes are as follow: a 12 % promissory note in the principal amount
of $25,000 at the purchase price of $25,000 per  convertible  note. Each note is
due and payable  upon the  earlier of  eighteen  (18) months from the day of the
signing or the initial closing of the company's  contemplated  equity financing.
The  principal  amount of each note may, at the option of the holder,  be rolled
over into the  equity  financing,  or  converted  at 5 shares  per dollar of the
principal. At the time of the conversion any accrued interest will be forfeited.
The convertible  notes are secured by a second mortgage on the Westway  facility
and the Mexican corporation.

The Company is presently seeking financing through capital investment  regarding
a private  placement of common stock in which the company intends to include all
the convertible notes already outstanding and other notes the company expects to
have from the recent offering.

There can be no  assurance  that such  private  placement  will be  consummated.
Should the Company be unable to obtain any  financing,  it may have to limit its
operations and inventories, and therefore its future sales volume.

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

During 1999 several vendors started legal action to collect their payments.  The
Company  has  accrued   $20,000  since   September  1998  for  legal  fees.  The
renegotiations  of the debt  were  largely  accomplished  with  about 65% of the
vendors but the majority of the  agreements  have not been funded due to lack of
cash to make payments.

The original  agreement that the Company had with the Internal  Revenue  Service
(for  the  payment  of back  taxes)  had too  high of  payment  requirements  to
accomplish,  therefore  the  company  started a new  negotiation  to make  lower
payments  and have a longer  period to pay. As of  September  30, 1999 the total
debt to IRS is for  $261,183.  As of September 30, 1999 the company has not been
able to make payments on back taxes since March 1999.

The  company  received a bridge  loan in April of 1998 for  $540,000  payable on
January 22 of 1999 which is in default,  as well as another bridge loan received
in September 1998 for $25,000, payable on June 22, 1999 which is in default. The
bridge loan notes have not been  renegotiated,  the note  holders can take legal
action,  convert  into common  stock,  and exercise the warrants of $4.50 each ,
which will expire on April 22, 2003.


<PAGE>





Since the Third quarter of 1998 Officers of the company  including Rick Bacchus,
Ron Bacchus and Rocky  Bacchus  have not  received  their full  salaries.  Total
payroll accrued for them as of September 30, 1999 is $104,796.

Since the third quarter of 1998 the company has made only partial payment to the
New Mexico State Tax Departments.  As of September 30, 1999 the delinquent taxes
accrued are $34,950.Legal action can be taken at any moment.

 In May 1999 the Company  started to review  transactions  related  with the TCC
financing,  in order to have the  proper  interest,  discounts  and fees.  As of
September 30, 1999 the company has not  recognized in its books fees,  discounts
and interest for $91,000.  The company  believes  that those  charges are out of
contract. In addition, the company already recognized in its books about $49,500
which will be in dispute  because the company  believes those charges are out of
contract.  The company believes that the overcharges can be solved without legal
action during 1999.

Year 2000

The company  believes its accounting  systems and other computer comply properly
with the year 2000  necessary  and  estimate  will not be any major  problem  to
affect the records and operability of the company.

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS

In addition to the factors  discussed  in the  "Overview"  and  "Liquidity"  and
"Capital  Resources"  sections of this  "Management  Discussion  and Analysis of
Financial  Condition and Results of Operations" and the Company's  Annual Report
on Form 10-K for the year  ended  December  31,  1998 the  following  additional
factors may affect the company's future results:

In analyzing this 10-Q prospective  investors should consider all of the matters
set forth  below  and in the 1998  10-K,  and the March  1999 10-Q and read such
documents in full.

         When  used  in  this  report,   the  words  "may,"  "will,"   "expect,"
"anticipate,"   "continue,"   "estimate,"   "project,"   "intend"   and  similar
expressions  are  intended to  identify  forward-looking  statements  within the
meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E
of the Securities Exchange Act of 1934, as amended regarding events,  conditions
and financial  trends that may affect the Company's  future plans of operations,
business  strategy,  operating  results  and  financial  position.   Prospective
investors are cautioned that any  forward-looking  statements are not guarantees
of future performance and are subject to risks and uncertainties and that actual
results may differ  materially  from those included  within the  forward-looking
statements  as a result of various  factors.  Such factors are  described in the
Company's  1998 10-K,  March 1999 10-Q, and in the risk factors set forth below.
All references to "Items" refer to the 1998 10-K.

