<PAGE>   1
                        SECURITIES & EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20459

                                  FORM 10-QSB


[X]      Quarterly report pursuant to Section 13 or 15 (d) of the
         Securities Exchange Act of 1934

For the quarterly period ended  September 30, 1996

[ ]      Transition report pursuant to Section 13 of 15 (d) of the
         Securities Exchange Act of 1934

For the transition period from                 to

Commission File No.  0-15241

                            NYTEST ENVIRONMENTAL INC.
             (Exact name of registrant as specified in its charter)

            DELAWARE                                       11-2725582
(State of other jurisdiction of                       (I.R.S. Employer
incorporation of organization)                        Identification Number)

60 Seaview Boulevard, Port Washington, New York                 11050
(Address of principal executive offices)                      (Zip Code)

                                 (516) 625-5500
              (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 of 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

As of September 30, 1996, the Issuer had 6,705,230 shares outstanding of its
$ .01 par value common stock.

Page  1  of  13  pages.
<PAGE>   2
                                     PART I

                             FINANCIAL INFORMATION

Item  1.           Financial Statements




                                     - 2 -
<PAGE>   3
                   NYTEST ENVIRONMENTAL INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                September 30,       December 31,
                                                                    1996               1995
                                                                 -----------        -----------
                                                                 (Unaudited)          (Audited)

<S>                                                              <C>                <C>
                         ASSETS
Current Assets:
Cash                                                             $    37,453        $   426,631
Accounts receivable, less allowance for doubtful
accounts of $111,234 - 1996 and $52,941 - 1995                     4,012,723          2,249,044
Inventories - Laboratory supplies, at cost                            59,970             63,468
Prepaid expenses and other current assets                            398,555            420,746
Deferred taxes                                                        22,000             22,000
                                                                 -----------        -----------
   Total Current Assets                                            4,530,701          3,181,889
                                                                 -----------        -----------

Fixed Assets:
Plant and Equipment, at cost                                       8,495,906          8,413,002
   Less: Accumulated depreciation                                  4,543,916          3,135,405
                                                                 -----------        -----------
   Net Fixed Assets                                                3,951,990          5,277,597
                                                                 -----------        -----------

Other assets                                                         534,950            314,837
                                                                 -----------        -----------

Total Assets                                                     $ 9,017,641        $ 8,774,323
                                                                 ===========        ===========

             LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Loans payable (note 4)                                           $ 2,161,479        $ 1,704,000
Term Loan - current maturity (note 4)                                368,028                  0
Notes payable - current maturity                                      31,444             38,824
Obligations under capital leases - current maturity                  123,488            231,039
Accounts payable                                                   2,294,628          1,290,890
Accrued liabilities                                                  739,495            766,741
Accrued estimated laboratory closing costs (note 5)                  226,800                  0
                                                                 -----------        -----------
     Total Current Liabilities                                     5,945,362          4,031,494
                                                                 -----------        -----------

Long Term Liabilities:
Term Loan (note 4)                                                 1,318,747                  0
Notes payable                                                         10,262             32,521
Obligations under capital lease                                      119,342            200,228
Subordinated convertible debt                                      1,095,000          1,095,000
Deferred income taxes payable                                         45,000             45,000
Accrued estimated laboratory closing costs (note 5)                  456,623                  0
                                                                 -----------        -----------
     Total Long Term Liabilities                                   3,044,974          1,372,749
                                                                 -----------        -----------

     Total Liabilities                                             8,990,336          5,404,243
                                                                 -----------        -----------

STOCKHOLDERS' EQUITY
Common stock $.01 par; authorized 30,000,000 shares,
 authorized 10,000,000 in 1995; issued and
 outstanding 6,705,230 shares                                         67,052             67,052
Additional paid-in capital                                         3,068,255          3,068,255
Retained earnings                                                 (3,108,002)           234,773
                                                                 -----------        -----------
     Total Stockholders' Equity                                       27,305          3,370,080
                                                                 -----------        -----------

