<PAGE>
 
                                 UNITED STATES

                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C.  20549


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

                                   FORM 10-Q

      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934


                  For the Quarterly Period Ended May 31, 1998


                          Commission File No. 0-24414


                              RF MONOLITHICS, INC.

             (Exact name of registrant as specified in its charter)


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

              DELAWARE                                  75-1638027
   (State or other jurisdiction of                   (I.R.S. Employer
    incorporation of organization)                    Identification)


     4441 SIGMA ROAD, DALLAS, TEXAS                        75244
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code   (972) 233-2903

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

                    [X] YES                        [ ]  NO

AS OF JUNE 30, 1998, 5,693,250 SHARES OF THE REGISTRANT'S COMMON STOCK, $.001
PAR VALUE, WERE OUTSTANDING.
<PAGE>
 
                              RF MONOLITHICS, INC.

                                   FORM 10-Q

                           QUARTER ENDED MAY 31, 1998

                               TABLE OF CONTENTS

   ITEM
   NUMBER                                                               PAGE
   ------                                                               ----

                   PART I.   CONDENSED FINANCIAL INFORMATION

    1.      Condensed Financial Statements:
             Condensed Balance Sheets
             May 31, 1998 (Unaudited), and August 31, 1997                1
 
            Condensed Statements of Income - Unaudited
             Three Months Ended May 31, 1998 and 1997,
             and Nine Months Ended May 31, 1998 and 1997                  2

            Condensed Statements of Cash Flows - Unaudited
             Nine Months Ended May 31, 1998 and 1997                      3 

             Notes to Condensed Financial Statements                      4

      2.    Management's Discussion and Analysis of Financial
             Condition and Results of Operations                          5

                         PART II.   OTHER INFORMATION

      1.    Legal Proceedings                                            11

      2.    Changes in Securities                                        11

      3.    Defaults Upon Senior Securities                              11

      4.    Submission of Matters to a Vote of Security Holders          11

      5.    Other Information                                            11

      6.    Exhibits and Reports on Form 8-K                             11

                                   SIGNATURES
<PAGE>
 
                    PART I.  CONDENSED FINANCIAL INFORMATION

ITEM 1.  CONDENSED FINANCIAL STATEMENTS

RF MONOLITHICS, INC.

CONDENSED BALANCE SHEETS
(In Thousands)
--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                                   MAY 31,                    AUGUST 31,
ASSETS                                                              1998                         1997
                                                                 (UNAUDITED)
<S>                                                         <C>                          <C>
CURRENT ASSETS:                                          
   Cash and cash equivalents                                       $ 1,558                      $   482
   Short-term investments                                            5,677                        5,487
   Trade receivables - net                                          10,357                        9,517
   Inventories                                                       7,151                        4,934
   Prepaid expenses and other                                        1,025                          961
   Deferred income tax benefits                                        742                          747
                                                                   -------                      -------
                                                         
                 Total current assets                               26,510                       22,128
                                                         
PROPERTY AND EQUIPMENT - Net                                        16,683                       13,694
                                                         
DEFERRED INCOME TAX BENEFITS                                           266                          890
                                                         
OTHER ASSETS - Net                                                     556                          648
                                                                   -------                      -------
                                                         
TOTAL                                                              $44,015                      $37,360
                                                                   =======                      =======
                                                         
LIABILITIES AND STOCKHOLDERS' EQUITY                     
                                                         
CURRENT LIABILITIES:                                     
   Current portion of long-term debt and line of credit            $ 2,685                      $ 1,165
   Accounts payable - trade                                          3,339                        2,135
   Accounts payable - construction and equipment                     1,328                          604
   Accrued expenses and other liabilities                            3,054                        2,965
   Income taxes payable                                                491                          585
                                                                   -------                      -------
                                                         
                 Total current liabilities                          10,897                        7,454
                                                         
LONG-TERM DEBT                                                       1,100                        1,911
                                                         
STOCKHOLDERS' EQUITY:                                    
   Common stock: 5,632 and 5,514 shares issued and outstanding           6                            6
   Additional paid-in capital                                       26,267                       25,535
   Retained earnings                                                 5,822                        2,593
   Unearned compensation                                               (90)                        (142)
   Unrealized gain on short-term investments                            13                            3
                                                                   -------                      -------
                                                         
                 Total stockholders' equity                         32,018                       27,995
                                                                   -------                      -------
                                                         
TOTAL                                                              $44,015                      $37,360
                                                                   =======                      =======
</TABLE> 
See notes to condensed financial statements.

