<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

             [ X ] Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                  for the Quarterly Period Ended March 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 0-19407

                         LASER-PACIFIC MEDIA CORPORATION
             (Exact name of registrant as specified in its charter)

                               Delaware 95-3824617
                (State or other jurisdiction of (I.R.S. Employer
               incorporation or organization) Identification No.)

                              809 N. Cahuenga Blvd.
                           Hollywood, California 90038
                                 (213) 462-6266
     (Address,  including zip code and telephone number,  including area code of
principal executive offices)

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

The number of shares  outstanding of each of the registrant's  classes of common
stock, as of May 1, 1998 was 7,128,172 shares of Common Stock, $.0001 par value.
 
<PAGE>

                         LASER-PACIFIC MEDIA CORPORATION
                                AND SUBSIDIARIES

                                Table of Contents

                                                                            Page

Part I - Financial Information

Item 1. Condensed Consolidated Financial Statements                           3

      Condensed Consolidated Balance Sheets                                   3
      Condensed Consolidated Statements of Operations                         4
      Condensed Consolidated Statements of Cash Flows                         5
      Notes to Condensed Consolidated Financial Statements                    6

Item 2. Management's Discussion and Analysis of Financial Condition
    and Results of Operations                                                 9

Part II - Other Information

    Signatures                                                               11

<PAGE>


                         LASER-PACIFIC MEDIA CORPORATION
                                AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets

 
<TABLE>
<S>                                                                                  <C>                 <C>    <C>   
                                                                                       (Audited)         (Unaudited)
                                                                                      December 31,         March 31
                                                                                          1997               1998
                                                                                     ---------------     --------------

Assets
Current assets                                                                   $
   Cash                                                                                     367,363            193,728
   Receivables net of Allowance for Doubtful Accounts                                     4,598,927          3,760,545
   Other current Assets                                                                     756,531            702,420
                                                                                     ---------------     --------------
     Total Current Assets                                                                 5,772,821          4,656,693
Net property and equipment                                                               16,194,498         16,254,649
Other assets                                                                                570,472            524,088

                                                                                     ===============     ==============
                                                                                     ===============     ==============
   Total Assets                                                                  $       22,487,791         21,435,430
                                                                                     ===============     ==============

Liabilities and Stockholders' Equity
Current liabilities
   Current installments of notes payable to bank and long-term debt                       4,994,308          4,659,424
   Other current liabilities                                                              3,060,662          2,557,942
                                                                                     ---------------     --------------
     Total Current Liabilities                                                            8,054,970          7,217,366
Notes payable to bank and long-term debt, less current installments                       8,139,042          7,353,634
Minority interest in consolidated subsidiary                                                521,440            536,795

Stockholders' equity:
Common stock, $.0001 par value.  Authorized 25,000,000 shares; issued and
   outstanding 7,128,172 shares at December 31, 1997 and March 31, 1998,                        713                713
Additional paid-in capital                                                               19,772,440         19,772,440
Accumulated deficit                                                                    (14,000,814)       (13,445,518)
                                                                                     ---------------     --------------
                                                                                     ---------------     --------------
   Net stockholders' equity                                                               5,772,339          6,327,635
                                                                                     ---------------     --------------
                                                                                  $      22,487,791         21,435,430
                                                                                     ===============     ==============

</TABLE>



     See accompanying notes to condensed consolidated financial statements.

<PAGE>


                         LASER-PACIFIC MEDIA CORPORATION
                                AND SUBSIDIARIES
           Condensed Consolidated Statements of Operations (Unaudited)

<TABLE>
    <S>                                                                             <C>                <C>  

                                                                                            Three Months Ended
                                                                                                 March 31,
                                                                                    ------------------------------------
                                                                                         1997                1998
                                                                                    ---------------    -----------------

     Revenues                                                                  $         7,661,547            8,051,851
     Operating costs                                                                     6,041,660            5,927,686
                                                                                    ===============    =================
           Gross profit                                                                  1,619,887            2,124,165
     Selling, general and administrative
         and other expenses                                                              1,221,572            1,201,341
                                                                                    ===============    =================
           Income from operations                                                          398,315              922,824
     Interest expense                                                                      380,069              377,322
     Other Income                                                                         (21,255)              (9,794)
                                                                                    ===============    =================
                                                                                    ===============    =================
           Net income                                                          $            39,501              555,296
                                                                                    ===============    =================