Total Liabilities and Stockholders' Equity                       $ 9,017,641        $ 8,774,323
                                                                 ===========        ===========
</TABLE>


                                     - 3 -
<PAGE>   4
                   NYTEST ENVIRONMENTAL INC. AND SUBSIDIARIES
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                           For the Nine Months Ended
                                                                 September 30
                                                       --------------------------------
                                                           1996                1995
                                                       ------------        ------------
                                                        (Unaudited)         (Unaudited)

<S>                                                    <C>                 <C>
Revenues                                               $ 12,320,728        $  4,619,049
                                                       ------------        ------------

Cost and expenses:

    Cost of operations                                   11,090,942           3,587,375
    Selling, general and administrative expenses          3,438,565           1,233,513
    Estimated Laboratory Closing Costs (note 5)             750,000                   0
                                                       ------------        ------------

          Total costs and expenses                       15,279,507           4,820,888
                                                       ------------        ------------

Operating (loss)                                         (2,958,779)           (201,839)

Interest expense                                            383,996              87,191
                                                       ------------        ------------

(Loss) before taxes                                      (3,342,775)           (289,030)

Income tax provision (benefit)  (note 6)                          0             (70,000)
                                                       ------------        ------------

Net (loss)                                               (3,342,775)           (219,030)

Retained Earnings-January 1                                 234,773             567,139
                                                       ------------        ------------

Retained Earnings-September 30                         $ (3,108,002)       $    348,109
                                                       ============        ============


(Loss) earnings per share :                            $      (0.50)       $      (0.03)
                                                       ============        ============


Average number of shares outstanding                      6,705,230           6,705,230
                                                       ============        ============
</TABLE>





                                      - 4 -
<PAGE>   5
                   NYTEST ENVIRONMENTAL INC. AND SUBSIDIARIES
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                         For the Three Months Ended
                                                                September 30
                                                       ------------------------------
                                                          1996               1995
                                                       -----------        -----------
                                                       (Unaudited)        (Unaudited)

<S>                                                    <C>                <C>
Revenues                                               $ 4,292,797        $ 1,520,501
                                                       -----------        -----------

Cost and expenses:

    Cost of operations                                   3,586,644          1,430,970
    Selling, general and administrative expenses           967,955            419,633
    Estimated Laboratory Closing Costs (note 5)            (50,000)                 0
                                                       -----------        -----------

          Total costs and expenses                       4,504,599          1,850,603
                                                       -----------        -----------

Operating (loss)                                          (211,802)          (330,102)

Interest expense                                           201,437             23,544
                                                       -----------        -----------

(Loss) before taxes                                       (413,239)          (353,646)

Income tax provision (benefit)  (note 6)                         0            (90,500)
                                                       -----------        -----------

Net (loss)                                                (413,239)          (263,146)

Retained Earnings-June 30                               (2,694,763)           611,255
                                                       -----------        -----------

Retained Earnings-September 30                         $(3,108,002)       $   348,109
                                                       ===========        ===========


(Loss) earnings per share :                            $     (0.06)       $     (0.04)
                                                       ===========        ===========


Average number of shares outstanding                     6,705,230          6,705,230
                                                       ===========        ===========
</TABLE>





                                     - 5 -
<PAGE>   6
                   NYTEST ENVIRONMENTAL INC. AND SUBSIDIARIES
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                   For the Nine Months Ended
                                                                          September 30
                                                                ------------------------------
                                                                    1996               1995
                                                                -----------        -----------
                                                                (Unaudited)        (Unaudited)

<S>                                                             <C>                <C>
Cash flows from operating activities:

Net (loss)                                                      $(3,342,775)       $  (219,030)
                                                                -----------        -----------