#1 Going  Concern  Opinion;  Significant  Losses;  Pressing Need to Complete the
Convertible  Note Offering and a Stock  Offering.  The report  accompanying  the
audited  Financial  Statements  for the year ended  December 31, 1998 contains a
"going  concern"  qualification,  the  results  for such year  reflect a loss of
$4,492,352 or ($2.88) per share and a stockholders  deficit of  $2,150,469.  The
Company  posted a loss of  $2,667,385  in the year ended  12/31/97  or $1.92 per
share. The Company posted a loss of $214,399 or ($0.13) per share for the first


<PAGE>




quarter ended March 31, 1999 verses a loss of $909,299 or $.60 per share for the
first quarter ended March 31, 1998. No assurances  can be given that the Company
will be able to continue its operations if it does not complete its  Convertible
Note Offering and a
subsequent Equity Financing.

#2 Likely Competition. Although, to the best of management's knowledge there are
as yet no competitors  offering a water cooled central air conditioning unit, it
must be assumed that if the Company's  efforts are  successful  other  companies
will begin to offer  competing  systems.  These future  competitors  may well be
companies which have substantially greater research, development,  marketing and
financial resources than the Company. See "Risk factor 1."

#3 Potential Environmental Liability.     The Company is involved in
environmental proceedings regarding an EPA Superfund Site in the State of New
Jersey owned by the Company.   While the Company believes that sufficient
reserves have been provided for in the accrued $888,955 reported in this Sept.
30, 1999 10Q, no assurances can be given that the Company's actual liability
will not exceed such estimates.  See "Risk factor 1."

#4 EPA Superfund Site Sale Commitment Signed but not Closed.  While a commitment
to sell the land in  Rockaway  (which  contains  the  Superfund  Site)  has been
signed.  A closing on the sale is projected for the third quarter and a possible
recovery of up to 1.1 million in previously  recognized expenses associated with
the Superfund  site is projected to take multiple  years.  No assurances  can be
given that the  Company  will close on the sale or that the buyer will  complete
the clean up. If the buyer  closes on the sales  transaction  and at some  point
defaults on the clean up the Company could still be liable for the clean up.

#5 No  Assurance  of  Acceptance  of Novel  Technology.  The  Company's  primary
product,  the AC2 Water Cooled Central Air Conditioning  unit, uses water rather
than air as a cooling medium.  Such technology requires the installation of both
a water  supply line and a water  waste line with  direct  access to the cooling
unit. No assurances can be given that contractors or the public will accept such
technology  even if they believe that the Company's  product  offers  advantages
over its competitors products. See "Risk factor 1."

#6  Concentration on a Single Product.  While the Company  produces  evaporative
coolers  and heat  exchangers  as well as the AC2, it intends to  concentrate  a
significant  portion of its marketing and  distribution  efforts on the AC2. The
Company's success will therefore be substantially  dependent upon the success of
the AC2,  which  is only  being  marketed  in  certain  geographical  areas.  No
assurances can be given that the Company's marketing efforts will be successful.
See "Risk factor 1."

#7  Uncertainty  of  Patent  Protection.   The  Company  holds  patents  on  its
evaporative  coolers,  has a patent on the AC2,  and other  patents are pending.
While the Company's  patent counsel has received  notice that an application has
been approved and that another  patent  relating to the AC2 may be issued in the
near future,  no assurances can be given that additional  patents will be issued
regarding the AC2 or that if issued,  such patent,  or the Company's  subsisting
patents, will provide adequate protection from its competitors, which may either
devise  alternate  technological  solutions  to  accomplish  the purpose of such
patents or obtain patents of their own which would require the Company to either
obtain a license  from such  patent  holders or to  redesign  its  products.  In
addition,  no  assurances  can be given that the Company will have the necessary
funds to either commence an action against parties who may be infringing the


<PAGE>




Company's patents or to defend against any patent infringement actions which may
be commenced by others.   See "Risk factor 1."

#8 Development Stage of the Company's  Primary Product.  The Company's sales and
marketing  efforts  regarding the AC2 are not sufficiently  established to fully
evaluate or forecast  their  prospects.  The Company is thus  subject to all the
risks  associated  with the launching of a new product and there is no assurance
that such efforts will be successful. See "Risk factor 1."

The  efficiency  and  comfort  achieving  capability  of the AC2  have  received
favorable responses during the 1998 season, however the reliability in the field
has been  unacceptable.  The  high  volume,  large,  and  well  established  air
conditioning  contractors  are not  expected to buy AC2 units until they believe
the reliability issues have been solved, and that is not expected to occur until
after 1999. The smaller more aggressive air  conditioning  contractors  that are
looking for an advantage to increase sales, may sell AC2 units in 1999, but they
want assurances that they will get factory support if they have problems.

