<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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

                                    FORM 10-Q

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

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


For Quarter Ended September 30, 1996              Commission file number 0-11656


                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION


              A Delaware Corporation       I.R.S. No. 22-1807533

              Two Nationwide Plaza, Suite 760, Columbus, Ohio 43215

                    Registrant's Telephone No. (614) 221-6000

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.

                            Yes [ X ]     No [   ]

Indicate the number of shares outstanding of each of the issuer's classes of 
Common Stock, as of the latest practicable date.

EACH OF THE FOLLOWING CLASSES ARE REGISTERED ON THE AMERICAN STOCK EXCHANGE.

<TABLE>
<CAPTION>
                           Class                                                Outstanding at October 31, 1996
                           -----                                                -------------------------------
                  <S>                                                                    <C>
                  Common Stock, par value                                                6,236,020
                    $.01 per share

                  Common Stock Purchase Warrants                                         414,538 (1)

<FN>

                  (1)  Upon exercise, represents 1,139,980 shares of The
                       Wendt-Bristol Health Services Corporation.

</TABLE>



<PAGE>   2



                THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                ---------------------------------------------
             FORM 10-Q   FOR THE QUARTER ENDED SEPTEMBER 30, 1996
             ---------   ----------------------------------------

                THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                ---------------------------------------------
                               AND SUBSIDIARIES
                               ----------------



                                  I N D E X


<TABLE>
<CAPTION>

Part I                                                                 Page No.
------                                                                ---------

<S>                                                                     <C>
Financial Statements:

     Consolidated Balance Sheets - December 31, 1995 and
     September 30, 1996 (Unaudited)                                     3-4

     Consolidated Statements of Operations (Unaudited)
     Three and Nine Months Ended September 30, 1996 and  1995           5

     Consolidated Statements of Cash Flow (Unaudited)
     Nine Months Ended September 30, 1996 and 1995                      6-7

     Notes to Consolidated Financial Statements                         8-10

     Management's Discussion and Analysis of Financial Condition
     and Results of Operations                                          11-13

Part II

     Other Information                                                  14

     Signatures                                                         14

     Exhibits                                                           14

</TABLE>

                                                  2

<PAGE>   3

                 THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                 ---------------------------------------------
           FORM 10-Q       FOR THE QUARTER ENDED SEPTEMBER 30, 1996
           ---------       ----------------------------------------

                 THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                               AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                AS AT SEPTEMBER 30, 1996 AND DECEMBER 31, 1995

                                    ASSETS


<TABLE>
<CAPTION>
                                                         September 30     December 31
                                                             1996            1995
                                                         ------------    ------------
                                                         (Unaudited)
<S>                                                      <C>             <C>         
Current assets:
   Cash                                                     $    102,014    $     35,825
                                                            ------------    ------------

   Restricted cash                                               368,219         310,912
                                                            ------------    ------------

   Receivables:
      Trade, net of allowance for doubtful
         accounts of $ 200,000 (September)
         and $340,000 (December)                               1,509,848       2,678,551
      Notes receivable                                           109,953          49,920
      Miscellaneous                                              845,578         858,032
                                                            ------------    ------------
                                                               2,465,379       3,586,503
                                                            ------------    ------------

   Inventories                                                   496,343         489,042
   Prepaid expenses and other                                    358,691         402,824
                                                            ------------    ------------
      Total current assets                                     3,790,646       4,825,106
                                                            ------------    ------------

Property, plant and equipment, at cost                        20,816,046      19,531,862
   Less: Accumulated depreciation and
      amortization                                            (5,901,792)     (5,243,057)
                                                            ------------    ------------
                                                              14,914,254      14,288,805
                                                            ------------    ------------
Investments and other assets:
   Notes and other receivables, net of current portion           367,584         395,912
   Notes receivable from officers, employees and
      related parties, net of amounts payable                    964,442         863,509
   Life insurance premiums receivable                            842,394         758,795
   Excess of cost over assets of businesses
      and subsidiaries acquired, less amortization               627,104         637,729
   Deferred charges                                              955,167         776,622
   Other assets                                                  265,835         260,847
                                                            ------------    ------------
      Total investments and other assets                       4,022,526       3,693,414
                                                            ------------    ------------