Adjustments to reconcile net (loss) to
net cash (used) provided by operating activities:
     Depreciation and amortization                                1,408,511            398,286
     Deferred income taxes                                                0            (64,500)
     Net changes in assets and liabilities:
           Accounts receivable - net                             (1,763,679)           192,893
           Laboratory supplies                                        3,498             (6,468)
           Prepaid expenses and other current assets                 22,191            (64,833)
           Other assets                                            (220,113)           (11,893)
           Accounts payable                                       1,003,738             32,277
           Accrued liabilities                                      (27,246)           (29,439)
           Accrued estimated laboratory closing costs               683,423                  0
                                                                -----------        -----------

Total adjustments                                                 1,110,323            446,323
                                                                -----------        -----------

Net cash (used) provided by operating activities                 (2,232,452)           227,293
                                                                -----------        -----------

Cash flows (used) for investing activities:
     Acquisition of equipment                                       (82,904)          (119,314)
                                                                -----------        -----------

Cash flows provided (used) by financing activities:
     Net advances under Loans Payable                               457,479           (196,000)
     Net advances under Term Loan                                 1,686,775                  0
     Repayments of notes payable                                    (29,639)           (38,337)
     Repayments of capitalized lease obligations                   (188,437)           (26,408)
                                                                -----------        -----------

Net cash provided (used) by financing activities                  1,926,178           (260,745)
                                                                -----------        -----------

Net (decrease) in cash                                             (389,178)          (152,766)

Cash at beginning of period                                         426,631            561,323
                                                                -----------        -----------

Cash at end of period                                           $    37,453        $   408,557
                                                                ===========        ===========


Supplemental Disclosure of Cash Flow Information:
     Interest payments                                          $   383,996        $    87,191
                                                                ===========        ===========

Supplemental Disclosure of Non-Cash Financing Activities:
     Assets acquired under capital leases                       $         0        $   478,338
                                                                ===========        ===========
</TABLE>




                                      - 6 -
<PAGE>   7
                   NYTEST ENVIRONMENTAL INC. AND SUBSIDIARIES
                         NOTES TO FINANCIAL STATEMENTS
                    SEPTEMBER 30, 1996 AND 1995 (UNAUDITED)
                        AND DECEMBER 31, 1995 (AUDITED)


NOTE 1.    COMPANY'S OPINION ON UNAUDITED FINANCIAL STATEMENTS

In the opinion of the Company, the accompanying unaudited financial statements
contain all ordinary and necessary adjustments to present fairly the balance
sheet as of September 30, 1996, and the related statements of operations and
cash flows for each of the nine month periods ended September 30, 1996 and
September 30, 1995, and the related statements of operations for each of the
three month periods ended September 30, 1996 and September 30, 1995. The balance
sheet as of December 31, 1995, is audited.

The statements of operations for the periods ended September 30, 1996 and
September 30, 1995 are not necessarily indicative of the results for the entire
year.

NOTE 2.    BASIS OF PRESENTATION

The accompanying consolidated financial statements at September 30, 1996,
include the effects of the Company's wholly owned subsidiaries, NEI of
Pennsylvania, Inc. ("NEIPA") and NEI/GTEL Environmental Laboratories, Inc.
("NEI/GTEL"), since August 5, 1995 and December 31, 1995, respectively. The
statement of operations for the three and nine month periods ended September 30,
1995, include the results of the Company's wholly owned subsidiary, NEIPA, which
commenced operations on August 5, 1995, and does not include the results of
operations of the Company's wholly owned subsidiary, NEI/GTEL, as it was
acquired subsequent to September 30, 1995. See Note 3 below.

NOTE 3.    ACQUISITIONS

On July 17, 1995, the Company organized NEI of Pennsylvania, Inc., a Delaware
corporation (NEIPA), as a wholly owned subsidiary to acquire and operate a
testing laboratory in Norristown, Pennsylvania. Effective August 5, 1995, NEIPA
acquired from BCM Engineers, Inc., a wholly owned subsidiary of Smith
Environmental Technologies Corporation ("Smith"), certain assets comprising an
environmental testing laboratory in Norristown, Pennsylvania. The Company has
ceased the operations in Norristown, Pennsylvania on September 1, 1996. See Note
5 below.