The Company is  dependent  on equity  offerings  to  continue  to provide  field
support.  Management  considers  it crucial that AC2 units  operate  reliably in
1999. The Company needs to quickly put together  "field upgrade kits" that solve
past operating problems and reassure customers. Some of the major problems are:

1. AC2 units had  reliability  problems  in 1998 (the first year for  widespread
units to operate with freeze protection controls). 2. The 1999 AC2 unit Upgrades
based on field  evaluations have not been field proven for a full season. 3. RTI
has not been able to  purchase  all the  materials  required  to upgrade all AC2
units in the field. 4. Customers are cautious in making sales  commitments (both
in making purchases from RTI & in offering AC2 units to their customers) because
of concerns about a) RTI's financial strength,  b) AC2 field corrections not yet
being  made,  and c)  possible  future  AC2  product  problems.  5.  RTI has not
automated  manufacturing  and this creates concern for the quality of production
(since it is largely hand built) and the cost is high because the labor  content
is high  and the  material  utilization  efficiency  is less  than an  automated
process would generate. 6. Relations with Suppliers & Sales Representatives have
been strained by failure to make timely payments.

No assurances can be given that the Company will resolve AC2 product problems or
solve customer and supplier relationship problems.

#9 Dependence on Certain Suppliers.  The Company is dependent upon its suppliers
of plastics,  motors, pumps and compressors.  The Company has failed to pay many
of its  suppliers  in  accordance  with  the  terms  of  sale.  Certain  of such
components may have long lead order times and the Company does not have a strong
relationship with such suppliers. Should the Company lose any of such suppliers,
it would cause  manufacturing  and  assembly  delays which would have a material
adverse effect on its business.  No assurance can be given that the Company will
be able to adequately  replace such  suppliers in the event of a termination  of
their services to the Company. See "Risk factor 1."

#10 Seasonality.  The air conditioning business is highly seasonal and the
Company expects to earn the majority of its revenues in the summer months when
the demand for cooling equipment is greatest.  No assurances can be given that


<PAGE>




the Company will be able to maintain sufficient cash flow.   See "Risk factor
1."

#11 Need for Highly Qualified  Personnel.  The success of the Company's business
will depend upon its ability to attract and retain  personnel  with a wide range
of technical  capabilities.  Competition  for such personnel is intense,  and is
expected to increase in the future.  No assurance  can be given that the Company
will be able to attract and retain such personnel.

#12 Dependence on Management; No Key Man Insurance. The Company is substantially
dependent upon the services of Messrs. Richard, Ronald and Rockney Bacchus (ages
45, 41, and 43 respectively) for the success of its business. The loss of any of
their  services would have a material  adverse effect on the Company.  While the
Company  proposes  to obtain Key Man  Insurance  in the amount of  approximately
$500,000 on the lives of each of the Bacchus brothers, no such insurance has yet
been obtained.

#13 Significant  Common Stock Holdings by Current Officers and Directors.  As of
the date hereof, the management of the Company  beneficially owns 258,705 shares
of Common Stock, or  approximately  16% of the Company's  issued and outstanding
Common  Stock.  There are no  cumulative  voting  rights and  directors  must be
elected by a plurality of the outstanding  voting  securities  entitled to vote.
Management  will  therefore  be in a position  to  significantly  influence  the
actions of the Company.

#14 Absence of Dividends on Common Stock. The Company has not paid any dividends
on its Common  Stock  since its  incorporation  and  anticipates  that,  for the
foreseeable future,  working capital and earnings,  if any, will be retained for
use in the Company's  business  operations and in the expansion of its business.
The Company has no present intention to pay cash dividends on its Common Stock.

#15 Possible Adverse Effects of Authorization of Preferred Stock;  Anti-Takeover
Effects. The Company's Certificate of Incorporation authorizes the issuance of a
maximum of  2,000,000  shares of  preferred  stock,  $.05 par value  ("Preferred
Stock"), on terms which may be fixed by the Company's Board of Directors without
further  stockholder  action.  The terms of any series of Preferred Stock, which
may include priority claims to assets and dividends,  and special voting rights,
could adversely  affect the rights of holders of the Common Stock.  The issuance
of  Preferred  Stock  could make the  possible  takeover  of the  Company or the
removal of management of the Company more difficult, discourage hostile bids for
control of the  Company in which  stockholders  may receive  premiums  for their
shares of Common Stock or otherwise dilute the rights of holders of Common Stock
and the market price of the Common Stock. . #16 Shares Eligible for Future Sale.
Sales of the Common Stock in the public market could adversely affect the market
price of the Common Stock. As of June 30, 1999, the Company had 1,611,166 shares
of Common Stock  outstanding.  Of these shares,  1,065,773  are freely  tradable
without  restriction under the Securities Act and 545,393 shares are "Restricted
Securities" within the meaning of Rule 144 promulgated under the Securities Act.

