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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q
(Mark One)
[X]             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the quarterly period ended May 31, 1998

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

For the transition period from ................... to ..................
Commission file number   0-17882

                     GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
                     ---------------------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                                           04-3051642
          --------                                           ----------
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                           Identification No.)

           320 Needham Street, Newton Upper Falls, Massachusetts 02464
           -----------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (617) 969-0050
                                 --------------
              (Registrant's telephone number, including area code)

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
   -----       -----
                 
     APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date.

Number of Shares of Common Stock outstanding at June 30, 1998     4,066,968
                                                             ------------------


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              GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE

                                TABLE OF CONTENTS

                                                                       Page
                                                                       ----


PART I   FINANCIAL INFORMATION

Item 1   Financial Statements

*        Consolidated Balance Sheets -
         May 31, 1998 (unaudited) and February 28, 1998                   3

*        Consolidated Statements of Operations - (unaudited)
         Three Months Ended May 31, 1998 and 1997                         4

*        Consolidated Statements of Cash Flows - (unaudited)
         Three Months Ended May 31, 1998 and 1997                         5

*        Notes to Consolidated Financial Statements 
                                                                          6

Item 2   Management's Discussion and Analysis of Financial
         Condition and Results of Operations                          7 - 8


PART II  OTHER INFORMATION

Item 1   Legal Proceedings                                                9


Item 6   Exhibits and Reports on Form 8-K                                 9

SIGNATURES                                                               10


                                       2


<PAGE>   3


PART 1: FINANCIAL INFORMATION
  ITEM 1: FINANCIAL STATEMENTS

             GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE
                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                     MAY 31, 1998    FEBRUARY 28, 1998
                                                                                     ------------    -----------------
                                                                                     (UNAUDITED)
                          ASSETS
<S>                                                                                  <C>               <C>         
Current assets:
      Cash and cash equivalents                                                      $  1,099,000      $  4,594,000
      Available-for-sale securities                                                     3,655,000         3,519,000
      Accounts receivable, net                                                         11,311,000        11,423,000
      Costs and estimated earnings in excess of billings on
           uncompleted contracts, net                                                  10,431,000         7,261,000
      Prepaid expenses and other current assets                                           340,000           133,000
      Deferred income taxes                                                             1,029,000         1,029,000
                                                                                     ------------      ------------
                Total current assets                                                   27,865,000        27,959,000
Property and equipment, net                                                             5,504,000         5,344,000
Other assets, net                                                                         924,000           918,000
                                                                                     ------------      ------------
                Total assets                                                         $ 34,293,000      $ 34,221,000
                                                                                     ============      ============

                          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
      Accounts payable, trade                                                        $  2,834,000      $  4,373,000
      Accrued payroll and expenses                                                      4,143,000         4,283,000
      Billings in excess of costs and estimated earnings
           on uncompleted contracts                                                     2,907,000         1,835,000
      Income taxes payable                                                                149,000           102,000
                                                                                     ------------      ------------
                Total current liabilities                                              10,033,000        10,593,000
Deferred income taxes                                                                     742,000           742,000
Commitments and contingencies

Stockholders' equity:
      Preferred stock, $.01 par value; authorized - 1,000,000 shares; issued and
           outstanding - none
      Common stock, $.01 par value; authorized - 14,000,000 shares; issued and
           outstanding - 4,066,968 at
           May 31, 1998 and 4,027,440 at February 28, 1998                                 41,000            40,000
      Capital in excess of par value                                                   14,594,000        14,430,000
      Unrealized losses on available-for-sale securities                                  (11,000)           (6,000)
      Retained earnings                                                                10,865,000        10,393,000
                                                                                     ------------      ------------
                Subtotal                                                               25,489,000        24,857,000
      Less:  Common stock held in treasury, at cost (400,475 at
           May 31, 1998 and February 28, 1998)                                         (1,971,000)       (1,971,000)
                                                                                     ------------      ------------
                Total liabilities and stockholders' equity                           $ 34,293,000      $ 34,221,000
                                                                                     ============      ============
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.


                                       3


<PAGE>   4




             GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE
                           CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                  THREE MONTHS ENDED MAY 31,
                                                                    1998            1997
                                                                 (UNAUDITED)     (UNAUDITED)
                                                                 -----------     -----------

<S>                                                              <C>             <C>        
Revenues                                                         $13,504,000     $12,856,000
Reimbursable expenses                                              3,903,000       3,267,000
                                                                 -----------     -----------
             Net revenues                                          9,601,000       9,589,000

Costs and expenses:
       Salaries and related costs                                  6,850,000       6,795,000
       General and administrative expenses                         2,094,000       2,286,000
                                                                 -----------     -----------
       Income from operations, before other income and taxes         657,000         508,000
                                                                 -----------     -----------

Other income
       Interest income                                                97,000          72,000
       Gain on sale of equipment and other assets                      3,000              --
       Equity in net income of joint venture                          30,000          30,000
                                                                 -----------     -----------
       Total other income, net                                       130,000         102,000
                                                                 -----------     -----------

Income from operations before provision for income taxes             787,000         610,000

Provision for income taxes                                           315,000         244,000
                                                                 -----------     -----------
Net income                                                       $   472,000     $   366,000
                                                                 ===========     ===========

Basic earnings per share:
       Earnings per share                                        $      0.13     $      0.09
                                                                 -----------     -----------

       Basic weighted average shares                               3,646,000       3,988,000
                                                                 -----------     -----------

Diluted earnings per share:
       Earnings per share                                        $      0.13     $      0.09
                                                                 -----------     -----------

       Diluted weighted average shares                             3,728,000       3,988,000
                                                                 -----------     -----------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.