Effective December 31, 1995, the Company organized NEI/GTEL Environmental
Laboratories, Inc., a Delaware corporation (NEI/GTEL), as a wholly owned
subsidiary of the Company, to acquire the business and substantially all of the
assets of GTEL Environmental Laboratories, Inc. ("GTEL"), a subsidiary of
Groundwater Technologies, Inc.  In exchange for the assets acquired plus closing
costs, NEI/GTEL paid $3,200,000 in a combination of cash, assumption of
liabilities and the issuance of a secured convertible note in the amount of 
$1,095,000. NEI/GTEL, as part of the transaction, hired all of the active
employees of GTEL. NEI/GTEL also entered into a long term lease for the use of
the GTEL Wichita, Kansas facility and assignment and assumption agreements for
the leases of GTEL facilities in Tampa, Florida and Milford, New Hampshire.


                                      - 7 -
<PAGE>   8
                   NYTEST ENVIRONMENTAL INC. AND SUBSIDIARIES
                         NOTES TO FINANCIAL STATEMENTS
                    SEPTEMBER 30, 1996 AND 1995 (UNAUDITED)
                        AND DECEMBER 31, 1995 (AUDITED)


NOTE 4.       LOANS PAYABLE

On April 23, 1996, the Company executed a loan and security agreement with a
finance company, which replaced the Company's July 1995, $2,000,000 line of
credit agreement with a different financial institution. The new agreement is
for a three year term with $7,000,000 maximum borrowing which includes a
$2,606,000 term loan sublimit for equipment financing. Additional advances under
agreement are limited to no more than 80% of eligible accounts receivable, as
defined.

The initial advance for equipment financing was $1,840,120. The agreement
provides for an additional $766,000 for equipment purchases during the term of
the agreement. All advances for equipment are being amortized in sixty
consecutive monthly installments until the expiration of the agreement when all
unpaid amounts will become payable.

The Company also has short term loan agreements with both Fluor Daniel GTI and
the Company's former lender for a total of $700,000.  As of September 30, 1996,
the balance outstanding for the short term loans was $670,833.

NOTE 5.       CLOSING OF NORRISTOWN, PENNSYLVANIA LABORATORY

On August 6, 1996, the Company's Board of Directors approved the closing of the
Norristown, Pennsylvania laboratory. The laboratory ceased operations on
September 1, 1996. This decision was predicated on the continued losses
sustained at that laboratory due to the substantial slowdown in revenue and
testing requirements of the facilities principal customer.

As a result of this decision, the June 30, 1996 financial statements reflected
an accrual for estimated laboratory closing costs totaling $800,000. These
estimated closing costs are comprised primarily of rent and related occupancy
costs to the end of the lease obligation dated February, 2000. During the three
months ended September 30, 1996, the Company incurred closing costs of
approximately $67,000. Based upon further review of the accrued estimated
laboratory closing costs, the financial statements for the three months ended
September 30, 1996 include a reduction of $50,000.

NOTE 6.       INCOME TAXES

The Company does not have any net operating loss carryback for income tax
purposes. As a result of its loss incurred during the nine months ended
September 30, 1996, the Company has net operating loss carryforwards for income
tax purposes which will be used to reduce future taxable income. The benefits of
the net operating loss carryforwards have not been recognized as the Company has
recorded a valuation on allowance equal to such benefit.


                                      - 8 -
<PAGE>   9
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Consolidated revenues for the nine months ended September 30, 1996 totaled 
$12,320,728 which were $7,701,679 higher than the $4,619,049 for the
corresponding period last year. The Company's subsidiary, NEI/GTEL, acquired on
December 31, 1995, had revenues of $7,712,742, the Company's subsidiary, NEIPA,
acquired on August 5, 1995 and subsequently closed on September 1, 1996, had
revenues of $895,178.