#17 No Assurance  of Public  Market.  The Company was  delisted  from the Nasdaq
Small Cap Market and is now traded on the Nasdaq Bulletin Board.  There may be a
greater  difficulty in selling stock on the Nasdaq  Bulletin Board than when the
stock was listed on the Nasdaq Small Cap Market.



<PAGE>




#18 Risk of "Penny Stock"  Regulations  The Commission  has adopted  regulations
which define a "penny  stock" to be any equity  security that has a market price
(as defined) of less than $5.00 per share,  subject to certain  exceptions.  The
Common  Stock was listed for  quotation  on the Nasdaq  SmallCap  Market and was
therefore  not deemed to be a "penny  stock."  Since the  Common  Stock has been
delisted  from the  Nasdaq  Small  Cap  Market  the Stock may be deemed a "penny
stock" as defined by the Exchange Act and the rules and regulations  promulgated
thereunder.  For any  transaction  involving a penny stock,  unless exempt,  the
rules require the delivery,  prior to the transaction,  of a disclosure schedule
prepared by the Commission relating to the penny stock market. The broker-dealer
also must disclose the  commissions  payable to both the  broker-dealer  and the
registered representative, current quotations for the securities, information on
the limited market in penny stocks and, if the broker-dealer is the sole market-
maker,  the  broker-dealer  must  disclose  this  fact  and the  broker-dealer's
presumed control over the market. In addition,  the broker-dealer  must obtain a
written  acknowledgment  from the customer that such disclosure  information was
provided  and must retain such  acknowledgment  from the  customer  for at least
three years. Finally, monthly statements must be sent to the customer disclosing
current price information for the "penny stock" held in the account.

While many Nasdaq listed securities would otherwise be covered by the definition
of penny stock,  transactions  in a Nasdaq listed  security would be exempt from
all but the sole market-maker  provision for: (i) issuers who have $2,000,000 in
tangible assets  ($5,000,000 if the issuer has not been in continuous  operation
for three years);  (ii)  transactions in which the customer is an  institutional
accredited  investor;  and (iii)  transactions  that are not  recommended by the
broker-dealer.  In addition,  transactions in a Nasdaq listed security  directly
with a Nasdaq market-maker for such securities would be subject only to the sole
market-maker  disclosure,  and the disclosure  with respect to commissions to be
paid to the broker-dealer and the registered representative.

The above described rules may materially  adversely affect the liquidity for the
market of the Company's Common Stock.  Such rules may also affect the ability of
broker-dealers  to sell the Company's Common Stock and may impede the ability of
holders  (including,  specifically,  purchasers in this  offering) of the Common
Stock to sell their shares in the secondary market.

#19 Indemnification of Directors and Officers. The Company's By-laws provide for
indemnification  against  losses  that  they  may  incur  in  legal  proceedings
resulting  from  rendering  services  to the Company in such  capacities  to the
fullest extent permitted by law.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933,  as  amended  ("Act")  may be sought  by  directors,  officers  and
controlling  persons of the Company  pursuant to such indemnity (or  otherwise),
the Company has been advised that in the opinion of the  Securities and Exchange
Commission such indemnification is against public policy as expressed in the act
and is, therefore,  unenforceable. In the event that a claim for indemnification
against  such  liabilities  (other  than the  payment by the Company of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any such action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the Common Stock
being  registered,  the Company  will,  unless in the opinion of its counsel the
matter  has  been  settled  by  controlling  precedent,  submit  to a  court  of
appropriate  jurisdiction  the question  whether such  indemnification  by it is
against  public policy as expressed in the Act and will be governed by the final
adjudication of such issue.


<PAGE>





ITEM 2.  CHANGES IN SECURITIES

             None.





                                    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: December 6, 1999                 By: /s/ RICK E. BACCHUS
                                      ---------------------------
                                          Rick E. Bacchus
                                          Acting Chief Executive Officer
                        And Principal Accounting Officer