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<PAGE>   5

<TABLE>
<CAPTION>


           GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                               Three Months Ended May 31,
                                                                 1998             1997
                                                             (Unaudited)      (Unaudited)
                                                             -----------      -----------
<S>                                                          <C>              <C>        
Cash flows from operating activities:
  Net income from continuing operations                      $   472,000      $   366,000
  Adjustments to reconcile net income from continuing
    operations to net cash used by operating activities:
    Depreciation and amortization                                303,000          294,000
    Equity in net income of joint venture                        (30,000)         (30,000)
    Gain on disposal of equipment                                 (3,000)              --
  Changes in assets and liabilities:
    (Increase) decrease in accounts receivable, net              112,000         (147,000)
     Increase in costs and estimated earnings
        in excess of billings on uncompleted contracts        (2,098,000)        (862,000)
    Decrease (increase) in prepaid expenses                     (207,000)           9,000
    Decrease in accounts payable, trade                       (1,539,000)      (1,953,000)
    Decrease in accrued payroll and expenses                    (140,000)        (181,000)
    Decrease (increase) in income taxes payable                   47,000          (60,000)
                                                             -----------      -----------
          Net cash used by operating activities               (3,083,000)      (2,564,000)
                                                             -----------      -----------

Cash flows from investing activities:
  Decrease (increase) in available-for-sale securities          (141,000)         204,000
  Proceeds from sale of equipment                                153,000               --
  Acquisition of property and equipment                         (608,000)        (225,000)
  Increase in other assets                                        19,000            7,000
                                                             -----------      -----------
           Net cash used by investing activities                (577,000)         (14,000)
                                                             -----------      -----------

Cash flows from financing activities:
  Proceeds from issuance of common stock, net                    165,000          171,000
                                                             -----------      -----------
           Net cash provided by financing activities             165,000          171,000
                                                             -----------      -----------
Net decrease in cash and cash equivalents                     (3,495,000)      (2,407,000)
Cash and cash equivalents at beginning of year                 4,594,000        4,229,000
                                                             -----------      -----------
Cash and cash equivalents at end of period                   $ 1,099,000      $ 1,822,000
                                                             ===========      ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements


                                       5


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              GZA GEOENVIRONMENTAL TECHNOLOGIES, INC. AND AFFILIATE
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  MAY 31, 1998


NOTE 1 -     BASIS OF  PRESENTATION


          The accompanying unaudited consolidated financial statements of GZA
          GeoEnvironmental Technologies, Inc. and Affiliate (the "Company") have
          been prepared in accordance with generally accepted accounting
          principles for interim financial statements and pursuant to the rules
          of the Securities and Exchange Commission for Form 10-Q. Certain
          information and footnotes required by generally accepted accounting
          principles for complete financial statements are omitted. It is the
          opinion of management that the accompanying consolidated financial
          statements reflect all adjustments (which are normal and recurring)
          considered necessary for a fair presentation. For further information
          refer to the audited financial statements and footnotes included in
          the Company's Annual Report to Stockholders for the year ended
          February 28, 1998, as filed with the Securities and Exchange
          Commission on May 29, 1998. Operating results for the quarter ended
          May 31, 1998 are not necessarily indicative of the results that may be
          expected for succeeding periods or for the year ending February 28,
          1999.

          The preparation of consolidated financial statements in conformity
          with generally accepted accounting principles requires management to
          make estimates and assumptions that affect the amounts reported in the
          consolidated financial statements and accompanying note. actual
          results could differ from those estimates.


NOTE  2 -    CONTINGENCIES

          The Company is a party to several legal actions arising in the normal
          course of business. Management believes that the outcomes of legal
          actions to which it is a party will not, in the aggregate, have a
          material adverse effect on the results of operations or financial
          condition of the Company.

          The Company's services involve risks of significant liability for
          environmental and property damage, personal injury, economic loss, and
          costs assessed by regulatory agencies. Claims may potentially be
          asserted against the Company under federal and state statutes, common
          law, contractual indemnification agreements or otherwise.


