<PAGE>

                         SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549


                                   FORM 10-QSB

(Mark One)

/X/    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES AND EXCHANGE ACT OF 1934
       For the quarterly period ended June 30, 1998

                         OR

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

Commission file number 0-28760

                      PACIFIC COAST APPAREL COMPANY, INC.
                      -----------------------------------
                (Exact name of registrant as specified in its charter)

                    CALIFORNIA                          95-4536683
                    ----------                          ----------
       (State or other Jurisdiction of       (IRS Employer Identification No.)
        incorporation or organization)

            1620 SO. LOS ANGELES ST.
               LOS ANGELES, CA                            90015
            ------------------------                      -----
          (Address of principal office)                 (Zip Code)

Registrant's telephone number, including area code:  (213) 748-9724
                                                     --------------

                                 INAPPLICABLE
                                 ------------

              (Former name, former address and former fiscal year,
                             if changed since last report)

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 / /

Number of shares of common stock outstanding as of June 30, 1998: 2,958,000 


Transactional Small Business Disclosure Format     Yes /X/      No / /


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                                                                            1

                         PACIFIC COAST APPAREL CO., INC.
                                 BALANCE SHEET

<TABLE>
<CAPTION>
                                                 June 30 1998     June 30 1997
                                                 ------------     ------------
<S>                                              <C>              <C>

          ASSETS

CURRENT ASSETS
   Cash and cash equivalents                          $1,555          $20,983
     Short-term investments                                        $1,450,830
     Due from factors                               $286,518          $93,498
     Accounts receivable                             $28,128
     Inventories                                    $625,737       $1,067,964
     Prepaid expenses and other current assets       $95,039         $132,899

        Total current assets                      $1,036,977       $2,766,174

PROPERTY AND EQUIPMENT - at cost, net of            
     accumulated depreciation                       $116,169         $156,175

OTHER ASSETS                                         $26,542          $78,312
                                                  $1,179,688       $3,000,661

     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                               $240,382         $451,541
     Accrued expenses                               $188,870         $178,421
     Current maturities of long-term debt           $108,000
     Loan payable, officer/stockholder                                 $6,899

        Total current liabilities                   $537,252         $636,861

LONG TERM DEBT, LESS CURRENT                        $138,047           $2,049
     MATURITY

NEGATIVE GOODWILL                                   $163,914

STOCKHOLDERS' EQUITY
     Preferred stock
        Authorized, 600,000 shares
        No shares outstanding
     Common stock - no par value                  $5,452,718       $5,777,163
        Authorized, 1,000,000 shares
        Issued and outstanding  2,958,000 shares
     Additional paid-in capital                     $479,860         $162,500
     Deficit                                     ($5,592,103)     ($3,577,912)

        Total stockholders' equity                  $340,475       $2,361,751

                                                  $1,179,688       $3,000,661

</TABLE>


<PAGE>

                                                                            2

                    PACIFIC COAST APPAREL CO., INC.
                         STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>

                                            Nine Months Ended June 30
                                          -----------------------------
                                              1998             1997
                                          ------------     ------------
<S>                                       <C>              <C>

NET SALES                                  $3,729,007         $630,054

COST OF GOOD SOLD                           1,979,612          474,005

GROSS (LOSS) PROFIT                         1,749,395          156,049

OPERATING EXPENSES
   Design and production                      462,245          160,268
   Selling                                    610,356          376,311
   Shipping                                   176,437           11,846
   General and administrative                 947,405        1,089,513
   Interest (income) expense                   53,109          (41,585)

     Total Operating Expenses               2,249,552        1,596,353

LOSS BEFORE INCOME TAXES                     (500,157)      (1,440,304)

PROVISION FOR INCOME TAXES                       (800)            (800)

NET LOSS                                    ($500,957)     ($1,441,104)


NET LOSS PER SHARE                              (0.17)           (0.48)

WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING                2,958,000        3,012,000

</TABLE>

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                                                                            3

                    PACIFIC COAST APPAREL CO., INC.
                         STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>

                                        Three Months Ended June 30
                                       -----------------------------
                                           1998             1997
                                       ------------     ------------
<S>                                    <C>              <C>

NET SALES                              $1,245,338         $222,448

COST OF GOOD SOLD                         756,894          189,889

GROSS (LOSS) PROFIT                       488,444           32,559

OPERATING EXPENSES
   Design and production                  145,535           72,443
   Selling                                182,287          112,695
   Shipping                                66,014            3,337
   General and administrative             239,861          378,754
   Interest (income) expense               19,234          (16,230)

     Total Operating Expenses             652,931          550,999

LOSS BEFORE INCOME TAXES                 (164,487)        (518,440)