                                                            $ 22,727,426    $ 22,807,325
                                                            ============    ============
</TABLE>



                                   (Continued)



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


                                        3


<PAGE>   4


                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
               FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996
               --------- ----------------------------------------

                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                                AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (Continued)

                 AS AT SEPTEMBER 30, 1996 AND DECEMBER 31, 1995

                      LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                               September 30     December 31
                                                                       1996            1995
                                                               ------------    ------------
                                                                (Unaudited)                
<S>                                                            <C>             <C>         
Current liabilities:
       Accounts payable                                        $  1,906,626    $  2,836,474
       Accrued expenses and other liabilities:
            Salaries and wages                                      452,080         451,718
            Taxes, other than federal income taxes                  939,515       1,315,508
            Interest                                                113,392          87,520
            Stock purchase agreement payable                        625,000         625,000
            Other                                                 1,001,483       1,987,634
       Long-term obligations classified as current                  906,482       2,760,789
       Federal income taxes payable                                      --         100,000
                                                               ------------    ------------
            Total current liabilities                             5,944,578      10,164,643
                                                               ------------    ------------

Long-term obligations, less amounts classified
       as current                                                11,731,650       7,880,566
                                                               ------------    ------------

            Total liabilities                                    17,676,228      18,045,209
                                                               ------------    ------------

Minority interests                                                  343,249         219,541
                                                               ------------    ------------

Stockholders' equity:
       Common stock: $.01 par;
            authorized: 12,000,000 shares
            issued: 8,243,480 shares                                 82,435          82,435
       Capital in excess of par                                  10,264,751      10,274,974
       Retained earnings (deficit)                               (2,716,178)     (2,872,818)
                                                               ------------    ------------
                                                                  7,631,008       7,484,591
       Treasury stock, at cost, 2,507,460 shares (September)
            and 2,523,722 shares (December)                      (2,923,059)     (2,942,016)
                                                               ------------    ------------
                 Total stockholders' equity                       4,707,949       4,542,575
                                                               ------------    ------------

                                                               $ 22,727,426    $ 22,807,325
                                                               ============    ============
</TABLE>








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


                                        4


<PAGE>   5


                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
               FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996
               --------- ----------------------------------------

                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                           Nine Months Ended              Three Months Ended
                                                              September 30                   September 30
                                                      ----------------------------    --------------------------
                                                           1996            1995           1996           1995
                                                      ------------    ------------    -----------    -----------
<S>                                                   <C>             <C>             <C>            <C>        
Revenues:
       Net sales                                      $  2,085,074    $  2,012,077    $   709,033    $   660,085
       Service income                                   14,187,278      13,687,012      4,818,996      4,418,222
                                                      ------------    ------------    -----------    -----------
                                                        16,272,352      15,699,089      5,528,029      5,078,307
                                                      ------------    ------------    -----------    -----------
Costs and expenses:
       Cost of sales                                     1,515,526       1,369,777        535,157        449,172
       Selling, general and administrative
            expenses, net                               13,003,451      12,517,093      4,425,138      4,055,859
                                                      ------------    ------------    -----------    -----------
                                                        14,518,977      13,886,870      4,960,295      4,505,031
                                                      ------------    ------------    -----------    -----------

Operating income before depreciation                     1,753,375       1,812,219        567,734        573,276

Depreciation                                               730,303         877,484        266,779        295,656
                                                      ------------    ------------    -----------    -----------

Operating income                                         1,023,072         934,735        300,955        277,620
                                                      ------------    ------------    -----------    -----------

Other income (expense):
       Minority interests in (earnings) losses, net       (125,981)         27,383        (18,170)        37,165
       Interest expense                                   (788,156)       (887,974)      (303,099)      (287,926)
       Other, net                                           73,705          52,003         41,855         15,420
                                                      ------------    ------------    -----------    -----------
                                                          (840,432)       (808,588)      (279,414)      (235,341)
                                                      ------------    ------------    -----------    -----------