                                      -1-
<PAGE>

RF MONOLITHICS, INC.
 
CONDENSED STATEMENTS OF INCOME - UNAUDITED
(In Thousands, Except Per-Share Amounts)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED                           NINE MONTHS ENDED
                                                      MAY 31,                                      MAY 31,
                                           -------------------------------           ----------------------------------
                                               1998               1997                    1998                 1997
<S>                                        <C>                   <C>                 <C>                      <C>
SALES                                         $14,595            $12,841                 $40,691              $33,613
                                           
COST OF SALES                                   8,708              7,527                  24,231               20,039
                                              -------            -------                 -------              -------
                                           
GROSS PROFIT                                    5,887              5,314                  16,460               13,574
                                           
OPERATING EXPENSES:                        
   Research and development                     1,276              1,060                   4,056                2,943
   Sales and marketing                          1,557              1,497                   4,427                4,285
   General and administrative                     774                987                   2,260                2,465
   Litigation                                       -                  -                     641                    -
                                              -------            -------                 -------              -------
                                           
                 Total operating expenses       3,607              3,544                  11,384                9,693
                                              -------            -------                 -------              -------
                                           
INCOME FROM OPERATIONS                          2,280              1,770                   5,076                3,881
                                           
OTHER INCOME (EXPENSE):                    
   Interest income                                 74                 83                     225                  230
   Interest expense                              (107)               (86)                   (245)                (264)
   Other expense                                  (10)                (6)                     (1)                 (15)
                                              -------            -------                 -------              -------
                                           
                 Total                            (43)                (9)                    (21)                 (49)
                                              -------            -------                 -------              -------
                                           
INCOME BEFORE INCOME TAXES                      2,237              1,761                   5,055                3,832
                                           
INCOME TAX EXPENSE                                778                612                   1,823                1,399
                                              -------            -------                 -------              -------
                                           
NET INCOME                                    $ 1,459            $ 1,149                 $ 3,232              $ 2,433
                                              =======            =======                 =======              =======
                                           
EARNINGS PER SHARE:                        
   Basic                                      $  0.26            $  0.21                 $  0.58              $  0.45
                                              =======            =======                 =======              =======
   Diluted                                    $  0.24            $  0.20                 $  0.54              $  0.43
                                              =======            =======                 =======              =======
WEIGHTED AVERAGE COMMON                    
   SHARES OUTSTANDING:                     
   Basic                                        5,628              5,438                   5,578                5,383
                                              =======            =======                 =======              =======
   Diluted                                      5,989              5,774                   6,006                5,688
                                              =======            =======                 =======              =======
 
See notes to condensed financial statements.
</TABLE>


                                      -2-
<PAGE>
RF MONOLITHICS, INC.
 
CONDENSED STATEMENTS OF CASH FLOWS - UNAUDITED
(In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION> 
                                                                         NINE MONTHS ENDED
                                                                               MAY 31,
                                                                        --------------------
                                                                           1998       1997
<S>                                                                     <C>         <C>
OPERATING ACTIVITIES:                                             
   Net income                                                             $ 3,232   $ 2,433
   Noncash items included in net income:                          
      Deferred taxes                                                          629       847
      Depreciation and amortization                                         2,749     2,104
      Provision for doubtful accounts                                          83       135
      Other                                                                    49        50
   Cash from (used in) operating working capital:                 
      Trade receivables                                                      (923)   (2,463)
      Inventories                                                          (2,217)     (423)
      Prepaid expenses and other                                              (64)     (186)
      Accounts payable - trade                                              1,204     1,503
      Accrued expenses and other liabilities                                   89       827
      Income taxes payable                                                    (94)        6
                                                                          -------   -------
                                                                  