PROVISION FOR INCOME TAXES                      0             (800)

NET LOSS                                ($164,487)       ($519,240)

NET LOSS PER SHARE                          (0.06)           (0.18)

WEIGHTED AVERAGE NUMBER OF              
   COMMON SHARES OUTSTANDING            2,958,000        2,954,000

</TABLE>


<PAGE>

                                                                           4

                                                                 Page 1 0f 2
                    PACIFIC COAST APPAREL CO., INC.
                  CONDENSED STATEMENT OF CASH FLOWS

                    INCREASE (DECREASE) IN CASH

<TABLE>
<CAPTION>

                                                      Nine Months Ended June 30
                                                    -----------------------------
                                                        1998            1997
                                                    -----------     -------------
<S>                                                 <C>             <C>

CASH FLOWS FROM OPERATING ACTIVITES
     Net loss                                        ($500,957)     ($1,441,104)
     Adjustments to reconcile net loss to
        cash used by operating activities:
        Depreciation                                   $27,741          $22,096
        Amortization of negative goodwill              ($8,652)

        Changes in assets and liabilities, net
          of effect of assets and liabilities
          acquired:
            Increase in due from factors             ($112,941)        ($93,498)
            Decrease in accounts receivable            $24,537
            Increase in inventories                   $239,589        ($810,884)
            Increase in prepaid expenses and          ($77,402)
               other current assets                                   ($167,429)
            Increase in other assets                   ($6,803)
            Decrease in note receivable, stockholder   $10,000

            Increase (decrease) in accounts payable      ($921)        $402,780
            Increase (decrease) in accrued expenses     $7,878          $63,512

            Total Adjustments                         $103,026        ($583,423)

            Net Cash Used By Operating Activities    ($397,931)     ($2,024,527)

</TABLE>

<PAGE>

                                                                            5

                                                                  Page 2 0f 2
                    PACIFIC COAST APPAREL CO., INC.
                   CONDENSED STATEMENT OF CASH FLOWS

                     INCREASE (DECREASE) IN CASH

<TABLE>
<CAPTION>
                                                 Nine Months Ended June 30
                                               -----------------------------
                                                   1998             1997
                                               -----------     -------------
<S>                                            <C>             <C>

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of property and equipment          ($5,899)       ($170,233)
     Decrease in short term investments                        $2,248,721

          Net Cash (used) Provided by
            Investing Activities                 ($5,899)      $2,078,488

CASH FLOWS FROM FINANCING ACTIVITIES
     Principal payments on long term debt       ($82,308)
     Reacquistion of common stock                               ($142,955)

          Net Cash Used by
            Financing Activities                ($82,308)       ($142,955)

NET DECREASE IN CASH AND
     CASH EQUIVALENTS                          ($486,138)        ($88,994)

CASH AND CASH EQUIVALENTS, beginning
     as previously stated                       $406,608         $109,977

PRIOR PERIOD ADJUSTMENT                          $81,085

CASH AND CASH EQUIVALENTS,
     beginning, as restated                     $487,693         $109,977

CASH AND CASH EQUIVALENTS, ending                 $1,555          $20,983

</TABLE>


<PAGE>

                                                                            6

                    PACIFIC COAST APPAREL CO., INC.
                  CONDENSED STATEMENT OF CASH FLOWS -
                      SUPPLEMENTAL INFORMATION

<TABLE>
<CAPTION>
                                                          Three Months Ended June 30
                                                         ----------------------------
                                                            1998             1997
                                                         ----------       -----------
<S>                                                      <C>              <C>

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION 
     Cash paid during period for:
          Interest                                       $19,234          $13,686
          Income Taxes                                                       $800

</TABLE>


<PAGE>

                                                                            7

                         PACIFIC COAST APPAREL CO., INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS

                                JUNE 30, 1998


1 - ACCOUNTING POLICIES

     Although the interim condensed financial statements of the Company are
     unaudited, it is the opinion of the Company's management that all normal
     recurring adjustments necessary for a fair statement of the results have
     been reflected therein. Operating revenues and net earnings for any interim
     period are not necessarily indicative of results that may be expected for
     the entire year.

     These statements should be read in conjunction wth the financial statements
     and reflected notes which are incorporated by reference in the Company's
     Annual Report on Form 10-KSB for the year ended September 30, 1997

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION

INTRODUCTION

     The Company was formed in April 1995 with the business strategy of 
reintroducing the Aca Joe apparel brand through major department stores and 
specialty store chains in the United States.  