     Earning Per Share
         Net Income per basic share                                              $            0.01                 0.08
                                                                                    ===============    =================

         Net Income per diluted share                                                         0.01                 0.07
                                                                                    ===============    =================

     Weighted average shares outstanding (basic)                                         7,128,172            7,128,172
                                                                                    ===============    =================

     Weighted average shares outstanding (diluted)                                       7,145,301            7,411,229
                                                                                    ===============    =================
</TABLE>



   See accompanying notes to the condensed consolidated financial statements.


<PAGE>


                         LASER-PACIFIC MEDIA CORPORATION
                                AND SUBSIDIARIES
           Condensed Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<S>                                                                        <C>                    <C>  

                                                                                      Three Months Ended
                                                                                           March 31,
                                                                           ------------------------------------------
                                                                                  1997                   1998
                                                                           -------------------    -------------------
      Cash flows from operating activities
        Net income                                                     $               39,501                555,296
        Adjustments to reconcile net income to net cash
          provided by operating activities:
            Depreciation and amortization                                           1,069,313              1,024,498
            Gain on sale of Property and equipment                                   (26,074)               (41,671)
            Provision for doubtful accounts receivable                                 74,549                 66,971
            Change in assets and liabilities:
               (Increase) decrease in:
                Accounts receivable                                                    85,591                439,604
                Inventory                                                             (5,241)                    558
                Prepaid expenses and other current assets                           (106,988)                 53,919
                Other assets                                                         (10,462)                 83,278
              Increase (decrease) in:
                Accounts payable and accrued expenses                                 107,520                412,051
                                                                           ===================    ===================
      Net cash provided by operating activities                                     1,227,709              2,594,504
                                                                           ===================    ===================

      Cash flows from investing activities:
        Purchases of property and equipment                                         (260,115)              (775,700)
        Net proceeds from disposal of property and equipment                           24,575                 46,457
                                                                           ===================    ===================
                Net cash used in investing activities                               (235,540)              (729,243)
                                                                           ===================    ===================

      Cash flows from financing activities :
        Net (repayment) proceeds of notes payable to bank and                     (1,000,567)            (1,638,896)
        long-       term debt
        (Repayments) borrowing of notes payable to related parties                                         (400,000)
                                                                           ===================    ===================
                Net cash used in financing activities                             (1,000,567)            (2,038,896)
                                                                           ===================    ===================

                Net (decrease) in cash                                                (8,398)              (173,635)
      Cash at beginning of period                                                     283,082                367,363
                                                                           -------------------    -------------------
      Cash at end of period                                            $              274,684                193,728
                                                                           ===================    ===================

      Supplementary disclosure of cash flow information:
        Cash paid during the period for interest                       $              379,682                377,322
                                                                           ===================    ===================
</TABLE>


     See accompanying notes to condensed consolidated financial statements.

<PAGE>

                         LASER-PACIFIC MEDIA CORPORATION

              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)



(1)      Basis of Presentation
 
     In  the  opinion  of  management,   the  accompanying  unaudited  condensed
consolidated financial statements contain all adjustments  (consisting of normal
recurring  items)  necessary  to  present  fairly  the  financial   position  of
Laser-Pacific Media Corporation ("the Company") and its subsidiaries as of March
31, 1998 and December 31, 1997;  the results of  operations  for the three month
periods ended March 31, 1997 and 1998;  and the statements of cash flows for the
three month  periods  ended March 31, 1997 and 1998.  Included in the  Condensed
Consolidated  Financial Statements is the activity of the Company's consolidated
subsidiary,  Pacific Video Canada, Ltd. ("PVC").  PVC's fiscal year ends October
31, therefore, the amounts included in the consolidated balance sheets are as of
January 31, 1998 and October 31, 1997, and the results of operations include the
three month periods ended January 31, 1998 and 1997.  The Company's  business is
subject  to  the  prime  time   television   industry's   typical   seasonality.
Historically,  revenues and income from  operations have been highest during the
first and fourth quarters, when production of television programs and demand for
the Company's services is at its highest.  The net income or loss of any interim
quarter is seasonally  disproportionate to revenues because selling, general and
administrative   expenses  and  certain  operating  expenses  remain  relatively
constant  during the year.  Therefore,  interim  results are not  indicative  of
results to be expected for the entire fiscal year.