                  Net cash from operations                                  4,737     4,833
                                                                  
INVESTING ACTIVITIES:                                             
   Purchases of short-term investments                                     (4,069)   (3,893)
   Sales of short-term investments                                          3,889     3,780
   Acquisition of property and equipment                                   (5,650)   (3,396)
   Proceeds from sale of assets                                                 -        24
   Decrease in other assets                                                    41        15
                                                                          -------   -------
                                                                  
                 Net cash used in investing activities                     (5,789)   (3,470)
                                                                  
FINANCING ACTIVITIES:                                             
   Borrowings on notes payable                                              1,500         -
   Repayments of notes payable and line of credit                            (375)   (1,175)
   Repayments of capital leases                                              (453)     (248)
   Borrowings of accounts payable - construction and equipment                724       131
   Common stock issued for options exercised                                  232       420
   Common stock issued under the Purchase Plan                                500       167
                                                                          -------   -------
                                                                  
                 Net cash from (used in) financing activities               2,128      (705)
                                                                          -------   -------
                                                                  
INCREASE IN CASH AND CASH EQUIVALENTS                                       1,076       658
                                                                  
CASH AND CASH EQUIVALENTS:                                        
   Beginning of period                                                        482     1,029
                                                                          -------   -------
                                                                  
   End of period                                                          $ 1,558   $ 1,687
                                                                          =======   =======
                                                                  
SUPPLEMENTAL INFORMATION:                                         
   Interest paid                                                          $   229   $   253
                                                                          =======   =======
                                                                  
   Income taxes paid                                                      $ 1,168   $   256
                                                                          =======   =======
                                                                  
   Property and equipment acquisitions by debt                            $    37   $   723
                                                                          =======   =======
 
 
See notes to condensed financial statements.
</TABLE>

                                      -3-
<PAGE>
 
RF MONOLITHICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1. INTERIM FINANCIAL STATEMENTS

The accompanying condensed financial statements include all adjustments,
consisting only of normal recurring adjustments and accruals, that in the
opinion of the management of RF Monolithics, Inc. (the "Company" or "RFM") are
necessary for a fair presentation of the Company's financial position as of May
31, 1998, the results of operations for the three and nine months ended May 31,
1998 and 1997, and cash flows for the nine months ended May 31, 1998 and 1997.
These unaudited interim condensed financial statements should be read in
conjunction with the audited financial statements of the Company and the notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
August 31, 1997, filed with the Securities and Exchange Commission.

Operating results for the nine months ended May 31, 1998, are not necessarily
indicative of the results to be achieved for the full fiscal year ending August
31, 1998.

2. INVENTORIES

Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                          MAY 31,            AUGUST 31,
                                           1998                1997
<S>                                      <C>                <C>
Raw materials and supplies                $4,142              $2,569
Work in process                            1,791               1,239
Finished goods                             1,218               1,126
                                          ------              ------
                                       
Total                                     $7,151              $4,934
                                          ======              ======
</TABLE>


3. PROPERTY AND EQUIPMENT

Property and equipment includes construction in progress of $4,772,000 at May
31, 1998, and $3,021,000 at August 31, 1997, which is composed of property and
equipment not yet placed in service primarily related to increasing the capacity
of the Company's manufacturing facilities.

4. EARNINGS PER SHARE

Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE, is
effective for the Company for the quarter ended February 28, 1998.  It requires
a reconciliation of both the numerator and denominator of the earnings per share
calculations and restatement of previous periods. There are no adjustments to
net earnings to arrive at income for either per share calculation.


