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, 1997

[  ] 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 [x] No[ ]

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

     May 7, 1997 - 1,481,166 shares of common stock
     -----------   ---------

    Transitional Small Business Disclosure Form    Yes     No [x]

                                    1 of 11
<PAGE>
PART I.  FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS

                            RTI INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                       MARCH 31,         DECEMBER 31,
                                                         1997                1996
         ASSETS                                       (UNAUDITED)
         -----------------------------------          -----------        -----------
<S>                                                    <C>               <C>       
Current:
  Cash and cash equivalents                            $1,270,579        $2,578,180
  Accounts receivable, net of allowance
   for doubtful accounts of $1,100 in 1997                581,482              --
  Restricted deposits                                        --             482,944
  Due from affiliated company                             124,695              --
  Inventories                                           1,118,236              --
  Prepaid expenses and Other                              126,171            27,760
  Other current assets                                     13,350              --
                                                       ----------        ----------

         TOTAL CURRENT ASSETS                           3,234,513         3,088,884


Property, plant and equipment,
 net of accumulated depreciation and
 amortization                                             846,132           476,235
Goodwill (Note 2)                                       1,367,390              --
Note receivable                                            55,000           670,000
Other assets                                              169,118             9,565

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

         TOTAL ASSETS                                  $5,672,153        $4,244,684
                                                       ==========        ==========
</TABLE>

        See accompanying notes to consolidated financial statements.

                                  Page 2 of 11
<PAGE>


                            RTI INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                               MARCH 31,           DECEMBER 31,
                                                  1997                 1996
LIABILITIES AND STOCKHOLDERS' EQUITY          (UNAUDITED)
------------------------------------        -------------          -------------
<S>                                          <C>                   <C>         
CURRENT:
  Accounts payable                           $    486,285          $     19,811
  Current portion of long term debt                47,525                  --
  Accrued expenses                                213,857                74,433
                                             ------------          ------------
        TOTAL CURRENT LIABILITIES                 747,667                94,244

Long-term debt, net of current portion
 and discount of $16,500 and $22,000              252,175               265,000
Other liabilities (Notes 3 and 4)                 943,688               970,935
                                             ------------          ------------

         TOTAL LIABILITIES                      1,943,530             1,330,179
                                             ------------          ------------

STOCKHOLDERS' EQUITY:
 Preferred stock, $.05 par value -
  shares authorized 2,000,000;
  issued and outstanding: none                       --                    --
 Common stock, $.08 par value -
  shares authorized 15,000,000;
  issued and outstanding, 1,481,182               118,495                88,094
 Additional paid-in capital                    17,104,624            16,053,542
 Deficit                                      (13,494,496)          (13,227,131)
                                             ------------          ------------

         TOTAL STOCKHOLDERS' EQUITY             3,728,623             2,914,505
                                             ------------          ------------

         TOTAL LIABILITIES AND
          STOCKHOLDERS' EQUITY               $  5,672,153          $  4,244,684
                                             ============          ============
</TABLE>

         See accompanying notes to consolidated financial statements.

                                  Page 3 of 11
<PAGE>
                            RTI INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


                                                THREE MONTHS ENDED
                                                     MARCH 31,
                                                 1997          1996
                                             ----------     ----------
REVENUES
 Net sales                                  $   217,537           --
 Rental income                                   20,928           --
                                            -----------    -----------
      TOTAL REVENUES                            238,465           --


COST OF SALES                                   324,883           --
                                            -----------    -----------
      GROSS PROFIT (LOSS)                       (86,418)          --

OPERATING EXPENSES:
  Selling, general and administrative
   expenses                                     232,359         30,077
  Product development                            12,756           --
  Expenses of Rockaway Industrial
   Park, including interest expense
   of $5,500 in 1997 and 1996                     8,094         21,257
                                            -----------    -----------
LOSS FROM OPERATIONS                           (339,627)       (51,334)

OTHER INCOME (EXPENSE):
 Loss from discontinued operations                 (427)       (35,152)
 Reserve for environmental investigation
  and remediation                                  --         (480,000)
 Environmental insurance settlement                --          580,000
 Other interest income (expense)                 33,988        (68,419)
 Other income                                    38,744         11,580
                                            -----------    -----------
NET LOSS                                    $  (267,322)   $   (43,325)
                                            ===========    ===========

NET LOSS PER SHARE                          $      (.22)   $      (.04)
                                            ===========    ===========
WEIGHTED AVERAGE NUMBER OF COMMON
 SHARES OUTSTANDING                           1,199,083      1,076,887
                                            ===========    ===========

          See accompanying notes to consolidated financial statements.