Income before income taxes                                 182,640         126,147         21,541         42,279

Income tax expense                                         (26,000)        (58,000)       (10,329)       (13,000)
                                                      ------------    ------------    -----------    -----------

Net income                                            $    156,640    $     68,147    $    11,212    $    29,279
                                                      ============    ============    ===========    ===========




Income per common share                               $       0.03    $       0.01    $        --    $        --
                                                      ============    ============    ===========    ===========

Weighted average shares outstanding                      5,730,975       6,658,894      5,736,020      6,219,758
                                                      ============    ============    ===========    ===========
</TABLE>








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


                                        5


<PAGE>   6


                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
               FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996
               --------- ----------------------------------------

                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 Nine Months Ended September 30
                                                                                 ------------------------------
                                                                                    1996               1995
                                                                                 -----------        -----------

<S>                                                                              <C>                <C>        
Cash flows from operating activities:
   Net income                                                                    $   156,640        $    68,147
                                                                                 -----------        -----------
   Adjustments required to reconcile net income 
    to net cash provided by operating activities:
      Amortization, depreciation and other, net                                      745,313            888,145
      Provision for losses on notes and accounts receivable                           65,174             64,788
      Minority interest in earnings (losses) of consolidated subsidiaries            125,981            (27,383)
      Changes in assets and liabilities:
         Receivables
            Sale of receivables                                                      970,550                 --
            Other changes                                                            168,933           (159,815)
         Merchandise inventories                                                      (7,301)           (95,974)
         Prepaid expenses and other current assets                                    52,867            342,567
         Accounts payable                                                           (929,848)          (316,014)
         Accrued expenses and other liabilities                                   (1,335,910)           (37,223)
         Federal income taxes payable                                               (100,000)          (175,000)
         Deferred charges and other                                                 (209,687)           (44,544)
                                                                                 -----------        -----------
     Total adjustments                                                              (453,928)           439,547
                                                                                 -----------        -----------
Net cash provided by (used in) operating activities                                 (297,288)           507,694
                                                                                 -----------        -----------

Cash flows from investing activities:
   Purchase of minority interest from limited partners                                    --           (150,000)
   Collection of miscellaneous receivable                                                 --          1,700,000
   (Increase) decrease in notes receivable                                           (31,705)            68,210
   Disbursements to related parties
      and former affiliates, net                                                    (180,532)          (170,823)
   Utilization of or (deposit to) restricted cash                                    (57,307)           245,684
   Capital expenditures                                                             (480,130)          (311,597)
                                                                                 -----------        -----------
Net cash provided by (used in) investing activities                                 (749,674)         1,381,474
                                                                                 -----------        -----------

Cash flows from financing activities:
   Purchase of common stock of subsidiary                                             (8,000)            (2,000)
   Proceeds from warrants exercised                                                       --              3,750
   Principal payments of long-term obligations                                      (920,710)        (1,520,261)
   Proceeds from long-term obligations                                             1,618,453                 --
   Net change in revolving credit agreement                                          423,408                 --
   Net borrowings from securitization program                                             --           (478,500)
                                                                                 -----------        -----------
Net cash provided by (used in) financing activities                                1,113,151         (1,997,011)
                                                                                 -----------        -----------

Net increase (decrease) in cash                                                       66,189           (107,843)

Cash at beginning of period                                                           35,825            182,042
                                                                                 -----------        -----------
Cash at end of period                                                            $   102,014        $    74,199
                                                                                 ===========        ===========
</TABLE>

                                   (Continued)

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

                                        6


<PAGE>   7


                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
               FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996
               --------- ----------------------------------------

                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 Nine Months Ended September 30
                                                                                 ------------------------------
                                                                                    1996             1995
                                                                                 -----------      -----------
<S>                                                                                <C>            <C>     
Cash paid during the nine months for:
         Interest                                                                  $   762,284    $   916,615
         Income taxes                                                              $   136,830    $   222,705