                                      -4-
<PAGE>
 
Reconciliation of share amounts is as follows (in thousands):

<TABLE>
<CAPTION>
                                             THREE MONTHS ENDED                     NINE MONTHS ENDED
                                                    MAY 31,                               MAY 31,
                                          ---------------------------          ----------------------------
                                             1998             1997                 1998             1997
<S>                                       <C>               <C>                <C>              <C>
Shares outstanding for basic
   earnings per share                         5,628            5,438               5,578            5,383
Effect of dilutive stock options                361              336                 428              305
                                              -----            -----               -----            -----
Shares outstanding for dilutive
   earnings per share                         5,989            5,774               6,006            5,688
                                              =====            =====               =====            =====
</TABLE>

5. LITIGATION EXPENSE

Litigation expense, which amounted to $0 in the current quarter and $641,000 in
the current year-to-date period, consists of expenses related to the resolution
of the legal matter with TimeKeeping Systems, Inc.  Expenses include legal
expenses, settlement costs and related travel.


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

       The following discussion may be understood more fully by reference to the
financial statements, notes to the financial statements, and management's
discussion and analysis of financial condition and results of operations
contained in the Company's Annual Report on Form 10-K for the year ended August
31, 1997, filed with the Securities and Exchange Commission.

GENERAL

       RFM offers products in four product areas:  Low-power components, low-
power Virtual Wire(R) radio systems, frequency control modules and filters.  The
Company sells to original equipment manufacturers in automotive, computer,
consumer, industrial and telecommunications market segments world wide.

       Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties.  The Company's actual results could differ materially from those
discussed here.  Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in this section and those
discussed in the Company's Form 10-K for the year ended August 31, 1997.

YEAR 2000 ISSUE

       The Company is continuing its evaluation of the Year 2000 issues to
determine whether such issues are expected to be material to the Company's
business, financial condition and results of operations.  It has determined that
its products are not effected by calendar dating, so there is no known Year 2000
impact on its product offering.  The Company has formed a team to evaluate its
situation and address any changes needed within its systems to ensure it can be
fully compliant with Year 2000 requirements.  Most of the Company's business
information systems are in the process of being replaced by Glovia(TM) and
Oracle(R) software, which are represented by the providers to be Year 2000
compliant.  The remainder of the systems and equipment are being inventoried and
evaluated as to compliance.  The cost of necessary replacements and upgrades
will be addressed in the Company's normal budgeting processes.  The total cost
of the business


                                      -5-
<PAGE>
 
system being implemented is expected to be approximately $2.0 million, most of
which has already been incurred. The Company does not currently anticipate that
it will incur significant future expenditures to address Year 2000 compliance
issues. There can be no assurance, however, that such future expenditures will
not exceed the Company's expectations.

   Year 2000 issues may create risk for the Company from unforeseen problems in
its own computer systems and from that of the systems of other companies upon
which the Company's operations may rely. The Company continues to survey its
customers and suppliers to determine the impact the Year 2000 issue may have on
them. Based on such survey, the Company will prepare contingency plans to lessen
the impact of potential problems resulting from customer or supplier Year 2000
issues. The current target for completion of the Company's Year 2000 program is
the end of the second quarter of its 1999 fiscal year (February 28, 1999).

RESULTS OF OPERATIONS

   The following discussion relates to the financial statements of the Company
for the three and nine months ended May 31, 1998 (current quarter and current
year-to-date period), of the fiscal year ending August 31, 1998, in comparison
to the three and nine months ended May 31, 1997 (comparable quarter of the prior
year and comparable year-to-date period).  In addition, certain comparisons with
the three months ended February 28, 1998 (previous quarter), are provided where
management believes it is useful to the understanding of trends.

   The selected financial data for the periods presented may not be indicative
of the Company's future financial condition or results of operations.