     Certain  prior year  balances  have been  reclassified  to conform with the
current year's presentation.

     In accordance with the directives of the Securities and Exchange Commission
under Rule 10-01 of  Regulation  S-X, the  accompanying  consolidated  financial
statements  and  footnotes  have  been  condensed  and  do not  contain  certain
information  included in the Company's annual consolidated  financial statements
and notes thereto.

(2)      Income per Share
 
     Net income per basic and diluted shares are based upon the weighted average
number of common shares outstanding.  Diluted shares outstanding  represents the
total of common shares  outstanding  as well as those options and warrants where
the exercise price was below the closing stock price on March 31, 1998.

(3)      Income Taxes

     At March 31, 1998,  federal  income tax expense of $10,000 and state income
tax expense of $6,000 was recognized after the application of net operating loss
carry  forwards.  Income tax expense  for the  quarter  ended March 31, 1998 was
computed  using  the  estimated  effective  tax  rate to apply  for  1998  after
considering  the impact of net operating loss  carryforwards.  Also included was
foreign income tax expense of US$ 16,227 relating to Canadian income.


(4)      Earnings per share

     In February 1997, the Financial Accounting Standards Board issued Statement
of Financial  Accounting Standards No 128, "Earnings per Share" (SFAS 128). SFAS
128 requires dual  presentation  of basic earnings per share ("EPS") and diluted
EPS on the face of all  statements  of earnings  for all  entities  with complex
capital  structures.  Basic  EPS is  computed  as net  earnings  divided  by the
weighted-average number of common shares outstanding for the period. Diluted EPS
reflects the potential  dilution  that could occur from common  shares  issuable
through stock-based compensation plans including stock options, restricted stock
awards,  warrants and other  convertible  securities  using the  treasury  stock
method. The following summarizes the computation of Basic EPS and Diluted EPS:

<TABLE>
<S>                                                                                   <C>                  <C>  
                                                                                           Three Months ended
                                                                                        3/31/97               3/31/98
     Net Earnings                                                               $        39,501               555,296

     Shares:
     Weighted Average Common Shares                                                   7,128,172             7,128,172
     Dilutive Stock Options and Warrants                                                130,000               489,400
     Dilutive Potential Common Shares                                                 7,145,301             7,411,229

     Earnings Per Share:
     Basic                                                                      $          0.01                  0.08
     Diluted                                                                               0.01                  0.07
</TABLE>
<PAGE>

                        LASER-PACIFIC MEDIA CORPORATION

          Notes to Condensed Consolidated Financial Statements (cont.)
                                   (Unaudited)
(5)      Subsequent Events

     On April 9, 1998, the Company entered into a Lock-Up Agreement with Command
Post and Transfer  Corporation  to sell its  2,424,488  shares of Pacific  Video
Canada,  Ltd.  (PVC).  The  Company  expects to realize  cash  consideration  of
approximately  $3,800,000.  The Company  anticipates  the sale will be concluded
on May 15, 1998.

     The balance sheet and statement of operations of Pacific Video Canada, Ltd.
presented  below reflect the amounts  attributable  to PVC which are included in
the condensed consolidated financial statements of Laser-Pacific Media Corp.