                                  Page 4 of 11

<PAGE>
                            RTI INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED MARCH 31,
                                                         1997           1996
                                                     -----------    -----------
<S>                                                  <C>            <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:                       --             --
   Net loss                                          $  (267,322)   $   (43,325)
                                                     -----------    -----------
   Adjustments  to  reconcile  net  loss  to
    net  cash  provided  by  operating activities:
      Depreciation and amortization                       30,550        209,237
      Allowance for doubtful accounts                      1,100           --
      Discount of note payable                             5,500          5,500
      (Increase) decrease in:
        Accounts receivable                             (467,672)        (3,453)
        Restricted deposits                              482,944           --
        Due from affiliate                              (124,695)          --
        Inventories                                     (527,614)
        Prepaid expenses and other                         2,235        (15,464)
      Increase (decrease) in:
        Accounts payable                                 379,370         55,356
        Accrued expenses                                  30,315         11,268
        Other liabilities                                (27,247)       480,000
                                                     -----------    -----------
             TOTAL ADJUSTMENTS                          (215,214)       742,444
                                                     -----------    -----------
              NET CASH PROVIDED BY (USED BY)
               OPERATING ACTIVITIES                     (482,536)       699,119
                                                     -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of fixed assets                            (187,974)      (306,097)
   Reduction in notes receivable                         615,000           --
   Purchase of business, net of cash acquired           (663,038)          --
   Purchases of other assets                            (159,553)          --
                                                     -----------    -----------
         NET CASH PROVIDED BY (USED IN)
          INVESTING ACTIVITIES                          (395,565)      (306,097)
                                                     -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments on short-term loans                         (850,000)      (200,000)
   Payments on long term debt                               --         (187,847)
   Payments on other liabilities                            --          (28,329)
   Proceeds from sale of preferred stock                    --          236,000
   Proceeds from sale of common stock                    420,500           --
   Payments for fractional shares
    of common stock                                         --              (55)
                                                     -----------    -----------
         NET CASH PROVIDED BY (USED IN)
          FINANCING ACTIVITIES                          (429,500)      (180,231)
                                                     -----------    -----------

NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS       (1,307,601)       212,791
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR           2,578,180         77,631
                                                     -----------    -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD             $ 1,270,579    $   290,422
                                                     ===========    ===========
</TABLE>


          See accompanying notes to consolidated financial statements.

                                  Page 5 of 11

<PAGE>

                            RTI INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (Information as of March 31, 1997 and 1996, 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, 1997, its results of operations and
its cash flows for the three  months  ended March 31, 1997 and 1996.  Results of
operations  for the three month period ended March 31, 1997 are not  necessarily
indicative of the results to be expected for the year ending December 31, 1997.

         Information  included in the consolidated  balance sheet as of December
31, 1996 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,
1996, 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.   NEW OPERATIONS

         With its  acquisition  of the  business of Quality Air Inc. on February
24, 1997, the Company is now engaged in the  manufacture,  marketing and selling
of  residential  coolers  and  of  central  air  conditioning   equipment.   The
acquisition  cost has been  allocated  first to  identifiable  assets,  with the
remainder of the purchase  price assigned to goodwill,  representing  mainly the
cost price of patents and patent pending, which will be amortized over 15 years.


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

                                  Page 6 of 11

<PAGE>


                            RTI INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (Information as of March 31, 1997 and 1996, and for
                    the three months then ended is unaudited)

environmental  cleanup  and  remediation  program  (Note 4), and its  ability to
recover  its net  investment  of $50,000 in 201 acres of Parcel I is impaired by
unpaid  outstanding  property  taxes for the years 1993,  1994,  1995,  and 1996
totaling  $196,373,  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 (Notes
4 and 6).

         In April 1996,  the DEP responded to the  Company's  petition to change
the  Remedial  Action  Work Plan under the Record of  Decision,  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,
but allowed the Company to take a well water  sampling in May 1997 to  determine
the longer term impact of the CleanOx remediation effort.

         The  Company  has  also  been  named  a  respondent  in   environmental
proceedings  relating to a New Jersey disposal site  ("Nascolite")  to which the
Company  shipped a small amount of  materials in 1978.  The Company has signed a
settlement agreement with the EPA requiring the payment of $32,247 in settlement
of the EPA's Nascolite claims, which payment was made on May 9, 1997.


                                  Page 7 of 11

<PAGE>


                            RTI INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (Information as of March 31, 1997 and 1996, and for
                    the three months then ended is unaudited)

         As a  result  of  ongoing  remediation  and DEP  involvement  in  these
matters,  there can be no  assurances  that the  cleanup,  remediation,  and DEP
oversight accruals will represent the Company's ultimate liability.