Supplemental disclosures of noncash investing and financing activity:

     A partnership, of which the Company is the managing general partner
     purchased equipment which was financed by entering into an installment
     finance agreement. 
         Increase in equipment cost, net                                           $   875,626
         Increase in long-term obligations                                            (875,626)

     Common stock of the Company (2,000,000 shares) and common stock of a
     subsidiary (300,000 shares) were exchanged for 30,000 shares of preferred
     stock, par value $100 per share, owned by the Company in Life Holdings,
     Inc. 
         Decrease in investment in preferred stock, at cost                                       $(3,000,000) 
         Decrease in minority interest                                                                512,653  
         Increase in treasury stock                                                                 2,487,347  
                                                                                                               
     A subsidiary of the Company incurred costs for the construction of an                                     
     Alzheimer's and related disorders facility with draws against a HUD-insured                               
     financing agreement                                                                                       
         Increase in long-term obligations                                                        $  (166,826) 
         Increase in prepaid expenses and other current assets                                         45,116  
         Decrease in accounts payable                                                                 121,710  
                                                                                                               
     A subsidiary of the Company has sold the operating assets, net of                                         
     associated liabilities to a related party in exchange for an interest                                     
     bearing note.                                                                                             
         Increase in notes receivable from officers, employees and related                                     
            parties, net of amounts payable:                                                                   
                Note arising in transaction                                                       $   574,949  
                Other                                                                                 (55,936) 
         Decrease in accounts payable                                                                  48,624  
         Decrease in accrued expenses and other liabilities                                            83,006  
         Decrease in trade and miscellaneous receivables                                               (4,668) 
         Decrease in inventories                                                                     (126,703) 
         Decrease in prepaid expenses and other current assets                                        (38,409) 
         Decrease in property, plant and equipment, net                                              (240,079) 
         Decrease in deferred charges                                                                    (500) 
         Decrease in other assets                                                                    (240,284) 
</TABLE>

The accompanying notes are an integral part of the financial statements 


                                        7


<PAGE>   8



                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
               FORM 10-Q  FOR THE QUARTER ENDED SEPTEMBER 30, 1996
               ---------  ----------------------------------------

                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
                                AND SUBSIDIARIES
                                ----------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.  MANAGEMENT'S REPRESENTATION

In the opinion of Management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting only of normal adjustments and
recurring accruals) necessary to present fairly The Wendt-Bristol Health
Services Corporation ("Wendt-Bristol" or "Company") and subsidiaries
consolidated financial position as at September 30, 1996 and December 31, 1995
and the consolidated results of its operations for the three and nine months
ended September 30, 1996 and 1995 as well as the cash flows for the respective
nine months. The results of operations for any interim period are not
necessarily indicative of results for the full year. THESE FINANCIAL STATEMENTS
SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES THERETO
CONTAINED IN THE WENDT-BRISTOL ANNUAL REPORT FILED AS FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1995, WHICH IS HEREBY INCORPORATED BY REFERENCE.

2.  RECLASSIFICATIONS

Cash required to be held in escrow by HUD for "Replacement Reserves" at the
nursing homes in the amount of $146,950 has been reclassified from Prepaid
expenses to Restricted cash on the December 31, 1995 balance sheet to conform
with the presentation at September 30, 1996, which includes "Replacement
Reserves" in the amount of $198,499.

3.  INCOME TAXES

The Company utilizes the provisions of SFAS No. 109 which requires the use of
the liability method of accounting for deferred income taxes. As a result, the
Company has recognized a deferred tax liability, a deferred tax asset and a
valuation allowance against the deferred tax assets. A summary of the December
31, 1995 attributes is as follows:
<TABLE>
        <S>                                                <C>
         Deferred tax assets                                  $  2,000,200
            Less:  valuation allowance                             300,000
                                                                -----------
                                                                 1,700,200

         Deferred tax liabilities                                1,530,800
                                                                -----------

         Net deferred tax asset                               $    169,400
                                                                ===========

</TABLE>
During 1996, the Company does not expect to incur any current Federal tax
liability since it will be able to utilize net operating loss carry forwards to
reduce taxable income to zero.