   The following table sets forth, for the three and nine months ended May 31,
1998 and 1997, (i) the percentage relationship of certain items from the
Company's statements of income to sales and (ii) the percentage change in these
items between the current periods and the comparable periods of the prior year:

<TABLE>
<CAPTION>
                                       Percentage of Total Sales                                   Percentage Change From
                             ---------------------------------------------------------    ----------------------------------------
                                     Three Months                   Nine Months                 Three Months         Nine Months
                                     Ended May 31,                 Ended May 31,                Ended May 31,        Ended May 31,
                             ---------------------------    --------------------------
                                  1998            1997           1998           1997            1997 to 1998         1997 to 1998
                             ------------    -----------    -----------    -----------    -------------------    -----------------
<S>                            <C>             <C>            <C>            <C>              <C>                  <C>
Sales                              100 %          100 %          100 %          100 %                14 %                 21 %
                                                                                        
Cost of sales                       60             59             60             60                  16                   21
                                  ----           ----           ----           ----                 ---                  ---
  Gross profit                      40             41             40             40                  11                   21
                                  ----           ----           ----           ----                 ---                  ---
Research and development             9              8             10              9                  20                   38
Sales and marketing                 11             12             11             13                   4                    3
General and administrative           5              7              5              7                 (22)                  (8)
Litigation                           -              -              2              -                   -                    -
                                  ----           ----           ----           ----                 ---                  ---
   Total operating expenses         25             27             28             29                   2                   17
                                  ----           ----           ----           ----                 ---                  ---
   Income from operations           15             14             12             11                  29                   31
Other income (expense), net          -              -              -              -                 378                  (57)
                                  ----           ----           ----           ----                 ---                  ---
Income before income taxes          15             14             12             11                  27                   32
Income tax expense                   5              5              4              4                  27                   30
                                  ----           ----           ----           ----                 ---                  ---
   Net income                       10 %            9 %            8 %            7 %                27 %                 33 %
                                  ====           ====           ====           ====                 ===                  ===
</TABLE>


                                      -6-
<PAGE>
 
SALES

   The following table sets forth the components of the Company's sales and the
percentage relationship of the components to sales by product area for the
periods ended as indicated (in thousands, except percentage data):

<TABLE>
<CAPTION>
                                                        Amounts                                                % of Total
                             ------------------------------------------------------------------   ----------------------------------
                                       Three Months                       Nine Months                Three Months      Nine Months
                                       Ended May 31,                     Ended May 31,               Ended May 31,    Ended May 31,
                             --------------------------------   -------------------------------   -----------------  ---------------
                                   1998             1997             1998             1997           1998   1997       1998   1997
                             --------------------------------   -------------------------------   -----------------  ---------------
<S>                            <C>              <C>              <C>              <C>             <C>        <C>     <C>    <C> 
Low-power components                 $10,702          $ 9,159          $29,164          $25,628      73 %     71 %    72 %    76 %
Low-power Virtual Wire(R)
   radio systems                         791              461            2,169            1,697       6        4       5       5
Frequency control modules              1,238            1,175            2,951            2,598       8        9       7       8
Filters                                1,766            2,020            6,113            3,471      12       16      15      10
Technology development sales              98               26              294              219       1        0       1       1
                                     -------          -------          -------          -------     ---      ---     ---     ---
   Sales                             $14,595          $12,841          $40,691          $33,613     100 %    100 %   100 %   100 %
                                     =======          =======          =======          =======     ===      ===     ===     ===
</TABLE> 

   Sales increased 14% in the current quarter in comparison to the comparable
quarter of the prior year and increased 10% from the previous quarter.  Current
year-to-date period sales increased 21% over the comparable year-to-date period.
The increase in the current quarter and current year-to-date over the respective
comparable periods was primarily attributable to an increased number of units
shipped of low-power components and low-power Virtual Wire(R) radio systems.
Low-power component sales in the current quarter increased 17% over the
comparable quarter of the prior year and 16% compared to the previous quarter.
Current year-to-date sales for these products increased 14% over the comparable
year-to-date period.  This was primarily due to increasing number of units sold
for the Company's surface mount resonator products, particularly for customers
in the automotive markets.

   The low-power component product line experienced a decline in the average per
unit selling price of approximately 17% in the current quarter in comparison
with the comparable quarter of the prior year.  This is greater than the
decrease of approximately 10% that was experienced in both fiscal 1996 and 1997
and reflects an increasingly competitive market for these products.  The Company
believes that the decline in average selling prices may be significant enough in
future periods to offset the sale of an increased number of units, potentially
resulting in lower total sales.  There can be no assurance that sales for low-
power components will continue to increase, or remain at the same level they
have been in previous periods.