For the three months ended September 30, 1996, the Company's revenues totaled
$4,292,797, which was $2,772,296 higher than the corresponding period last year.
The Company's subsidiary, NEI/GTEL, had revenues of $2,579,709,and the Company's
subsidiary, NEIPA, had revenues of $197,834. Overall, the current market
conditions are still being characterized as having excess capacity and
aggressive price competition. However, Management has undertaken several actions
to expand its sales and marketing effort including the hiring of several
additional sales and marketing personnel.

Consolidated cost of operations for the nine months ended September 30, 1996
totaled $11,090,942. This was an increase in cost of operations of $7,503,567
from the comparable period last year. The Company's subsidiary, NEI/GTEL, cost
of operations were $6,600,121, and the Company's subsidiary, NEIPA, cost of
operations were $1,325,525, or 148% of revenue. As a result, on September 1,
1996, the Company ceased operation of the NEIPA subsidiary, to reduce its
ongoing losses.

Consolidated cost of operations for the three months ended September 30, 1996
totaled $3,586,644. This was an increase in cost of operations of $2,155,674
from the comparable period last year. The Company's subsidiary, NEI/GTEL, cost
of operations were $2,255,626, and the Company's subsidiary, NEIPA, cost of
operations were $244,683.

Management has implemented plans to reduce its cost of operations but has had
limited success due to the costs incurred for the retention of required
personnel to perform analytical tests necessary for federal and state
certifications for its services.

Consolidated selling, general and administrative expenses for the nine months
ended September 30, 1996, totaled $3,438,565, which was $2,205,052 higher than
the comparable period last year. The Company's subsidiary, NEI/GTEL, selling,
general and administrative expenses were $1,649,288. The Company's subsidiary,
NEIPA, selling, general and administrative expenses were $249,188.

Consolidated selling, general and administrative expenses for the three months
ended September 30, 1996, totaled $967,955, which was $548,322 higher than the
comparable period last year. The Company's subsidiary, NEI/GTEL, selling,
general and administrative expenses were $497,399, and the Company's subsidiary,
NEIPA, selling, general and administrative expenses were $6,786.


                                      - 9 -
<PAGE>   10
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS (CONTINUED)

The increase in consolidated selling, general and administrative expenses was
primarily due to higher bad debt expense, administrative expenses incurred as a
result of the NEI/GTEL acquisition, and an increase in sales personnel and
related expenses. During the three months ended September 30, 1996, selling,
general and administrative expenses for the Company's subsidiary, NEI/GTEL,
included a $55,059 reclassification of selling, general and administrative
expenses to interest expense. During the three months ended September 30, 1996,
selling, general and administrative expenses for the Company's subsidiary,
NEIPA, reflected a concession of expenses from Smith.

Consolidated interest expense for the nine months ended September 30, 1996,
totaled $383,996. This included $46,000 for the amortization of costs totaling
approximately $226,000 incurred as a result of the Company's loan and security
agreement executed on April, 23, 1996.

Consolidated interest expense reported for the three months ended September 30,
1996 totaled $201,437, which included $55,059 prior period interest expense from
the Company's subsidiary, NEI/GTEL, which had been reclassified from selling,
general and administrative expenses. Interest expense incurred during the three
months ended September 30, 1996, including the amortization of prepaid cost, was
$146,378.

The consolidated pre-tax loss for the nine months ended September 30, 1996
totaled $3,342,775, an increase of $3,053,745 from the comparable period last
year. The Company's subsidiary, NEI/GTEL, pre-tax loss was $618,832. The
Company's subsidiary, NEIPA, pre-tax loss was $1,439,161, including $750,000 for
an accrual of estimated laboratory closing costs.