(Continued)

                                        8

<PAGE>   9



                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
               FORM 10-Q  FOR THE QUARTER ENDED SEPTEMBER 30, 1996
               ---------  ----------------------------------------

                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
                                AND SUBSIDIARIES
                                ----------------

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.  INCOME TAXES (CONTINUED)

  Federal, state and local taxes are summarized as follows:

<TABLE>
<CAPTION>
                                                         Nine months ended                  Three months ended
                                                          September 30,                        September 30,
                                                         -----------------                  ------------------

                                                       1996              1995              1996             1995
                                                       ----              ----              ----             ----
<S>                                                 <C>                <C>              <C>               <C>
Federal income taxes:
  Current expense                                    $  -              $45,000          $  -              $10,000

State and local taxes:
  Current expense                                     26,000            13,000           10,329             3,000
                                                      ------           -------          -------           -------

Total tax expense                                    $26,000           $58,000          $10,329           $13,000
                                                     =======           =======          =======           =======

</TABLE>
4.  STOCKHOLDERS' EQUITY

At September 30, 1996 there were 414,538 Common Stock purchase warrants
outstanding, exercisable at $3.75 per warrant. Each warrant, upon exercise,
provides two and three quarters (2 3/4) shares of the Company's common stock and
a Series II warrant (issuable upon completion of appropriate Securities and
Exchange Commission filings) exercisable for two shares at $3.00/share. The
Warrants' expiration dates, as amended by the Board of Directors in April 1996,
are May 1, 1997 for the initial Warrant and May 1, 1998 for the Series II
Warrants. No warrants were exercised during the nine or three months ended
September 30, 1996.

Earnings per share were computed using the weighted average number of shares
outstanding (net of Treasury shares) during each period. The common stock
equivalents (warrants and options) are anti-dilutive, thereby yielding similar
primary and fully diluted per share amounts.

5.  FINANCING TRANSACTIONS

 A. On April 1, 1996, the Company refinanced a mortgage at the Diagnostics and
Radiology Center, operated by a partnership of which a subsidiary is the general
partner. The mortgage of $712,500 bears a fixed interest rate of 9.41%, payable
in monthly installments through April, 2005, with any remaining balance due on
that date. Funds provided from the mortgage are for working capital related to
the expansion of operations at the facility. 
(continued)

                                       9

<PAGE>   10



                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
               FORM 10-Q  FOR THE QUARTER ENDED SEPTEMBER 30, 1996
               ---------  ----------------------------------------

                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
                                AND SUBSIDIARIES
                                ----------------
                                      
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5.  FINANCING TRANSACTIONS (CONTINUED)

 B. On April 19, 1996, the Company refinanced the mortgage relating to the New
Jersey property leased by the purchaser of its former manufacturing division.
The mortgage was initially due on October 1, 1995 but the Company received a
short-term extension from the lender; therefore, the entire balance of
approximately $1,640,000 was classified as current on the December 31, 1995
Balance Sheet. Terms of the new five-year $1,700,000 mortgage include
amortization on a ten year basis, a five-year renewal option and interest at
prime plus three percent.

 C. On May 30, 1996, certain subsidiaries of the Company entered into a
three-year financing arrangement with a finance company to sell, with limited
recourse, its health care trade accounts receivable. Terms of the agreement
include a commitment of up to $1,500,000 against eligible receivables at an
annual interest rate of 12% plus servicing fees. Proceeds from the initial sale
of these receivables amounted to approximately $971,000 with an additional
$150,000 term note, amortizing over 36 months. Trade receivables as shown in the
Consolidated Balance Sheet are shown exclusive of the receivable interests sold
under this program.

D. On August 29, 1996, certain subsidiaries of the Company were added to an
existing (See 5C. above) three-year financing arrangement with a finance company
to borrow against its health care trade accounts receivable. Proceeds from the
initial borrowing against the subsidiaries' receivables amounted to
approximately $489,000.