   Year-to-date sales increased more rapidly for the Company's various value
added products than for the low-power component products.  As a result, the
value added products accounted for 28% of the total sales for the current year-
to-date period compared to 24% for the comparable year-to-date period. Low-power
Virtual Wire(R) radio systems sales increased 72% over the comparable quarter of
the prior year and 28% over the comparable year-to-date period.    Sales of
frequency control module products increased 5% from the comparable quarter of
the prior year and 14% from the comparable year-to-date period. Sales increases
for low-power Virtual Wire(R) radio system and frequency control module products
resulted from continued increase in demand for newer products.

   Filter sales decreased 13% from the comparable quarter of the prior year and
21% from the previous quarter.  The decline was primarily due to a significant
reduction in shipments to a single wireless LAN customer.  This is a North
American customer that has been impacted by reduced demand from Asian customers.
Year-to-date filter sales are 76% higher than the comparable year-to-date
period, due to the impact of sales to this wireless LAN customer during our
first two fiscal quarters. There can be no assurance that significant sales will
resume to this customer in future periods.


                                      -7-
<PAGE>
 
   The Company is devoting considerable resources into developing the filter
market and will continue to do so.  Sales to a large segment of this market, the
telecommunications base station market, increased significantly during the
current quarter both in comparison to the comparable quarter of the prior year
and the previous quarter.  There can be no assurance, however, that sales to
this market, if any, will continue.

   International sales (primarily in Europe and Asia) were approximately 58% and
49% of the Company's sales during the current quarter and the comparable quarter
of the prior year, respectively.  International sales were approximately 56% and
50% of sales during the current year-to-date period and the comparable year-to-
date period, respectively.  Sales to customers in Asia was slightly less than
13% of total sales in the current quarter, compared to 12% in the comparable
quarter of the prior year and 10% in the previous quarter.  The Company has not
experienced a reduction in sales or new orders from customers in Asia in the
current quarter.  There can be no assurance that economic conditions in Asia
will not result in future reductions in sales either directly to customers in
Asia or to customers in North American or Europe who may have end customers in
Asia.

   The Company considers all product sales with a billing address and a delivery
destination in North America to be domestic sales.  All other sales are
considered international.  These sales are denominated primarily in U.S.
currency.  The Company currently anticipates that international sales will
continue to represent a significant portion of its business.  However, there can
be no assurance that these sales will continue as there are inherent risks in
the Company's international business activities which include unexpected changes
in regulatory requirements, tariffs and other trade barriers, additional cost of
marketing and delivering products into foreign countries, the impact of
fluctuations in foreign exchange rates and longer accounts receivable cycles.

   The Company's top five customers accounted for approximately 28% of the
Company's sales in the current quarter, 31% in the comparable quarter of the
prior year and 34% in the previous quarter.  The decrease in the relative
portion of the revenues to the Company's top five customers from the comparable
quarter of the prior year to the current quarter was primarily a result of
reduced sales to the wireless LAN customer discussed previously.

   While the Company has achieved sales increases in prior periods, there can be
no assurance that such sales increases can be achieved in future periods.  The
Company's success is highly dependent on achieving technological advantages in
its product design and manufacturing capabilities, as well as its ability to
sell its products in a competitive marketplace that can be influenced by outside
factors such as economic and regulatory conditions.  The Company experiences
increased competition from companies that offer alternative technology solutions
or aggressive product pricing.  There can be no assurance that competition from
alternative technologies or from competitors duplicating the Company's
technologies will not adversely affect selling prices and market share.