The consolidated pre-tax loss for the three months ended September 30, 1996, was
$413,239 or $59,593 higher than the pre-tax loss of $353,646 for the comparable
period last year. The Company's subsidiary, NEI/GTEL, pre-tax loss was $255,481,
and the Company's subsidiary, NEIPA, pre-tax loss was $2,425, which included a
reduction in the estimated laboratory closing costs accrual of $50,000 in
addition to a $129,944 concession of expenses from Smith. This concession of
expenses, specifically comprised of rent and related occupancy costs and certain
equipment leases, was due to the substantial slowdown in revenue and testing
requirements from Smith to the Company's subsidiary, NEIPA. Subsequent to the
closing of the Company's subsidiary, NEIPA, there has been discussions with
Smith regarding additional concessions which cannot be quantified at this time.

The consolidated pre-tax loss for the three month period ended September 30,
1996 was $965,938 lower than the consolidated pre-tax loss of $1,379,177 for
the three month period ended June 30, 1996 which included a provision of
$800,000 for estimated laboratory closing costs for the Company's subsidiary,
NEIPA, and was $1,137,120 lower than the consolidated pre-tax loss of
$1,550,359 for the three month period ended March 31, 1996.

                                     - 10 -
<PAGE>   11
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS



NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES

The Company's operations for the nine months ended September 30, 1996 used net
cash of $2,232,452 as compared to net cash provided by operations of $227,293 in
the corresponding period one year ago. The increase in cash used of $2,459,745
was primarily due to the net loss incurred during the nine months ended
September 30, 1996, and the substantial increase in accounts receivable,
partially offset by depreciation, the non cash accrual for the estimated
laboratory closing costs of the Norristown, Pennsylvania facility and the
increase in accounts payable. The increase in accounts receivable resulted
principally from the NEI/GTEL operations.


CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES

The net cash provided by financing activities of $1,926,178 was $2,186,923
higher during the nine months ended September 30, 1996 than during the
comparable period in 1995. This increase in financing resulted from increased
borrowings principally related to the NEI/GTEL acquisition.


MATERIAL COMMITMENTS

The Company had no material commitments for capital expenditures.


                                    - 11 -
<PAGE>   12
                                    PART II

                               OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         No change from the previous filing.

ITEM 2.  CHANGES IN SECURITIES

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
        
         None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


     (a)  The Annual Meeting of Stockholders was held on June 25, 1996.

     (b)  The following matters were voted upon and the results were as
          follows:


          (1)  The following persons were nominated by management and each were
               elected to serve as directors until the next Annual Meeting
               of Stockholders:  John Gaspari, James W. Shearard, Anthony P.
               Towell, Thomas E. Lent, Martin Fleisher, PH.D.

          (2)  The Stockholders voted 5,288,053 shares in the affirmative and
               351,687 in the negative to amend the Company's Certificate of
               Incorporation, to increase the number of authorized shares of
               common stock from 10,000,000 to 30,000,000.

          (3)  The stockholders voted 861,686 shares in the affirmative and
               371,887 in the negative to amend the Company's existing 1992
               Employee Stock Incentive Plan increasing the number of shares of
               Common Stock available under the plan from 600,000 to 1,500,000.

          (4)  The stockholders voted 5,598,944 shares in the affirmative and
               40,490 shares in the negative to ratify the selection of Cornick
               Garber & Sandler, L.L.P. as the Company's auditors for the year
               ending December 31, 1996.                               

ITEM 5.  OTHER INFORMATION

         None.



                                     - 12 -
<PAGE>   13
                                   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.

                                  NYTEST ENVIRONMENTAL INC.


                                  By: /s/ John Gaspari
                                      ---------------------------------------
                                        John Gaspari
                                        President and Chief Executive Officer


                                  By: /s/ Elliot J. Laitman
                                      ---------------------------------------
                                        Elliot J. Laitman
                                        Chief Financial Officer and Treasurer



Dated: November 14, 1996




                                     - 13 -