                           PACIFIC VIDEO CANADA, Ltd.
                            Condensed Balance Sheets
<TABLE>
<S>                                                                                                             <C>  

                                                                                                    January 31, 1998
                                                                                               ---------------------------
          Assets
             Current Assets                                                               $                     1,096,862
             Capital Assets                                                                                     4,098,687
                                                                                               ===========================
               Total Assets                                                                                     5,195,549
                                                                                               ===========================

          Liabilities
             Current Liabilities                                                                                1,273,118
             Long Term Debt and other liabilities                                                               1,618,588
          Equity
             Share Capital                                                                                      1,735,126
             Retained Earnings                                                                                    568,717
                                                                                               ===========================
               Total Liabilities & Equity                                                 $                     5,195,549
                                                                                               ===========================
</TABLE>
            
                         LASER-PACIFIC MEDIA CORPORATION

        Notes to Condensed Consolidated Financial Statements (continued)
                                   (Unaudited)

(5)      Subsequent Events (cont.)

                           PACIFIC VIDEO CANADA, Ltd.
                        Condensed Statement of Operations
<TABLE>
<S>                                                                                                             <C>

                                                                                                   Three Months Ended
                                                                                                    January 31, 1998
                                                                                               ---------------------------

          Sales                                                                            $                    1,249,905
          Direct expenses                                                                                         906,982
                                                                                               ===========================
                   Gross Profit                                                                                   342,923

          SG&A expenses                                                                                           273,111
                                                                                               ===========================
                   Earnings from Operations                                                                        69,812

          Interest and Other expenses                                                                              34,538
                                                                                               ===========================
                   Earnings before income taxes                                                                    35,274

          Income taxes                                                                                             16,226
                                                                                               ===========================
                   Net earnings                                                            $                       19,048
                                                                                               ===========================
</TABLE>

<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
Results of Operations

     Revenues for the quarter ended March 31, 1998 increased to $8,052,000  from
$7,662,000 for the same year-ago  period,  an increase of $390,000 or 5.1%. This
increase in revenue is comprised of an increase in Post  Production  Services of
$507,000,  offset by a decrease in Film  Production  Services of $112,000  and a
decrease in  Production  Services of $5,000.  The increase in revenues from Post
Production  Services  is  attributable  to  increased  demand for the  Company's
Digital  Compression  Services  including  DVD, and  revenues  from Feature Film
Mastering  business,  a service the Company began offering in November 1997. The
decrease  in  revenues  from  Film  Production  Services  is the  result  of the
elimination of our positive film services in 1997.

     Operating  costs in the first quarter of 1998  declined  $114,000 or 1.89%,
from  $6,042,000 in the first quarter of 1997 to $5,928,000 in the first quarter
of 1998. Operating costs as a percentage of revenues for the quarter ended March
31, 1998 were 73.6% compared with 78.9% for the year ago-period.  The decline in
operating  cost is  primarily  the result of lower  depreciation  expense  and a
decrease in processing costs.

     For the quarter ended March 31, 1998,  the Company  recorded a gross profit
of  $2,124,000  compared to a gross profit of  $1,620,000  for the same year-ago
period,  an increase of $504,000 or 31.1%.  The increased profit is attributable
to the increase in revenues  and the decline in operating  expenses as explained
above.

     Selling,  general  and  administrative  (SG&A) and other  expenses  for the
quarter ended March 31, 1998 were $1,201,000  compared to $1,222,000  during the
same year-ago period, a decrease of $21,000 or 1.7%.

     Interest  expense for the quarter  ended  March 31, 1998 was  unchanged  at
$377,000 compared to $380,000 for the same year-ago period.


Liquidity and Capital Resources

     The Company and its  subsidiaries are operating under a loan agreement with
The CIT Group/Credit Finance with a maturity date of August 3, 2000. The maximum
credit under the agreement is $9 million.  The amended loan  agreement  provides
for  borrowings  up to $5.4 million  under the term loan  (limited to 85% of the
eligible  equipment  appraisal  value) and $3.6 million under the revolving loan
(limited to 85% of eligible accounts  receivable).  At March 31, 1998 $1,016,122
was available under the revolving loan agreement. The outstanding balance of the
term loan was  $2,876,882 at March 31, 1998. The term loan is payable in monthly
installments  of $106,000 plus interest at prime plus 2% through August 3, 2000.
Principal  payments are not required in June, July or August.  Future  principal
payments may be  increased  to  compensate  for a  significant  reduction in the
appraised value of the assets,  which secure the loan. The revolving loan had an
outstanding  balance of $1,266,000 at March 31, 1998. It bears interest at prime
plus  2%,  which  is  payable  monthly.  The  loan  contains  automatic  renewal
provisions for successive terms of two years after maturity unless terminated as
of August 3, 2000,  or as of the end of any renewal  period by either party upon
at least 60 day written notice.