GROSS PROFIT

   The current quarter gross margin and year-to-date gross margin were 40.3% and
40.5% respectively.  This represents a decrease from the 41.4% gross margin for
the comparable quarter of the prior year, but nearly the same as the 40.4% gross
margin for the comparable year-to-date period and the 40.3% gross margin for the
previous quarter.  The reduction in gross margin from the prior year was
primarily due to the reduction in margins for the filter product line resulting
from initial yield losses incurred as certain production was moved to automated
processes.  Gross margins for the largest product line, low-power components,
actually increased compared to both comparable period of the prior year and the
previous quarter.  The increased gross margin resulted from the effect of
reductions in per unit manufacturing costs which were only partially offset by
the decline in average selling prices noted above.


                                      -8-
<PAGE>
 
   The reduction in per unit manufacturing costs, noted previously, resulted
from continued improvements in yield and labor productivity, purchasing cost
reductions and an increase in the number of units produced, allowing for fixed
overhead expenses to be spread over a larger number of units. There can be no
assurance that lower average selling prices resulting from competitive pressures
will continue to be offset by reductions in per unit manufacturing cost.  If
average selling prices decline more than per unit manufacturing costs, the
Company's gross profit margin would be adversely affected.

   The Company has in the past experienced sudden increases in demand which have
put pressure on its manufacturing facilities to increase capacity to meet this
demand.  In addition, new products sometimes require different manufacturing
processes than the Company currently possesses.  The Company has devoted
substantial capital expenditures to increasing capacity and improving its
manufacturing processes.  There can be no assurance that the Company can
continue to increase its manufacturing capacity and improve its manufacturing
processes in a timely manner so as to take advantage of increased market demand.
Failure to do this would result in a loss of potential sales in the periods
impacted.

RESEARCH AND DEVELOPMENT

   Research and development expenses in the current quarter increased
approximately $216,000, or 20%, over the comparable quarter of the prior year.
Current year-to-date research and development expenses increased 38% in
comparison to the comparable year-to-date period.  These costs increased due to
the Company's increase in staffing for these activities and in other product
development costs and reflects the Company's plan to increase product
development for value added products. The Company expects that research and
development expenses will increase in absolute dollars in future periods. Since
research and development expenses increased faster than sales, such expenses
increased to 9% of sales in the current quarter, compared to 8% of sales in the
comparable quarter of the prior year.

SALES AND MARKETING

   Current quarter sales and marketing expenses increased approximately $60,000,
or 4%, from the comparable quarter of the prior year and approximately $142,000,
or 3%, from the comparable year-to-date period. Since sales increased faster
than sales and marketing expenses, such expenses decreased to 11% of sales in
the current quarter, compared to 12% of sales in the comparable quarter of the
prior year.  The Company expects to incur higher sales and marketing expenses in
absolute dollars in future periods as it continues to increase its contacts with
customers.

GENERAL AND ADMINISTRATIVE

   General and administrative expenses for the current quarter decreased
approximately $213,000, or 22%, from the comparable quarter of the prior year.
This decline resulted from a reduction in professional expenses. Current year-
to-date general and administrative expenses decreased slightly in comparison
with the comparable year-to-date period, causing these expenses to decline from
7% of sales to 5% of sales. The Company expects general and administrative
expenses will increase in absolute dollars in future periods.

LITIGATION

   Litigation expense, which amounted to $641,000 in the current year-to-date
period, consists of expenses related to the resolution of the legal matter with
TimeKeeping Systems, Inc. Expenses include legal expenses, settlement costs and
related travel. Legal expenses related to the TimeKeeping Systems, Inc. matter
were substantially lower in the prior year. The Company does not currently
expect to incur significant expenses with regard to this matter in future
periods.


                                      -9-
<PAGE>
 
INCOME FROM OPERATIONS

   Income from operations was approximately $2,280,000, or 15% of sales in the
current quarter, compared to approximately $1,770,000 or 14% of sales in the
comparable quarter of the prior year. The increase in income from operations as
a percent of sales is due to a reduction in operating expenses as a percent of
sales. On a year-to-date basis, current year income from operations was 12% of
sales, compared to 11% of sales for the comparable year-to-date period.