                                       6


<PAGE>   7


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

RESULTS OF OPERATIONS

THREE MONTH COMPARISON FOR FISCAL YEARS 1998 AND 1997

*    NET REVENUES. The Company's net revenues for the three months ended May 31,
     1998 increased by approximately $12,000 (.13%) compared with the
     corresponding period in the prior fiscal year. The increase in net revenue
     is attributable to a $496,000 (5.4%) increase in net revenues from
     continuing operations, particularly in the Northeast Region. The increase
     in net revenues was offset partially by the loss of net revenues received
     from the Phoenix, Arizona and Grand Rapids, Michigan offices which were
     closed in fiscal 1998. The net revenues of the closed offices for the
     comparable fiscal period was approximately $484,000.

*    SALARIES AND RELATED COSTS. Salaries and related costs for the three months
     ended May 31, 1998 increased by $55,000 (.8%) compared with the
     corresponding period in the prior fiscal year. The increase is attributable
     primarily to professional and support staff salary increases and an
     increase in Incentive Compensation Plan accruals which were offset
     partially by a reduction of approximately $364,000 in salary and related
     costs attributable to the offices closed during the prior fiscal year.

*    GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
     for the three months ended May 31, 1998 decreased by approximately $192,000
     (8.5%) compared with the prior fiscal year. The decrease primarily reflects
     lower bad debt reserve requirements, a decrease in occupancy expense, and
     reductions in general and professional liability insurance premiums. The
     cost reductions were offset, in part, by an increase in temporary help and
     consulting expenditures. The Company anticipates that temporary help and
     consulting expenditures will continue to increase from the prior fiscal
     year. The increase in temporary help cost is reflective of the current
     competitive labor market. The increase in consulting cost is reflective of
     on going and planned compensation, process improvement, marketing,
     management information systems, and general management consulting
     assignments anticipated during fiscal 1999.

*     LIQUIDITY AND CAPITAL RESOURCES

          For the three month period ended May 31, 1998, $3,083,000 of net cash
          was used by operations, whereas for the three month period ended May
          31, 1997, $2,564,000 of net cash was used by operations.

          The greater use of cash in the first three months of fiscal 1999 
          is attributable primarily to approximately $2,000,000 in increase
          costs and estimated earnings in excess of billings on uncompleted
          contracts for 


                                       7


<PAGE>   8


          several projects in which billings have been delayed pending final
          approval for change orders, contract amendments, and payment
          requisitions. In addition, because of a significant increase of
          contract activity in the first quarter of fiscal 1999 the Company
          experienced delays in gathering the detail necessary to bill
          approximately $900,000 in invoices which were subsequently processed
          and billed in the second quarter.

          The Company made capital expenditures of approximately $608,000 and
          $225,000 for the first three months of fiscal 1999 and 1998,
          respectively.

          The Company's working capital increased from $17,366,000 at February
          28, 1998 to $17,832,000 at May 31, 1998.

          At May 31, 1998, the Company had cash on hand and cash equivalents of
          $1,099,000, and short-term investments of $3,655,000 compared with
          $4,594,000 and $3,519,000 respectively, at February 28,1998. These
          investments consist primarily of tax-exempt municipal bonds, taxable
          U.S. Treasury Notes and other bonds and commercial paper. The Company
          believes that its cash on hand and cash equivalents and future cash
          generated from operations will be sufficient to meet its cash
          requirements for at least the next twelve months.

          FORWARD LOOKING STATEMENTS

          The Company may make or publish statements or this report may contain
          projections, estimates, and predictions relating to anticipated
          financial performance, potential contract value, pending claims or
          litigation, business strategy, plans, acquisitions, or technological
          developments and other matters. A number of risks and uncertainties
          could materially affect these forward looking statements, and the
          Company's results of operations. These risks and uncertainties
          include, but are not limited to competition, market pricing pressures,
          changes in federal, state, and local legislation and regulations,
          ability of the company to execute projects within contracted cost
          estimates, current or future claims made against the company, ability
          of the Company to resolve contract and change order disputes favorably
          and availability of qualified personnel to execute contracts and work
          plans.


                                       8


<PAGE>   9


PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS.

The Company is party to several legal proceedings arising in the normal course
of business. Management believes that the outcome of these actions will not,
individually or in the aggregate, have a material adverse effect on the
financial condition of the Company.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)    EXHIBITS

         3.1   Restated Certificate of Incorporation of the Company (1)

         3.3   Amended and Restated By-Laws of the Company (2)


         27.   Financial Data Schedule for the period ended May 31, 1998.

(b)    REPORTS ON FORM 8-K

       The Company did not file any report on form 8-K during the three month
       period ended May 31, 1998.









(1)     Incorporated by reference to the similarly numbered exhibit included in
the Company's Form S-1 Registration Statement, File No. 33-29369, filed with the
Commission on June 16, 1989.


(2)     Incorporated by reference to the similarly numbered exhibit included in
the Company's Annual Report on Form 10-K for the fiscal year ended February 28,
1995, filed with the Commission on June 12, 1995.


                                       9


<PAGE>   10


                                   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.



                                        GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.




Date: July 13, 1998
                                        /s/ Joseph P. Hehir
                                        ----------------------------------------
                                        JOSEPH P. HEHIR, Chief Financial Officer
                                        and Treasurer (Chief Accounting Officer)








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