6.  SUBSEQUENT EVENT - PRIVATE SALE OF COMMON STOCK

During October 1996, the Company entered into a private sale of 500,000 shares
of the Company's common stock, held in treasury, in a Regulation S transaction
for $500,000. As a result of the transaction the Buyer, McBridge Advisory Ltd.
which is incorporated under the Laws of Ireland and has principal offices in
Lugano, Switzerland, has increased its holdings in the Company to 626,200
shares. The principal of McBridge, a personal friend of Marvin D. Kantor,
Chairman of the Company, has indicated that the purchase has been made for
investment purposes only. A portion of the proceeds ($300,000) was used toward
payment on a stock purchase agreement included in current liabilities on the
accompanying Balance Sheets ($625,000), while the remainder has been used for
working capital needs.


                                      10

<PAGE>   11



                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
               FORM 10-Q  FOR THE QUARTER ENDED SEPTEMBER 30, 1996
               ---------  ----------------------------------------

                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
                                AND SUBSIDIARIES
                                ----------------
                                      
                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NOTE:   REFERENCE SHOULD BE MADE TO THE NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS HEREIN.


FINANCIAL CONDITION

Management believes that the Company's financial condition continues to be
strengthened through the concentration of efforts to develop its Health Care
Services business. As a result of the emphasis on health services, rather than
manufacture or distribution, Management believes that the Company has
established a focused growth plan that is evidenced by the increase in pre-tax
income of approximately $57,000 for the first nine months from $126,000 in 1995
to $183,000 in 1996.

Working capital increased approximately $3,186,000 during the nine months ended
September 30, 1996, due mostly from an equipment refinancing in March 1996, the
refinancing of the New Jersey mortgage in April 1996 (see Form 10-K Note 15 and
Note 5 herein), and the new accounts receivable financing (see Note 5 herein).
Current assets decreased approximately $1,034,000, due mostly from a decrease of
approximately $1,169,000 in trade receivables. The decrease in receivables is
mostly attributable to the accounts receivable financing program the Company
entered into in May 1996. Current liabilities decreased approximately
$4,220,000, due primarily from reductions/payments in current portion of
long-term debt ($1,854,000 - most of which was reclassified to long-term),
accrued expenses other ($986,000), accounts payable ($930,000), accrued taxes
other than federal income taxes ($376,000), and federal income taxes payable
($100,000).


LIQUIDITY AND CAPITAL RESOURCES

The Company improved its working capital during the first nine months of 1996 by
refinancing most of its equipment, replacing its balloon mortgage on the New
Jersey property (due April, 1996) with a mortgage that matures in 2001, and
obtaining accounts receivable financing.

On March 27, 1996 the Company, through several of its subsidiaries, refinanced
most of its equipment at the nursing homes and Diagnostics Center with a finance
company. The total amount refinanced of $1,700,000 is on a secured note and
bears an interest rate of 12 1/8% payable over sixty months. With the proceeds,
the Company paid off existing debt of approximately $1,023,000 and used the
remainder for working capital needs.

(Continued)

                                      11

<PAGE>   12



                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
               FORM 10-Q  FOR THE QUARTER ENDED SEPTEMBER 30, 1996
               ---------  ----------------------------------------

                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
                                AND SUBSIDIARIES
                                ----------------
                                      
                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

On May 30, 1996 the Company entered into an agreement with a finance company to
secure additional working capital funds to replace the accounts receivable
securitization program that terminated in 1995. Terms of the agreement include a
lending commitment of up to $1,500,000 against eligible receivables at an annual
interest rate of 12% plus servicing fees. As a result of the transition between
financing companies, the Company had experienced some cash flow difficulties
from time to time, but has maintained good working relationships with its
vendors.