INCOME TAX EXPENSE

   The Company's income tax expense in the current quarter increased compared to
the comparable periods of the prior year, reflecting an increase in taxable
income. During the second quarter, the Company implemented a foreign sales
corporation, RFM Export, Inc., to obtain tax savings relating to its exports,
which represent approximately half of the Company's sales. The Company expects
the effective tax rate would be approximately 35% to 36% in the next several
quarters.

NET INCOME

   Net income increased 27% to approximately $1,459,000 ($.24 per diluted common
share) in the current quarter, compared to approximately $1,149,000 ($.20 per
diluted common share) for the comparable quarter of the prior year. On a
year-to-date basis, net income increased 33% over the comparable year-to-date
period.

LIQUIDITY AND CAPITAL RESOURCES

   The principal sources of liquidity at May 31, 1998, consisted of $7.2 million
of cash and short-term investments and $6.2 million of unused credit facilities.
These credit facilities include $3.5 million unused under a line of credit
agreement with a commercial bank which expires December 31, 1999, and $2.7
million in an equipment-collateralized term lease facility with a commercial
bank, available until December 31, 1998. The credit facilities contain
restrictions and financial covenants relating to various financial ratios,
including net worth, interest coverage and levels of debt compared to tangible
net worth. As of May 31, 1998, the Company was in compliance with such
restrictions and covenants.

   Net cash provided by operating activities was approximately $4.7 million and
$4.8 million for the year-to-date periods of fiscal 1998 and 1997, respectively.
The decrease in cash generated from operations was primarily due to an increase
in cash used in operating working capital, partially mitigated by an increase in
cash from net income and non-cash items included in net income for the
comparable periods. The increase in working capital primarily resulted from an
increase in raw material inventory, purchased in anticipation of future demand.

   Cash used in investing activities was approximately $5.8 million and $3.5
million for the year-to-date periods of fiscal 1998 and 1997, respectively, both
primarily as a result of capital expenditures. The Company expects to acquire a
total of approximately $7 million to $9 million of capital equipment by the end
of the fiscal year, consisting primarily of equipment needed for its
manufacturing facilities. Some of this equipment may be acquired under the
equipment-collateralized operating lease facility.

   Net cash generated from financing activities was $2.1 million for the current
year-to-date period, primarily related to cash from borrowings on notes payable,
issuance's of common stock related to the Company's stock option and employee
stock purchase plans and borrowings on accounts payable-construction and
equipment offset by payments on borrowings of notes payable and capital leases.
Net cash


                                     -10-
<PAGE>
 
used in financing activities was $700,000 for the prior year-to-date period,
primarily related to payments on the line of credit and capital leases.

   The Company believes that cash generated from operations, if any, banking
facilities and the $7.2 million balance in cash and short-term investments will
be sufficient to meet the Company's operating cash requirements through the rest
of the fiscal year. To the extent that these sources of funds are insufficient
to meet the Company's capital requirements, the Company may be required to raise
additional funds. No assurance can be given that additional financing will be
available or, if available, that it will be available on acceptable terms.

                          PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
Not applicable.

ITEM 2.  CHANGES IN SECURITIES
None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
None.

ITEM 5.  OTHER INFORMATION
Not applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits.  The Company hereby incorporates by reference all exhibits filed
     in connection with Form 10-K for the year ended August 31, 1997 and the
     Forms 10-Q for the quarters ended November 30, 1997 and February 28, 1998.

(b)  The Company did not file any reports on Form 8-K during the quarter ended
     May 31, 1998.

(c)  Exhibit Number      Description
     --------------      -----------

          10.24          Separation and Consulting Agreement between the
                         Company and Mr. Conlin, dated June 10, 1998

Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant 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 registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant 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.


                                     -11-
<PAGE>
 
                                   SIGNATURES

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


                              RF MONOLITHICS, INC.


Dated: July 15, 1998          By:    /s/ Sam L. Densmore
                                     -------------------
                                     Sam L. Densmore
                                     CEO, President and Director

                                     /s/ James P. Farley
                                     -----------------------
                                     James P. Farley
                                     VP and Controller