         Environmental accruals at March  31,1997  were as follows:
                           Current ("Accrued expenses"):
                             Nascolite Site                       $  32,247

                           Long-term ("Other liabilities"):
                             Groundwater remediation                747,315
                                                                  ---------
                             Total                                $ 779,562
                                                                  =========


5.   DISCONTINUED OPERATIONS

         On August 8, 1996,  the Company sold to SteriGenics  International  the
assets and  liabilities  related  to its  irradiation  business,  except for its
Rockaway facility, which was leased for six years to SteriGenics  International.
Results  from  irradiation  operations  are  shown  as "Loss  from  discontinued
operations".


6.       STATEMENT OF CASH FLOWS

         Supplemental disclosures of cash flow information are as follows:

                                Three months ended March 31,
                                    1997        1996
                                ----------- -----------

        Interest paid              $  362       $62,497
        Income taxes paid               -         5,499


                                  Page 8 of 11

<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, 1997 AND
1996.

         Net sales for the  period  from  February  24 to March 31,  1997,  were
$217,537,  which did not include any air conditioner sales. In the first quarter
of 1996,  the company did not record any sales,  because of the  elimination  of
sales from discontinued operations. Rental income reflects the lease income from
the Company's former irradiation facility in Rockaway, New Jersey.

         Cost  of  sales  of  $324,883  in  the  1997   period   reflected   the
inefficiencies  caused by the preparations to shift manufacturing  capacity from
coolers to air  conditioners.  In first  quarter  of 1996,  there was no cost of
sales  after  elimination  of the costs of the  discontinued  business.  Product
development costs totaled $12,756 in the period ended March 31, 1997; there were
no such costs in 1996.

         Selling,  general and administrative expenses of $232,359 for the first
quarter of 1997  included the costs of setting up the sales and marketing of the
new central air conditioner  that will be  manufactured,  starting in the second
quarter  of this  year.  In the first  quarter of last  year,  the  Company  had
expenses of $30,077 not related to the discontinued business.

         Expenses of Rockaway  Industrial  Park were $8,094 in the first quarter
of 1997, as compared with $21,257 in the same period last year, when the Company
incurred consulting expenses.

         Because of the costs described  above, the Company incurred a loss from
operations  of  $339,627 in the first  quarter of 1997.  This  compares  with an
operating loss of $51,334 for the same period last year.

         Other income for the three months ended March 31, 1997 consisted mainly
of  interest  income  of  $33,988  on the  cash  received  from  the sale of its
irradiation business,  and $38,744 from additional funds received, as the result
of a  litigation  settlement  made in 1995.  In the first  quarter of 1996,  the
Company had a net loss of $35,152 from discontinued operations, interest expense
of $68,419 and received an environmental  insurance  settlement of $580,000,  of
which $480,000 was reserved for future environmental remediation costs.

                                  Page 9 of 11

<PAGE>


         The net loss of  $267,322  or 22 cents per share for the first  quarter
compares with a loss of $43,325 or 4 cents per share a year earlier.


LIQUIDITY AND CAPITAL RESOURCES

         During the first quarter of 1997,  the Company spent  $1,132,511 in its
new operations,  and invested in the acquisition of the new business ($863,063),
in fixed  assets  ($187,974)  and in other  assets  ($159,553)  related  to this
business.

         Net cash provided by financing activities of $420,500 resulted from the
sale of 145,000 common shares of the Company in a private placement at $2.90 net
per share.

         At March 31, 1997, the Company had $1.3 million in cash and equivalent,
which the Company expects to invest in its new air conditioning  business during
the second quarter.

         The air  conditioning  business  is  highly  seasonal,  increasing  the
requirements  for capital in the summer  months.  The  Company may need  working
capital or fixed  asset  financing,  but does not have any credit  lines at this
time.  The  Company  is  negotiating  for such  financing,  but  there can be no
assurance  that the  Company  will be  successful  in its  negotiations.  If the
Company can not obtain any such financing,  it may have to limit its inventories
and  accounts  receivable,  and hence  its  sales,  to levels  that can be self-
financed.



PART II.  OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS
          There have been no new legal  proceedings  during the  quarter
          ended March 31, 1997.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits: None

         (b) Reports on Form 8-K
             The  Company  filed a  Current  Report  on Form  8-K/A  during  the
             quarter.   It  was  dated   February  24,  1997  and  reported  the
             consummation of the acquisition of the business of Quality Air Inc.
             An  Amendment  No.1 to this  Current  Report  was  filed  with  the
             Securities  and Exchange  Commission on May 9, 1997. It contained a
             Pro Forma Condensed Consolidated Balance Sheet of the Company as of
             December 31, 1996.

                                 Page 10 of 11

<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 9, 1997              By: /s/ THEO W. MULLER
                                   --------------
                                       Theo W. Muller
                                       Chief Executive Officer
                                       (Principal Executive, Financial
                                        and Accounting Officer)


                                 Page 11 of 11