The Company, at its Diagnostic and Radiology Center, operated by a limited
partnership of which a subsidiary is general partner, obtained additional
imaging techniques such as angiography, fluoroscopy and bone densitometry in the
third quarter of 1996. The cost of such equipment, approximately $806,000, was
financed through the Partnership by favorable vendor financing programs. The
Center is also obtaining a state-of-the-art echospeed upgrade for its MR
equipment in the first quarter of 1997; such upgrade will enable an enhanced
ability to provide cardiac applications. The cost of such equipment,
approximately $400,000, will be financed through a favorable vendor program.

Management further believes the present resources available, the accounts
receivable financing program indicated above, as well as profitable operations
will meet anticipated requirements for operations of the business. There are no
further material commitments for capital expenditures.

RESULTS OF OPERATIONS 1996-1995

Consolidated revenues from operations for the nine months ended September 30,
1996 increased approximately $573,000 or 3.7% while revenues for the three
months ended September 30, 1996 increased approximately $450,000 or 8.9% over
1995. Net sales increased approximately $73,000 or 3.6% for the nine months and
increased $49,000 or 7.4% for the three months ended September 30, 1996 as
compared to the same periods in 1995. Service revenues increased approximately
$500,000 or 3.7% for the nine months and $401,000 or 9.1% for the three months
over the same periods in 1995, mostly attributable to higher revenues at the
Alzheimer's Center and Diagnostics Center partially offset by a decline in
visits and revenues in the Home Care subsidiary. Occupancy at the other nursing
homes was down for the quarter partially offset by rate increases.

Cost of sales increased approximately $146,000 or 10.6% for the nine months and
$86,000 or 19.1% for the three months ended September 30, 1996 as compared to
the corresponding periods in 1995. Gross margin for the nine months ended
September 30, 1996 declined to 27.3% compared to 31.9% for the same period in
1995, primarily attributable to new competition in the retail pharmacy division.

(Continued)


                                      12

<PAGE>   13



                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
               FORM 10-Q  FOR THE QUARTER ENDED SEPTEMBER 30, 1996
               ---------  ----------------------------------------

                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
                                AND SUBSIDIARIES
                                ----------------
                                      
                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS 1996-1995 (CONTINUED)

Selling, general and administrative expenses, which include costs associated to
services rendered, increased approximately $486,000 or 3.9% for the nine months
and $369,000 or 9.1% for the three months ended September 30, 1996 over the same
periods in 1995.

Minority interests in earnings increased approximately $153,000 for the nine
months and $55,000 for the three months ended September 30, 1996 as compared to
the same periods in 1995 due to improved results in the operations that are not
wholly-owned by the Company, primarily the Alzheimer's Center which is no longer
in a start-up phase and is contributing to profits in 1996.

Interest expense decreased approximately $100,000 or 11.2% for the nine months
and increased $15,000 or 5.3% for the three months ended September 30, 1996 as
compared to the same periods in 1995. The nine month decrease is mostly due to
the termination of the accounts receivable securitization program for the first
part of the year while the third quarter increase is due to the new borrowings
that occurred during the current year.



                                      13

<PAGE>   14



                  THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                  ---------------------------------------------
               FORM 10-Q  FOR THE QUARTER ENDED SEPTEMBER 30, 1996
               ---------  ----------------------------------------

                          PART II OTHER INFORMATION


Item 6.   Exhibits and Reports on Form 8-K

         (a)  Exhibits

              10.14    Amendment to Receivables Purchase and Sale Agreement
                       dated August 29, 1996 between The Wendt-Bristol
                       Company, et al, and HealthPartners Funding L.P., relating
                       to the health care receivables financing program.
                          
              27       EDGAR Financial Data Schedule

         (b)  Reports on Form 8-K - None

                               --------------------------------
                                  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.

                              THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
                              ---------------------------------------------
                              (Registrant)
 
 
   November 13, 1996       By:      /s/ Sheldon A. Gold
                                    -------------------
                                    Sheldon A. Gold
                                    President
                                    (Principal Executive Officer)
                          
                          
   November 13, 1996       By:      /s/ Charles R. Cicerchi
                                    -----------------------
                                    Charles R. Cicerchi
                                    Vice-President, Finance
                                    (Principal Financial and Accounting Officer)
                          
                                      14