     The Company has an outstanding  real estate loan with Bank of America.  The
loan is secured by the building where the Company  provides film  processing and
sound services.  The loan agreement  matures December 31, 1998 with an option to
extend the maturity an additional  year upon payment,  to Bank of America,  of a
$25,000 loan extension fee prior to December 31, 1998. The  outstanding  balance
as of March 31, 1998 was $1,187,486.

In July 1997, the Company  issued  $1,000,000 of short-term  Installment  (Fixed
Rate) Line of Credit Notes,  Series 1997 to 35 Lake Avenue, a California limited
partnership.  James R. Parks,  the  Company's,  Chief  Executive  Officer,  is a
partner in 35 Lake Avenue.  The principal balance of the Notes bears interest at
the rate of  fourteen  percent  (14%) per annum.  The  accrued  interest  on the
outstanding  principal  was payable on September  30,  1997,  December 31, 1997,
January  30,  1998,  February  28,  1998 and March  30,  1998.  The  outstanding
principal  balance  was to be paid in three  equal  installments  on January 30,
1998,  February 28, 1998 and March 31, 1998. The Company  granted 35 Lake Avenue
warrants to purchase one (1) share of the Company's common stock at the exercise
price of $1.00 per share,  for each $4.00 of original  principal  amount of debt
loaned.  250,000 warrants were issued. The warrants originally expired two years
from the date of grant. The Company's obligations under the Notes are secured by
a pledge of 2,424,488  shares of the Common  Stock of Pacific  Video Canada Ltd.
and a third deed of trust against the building  where the Company  provides film
processing and sound services.  In January,  1998 35 Lake Avenue agreed to amend
the terms of the short-term Installment Line of Credit Notes from March 30, 1998
until  November  30,  1998.  Under the  amendment,  principal  payments  reflect
approximately $400,000 due in the first quarter of 1998, $200,000 due at the end
of the third quarter of 1998 and remaining  payments of $300,000 due  throughout
the fourth quarter of 1998. In consideration  for the extension of the principal
payments, the expiration date of the warrants originally issued was extended for
two additional  years. At March 31, 1998, the outstanding  principal  balance on
the notes was $500,000.

The Company's  principal source of funds is cash generated by operations.  On an
annual  basis,   the  Company   anticipates  that  existing  cash  balances  and
availability  under existing loan  agreements and cash generated from operations
will be  sufficient to service  existing  debt.  Additionally,  the Company will
receive approximately 3,800,000 in additional funding in the 2nd Quarter of 1998
from the sale of the Company's stock ownership of Pacific Video Canada Ltd. This
additional  funding will be used to retire debt and to fund the upgrading of the
Company's plant and equipment.

Forward  looking  statements  and comments in this  document  relating to, among
other  things,  the prospects  for the Company to achieve  growth in sales,  the
ability to reduce overhead,  and ability to achieve positive  operating results,
are   necessarily   subject  to  risks  and   uncertainties.   These  risks  and
uncertainties  are  significant in scope and nature,  including risks related to
competition, continuation of sales levels and in particular the risks related to
the cost and availability of capital.

Item 1.  Submissions of Matters to a Vote of Security Holders

     No matters were  submitted to a vote of security  holders  during the first
quarter of 1998.

Item 2.  Exhibits and Reports on Form 8-K

     None
<PAGE>

                                  Signatures



                         LASER-PACIFIC MEDIA CORPORATION
 
                                  (Registrant)


Dated: May 15, 1998                          /s/James R. Parks
                                                James R. Parks
 
                                                Chairman of the Board
                                                and Chief Executive Officer



 

Dated: May 15, 1998                          /s/Robert McClain
                                                Robert McClain
 
                                              Secretary and
                                                Chief Financial Officer
                                               (Principal Financial and 
                                                Accounting Officer)