     Because of it's inability to place goods in its target accounts and 
continued losses in the development of this plan, the Company decided not to 
renew its license for the Aca Joe brand which came up for renewal on June 30, 
1998. The Company was not confident it would achieve profitability in the 
near future, and decided it would not be prudent to continue funding the Aca 
Joe operations with its significant  historical losses.  The Company has no 
further capital commitments or obligations to the Aca Joe brand.

     The Company is continuing to develop both the men's and women's Cotton 
Stuff lines.  Revenues for the Cotton Stuff brand have increased 
approximately 16.5% since the brand was acquired in September 1997.  The 
Cotton Stuff line is sold through better men's and women's specialty stores 
and better catalogs throughout the United States.  Catalog customers include 
the Neiman Marcus and Saks Folio.  Specialty stores include the Jacobson's 
stores and Fred Siegel.

     The Company continues to increase its marketing efforts for the Cotton 
Stuff brand.  The Company now has a complete men's and women's sales force 
made up of independent sales representatives in major territories across the 
United States.  Additionally the number of trade shows in which the Company 
participates has more than doubled in the last nine months.  

     In addition to the branded Cotton Stuff business the Company is in the 
very early stages of developing a  private label,  product development 
program targeted at department stores and specialty store chains.  The 
Company would use either its Cotton Gear label or a label chosen by the 
particular account. The Company believes it has an opportunity to increase 
its revenues by producing quality products at slightly lower costs and lower 
mark ups  than its current Cotton Stuff line.  To date the Company has no 
commitment from customers for these services and there is no assurance that 
this marketing effort will be successful.

NINE MONTHS ENDED JUNE 30, 1998

     Revenues for the nine months ended June 30, 1998 were $3,729,007 
compared with $630,054 for the comparable period ended June 30, 1997.  The 


<PAGE>

significant increase during the nine months ended, reflects the revenues 
realized by the purchase of Cotton Stuff brand in September 1997.  All of the 
revenues for the period ended June 30, 1997 were generated from the Aca Joe 
brand, while only $113,235 in revenues were generated from the Aca Joe brand 
in the nine months ended June 30, 1998.  When comparing revenues generated by 
the Cotton Stuff brand, the revenues have increased approximately 16.5 % in 
the period ended June 30, 1998 compared to June 30, 1997.

     The Company's operating expenses for the nine months ended June 30, 1998 
were $2,239,552 compared with $1,596,353.  The increase in operating expenses 
is in relation to the significant increase in revenues. Operating costs as a 
percentage of sales has decreased from 253.3% of sales in the period ended 
June 30, 1997 to 59.7% in the period ended June 30, 1998.  General and 
administrative expenses have decreased from $1,089,513 to $937,405, a 
decrease of approximately 15%.  Selling costs have increased over the 
comparable period from $376,311 to $462,245. Selling cost as a percentage of 
sales has decreased from 59.7% in  the period ended June 30, 1997 to 12.3% in 
the period ended June 30, 1998.  Design and production expenses have 
increased during the comparable period  from $160,268 to $462,245 in the 
period ended June 30, 1998 due to the development of both the men's and the 
women's line.  Design costs as a percentage of sales has decreased from 
26.6% in the period ended June 30, 1997 to 12.2% in the period ended June 30, 
1998. All costs as a percentage of sales decreased over the comparable period 
ended June 30, 1997 because of the significant increase in sales. 

LIQUIDITY AND CAPITAL RESOURCES

     In September 1996 the Company realized net proceeds of approximately 
$5,267,000 from the initial public offering of common stock and warrants to 
purchase common stock.  A portion of these proceeds were used to repay 
appxomimately $550,000 of indebtedness then outstanding.  The Company has 
experienced cumulative losses from operation of [$5,592,103] for the period 
from April 28,1995 (inception) through June 30, 1998.

     In February, the Company was notified that it was out of compliance with 
the net tangible asset requirement (which became effective February 23, 1998) 
for maintaining it's lisiting on NASDAQ SmallCap Market.  Company 
representatives made an oral presentation to the NASDAQ Listings and 
Qualifications Panel in Washington DC on March 28, 1998 to discuss the 
violation and it's plan for compliance. The Company was subsequently granted 
an exemption through May 15, 1998 at which time the Company was to have met 
the net tangible requirement.

<PAGE>

     On May 13, 1998 the Company requested an extension to the exemption.  On 
May 19, 1998 the Company was notified that its securities were being delisted 
effective the close of business May 19, 1998 for failure to comply with the 
net tangible asset requirement.

     The securities of the Company began trading on the OTC Bulletin Board, 
symbol (ACAJ and ACAJW) on May 21, 1998.  The Company plans to reapply for 
listing on the NASDAQ SmallCap Market as soon as it is in  compliance with 
all requirements.  There can be no assurance however that the Company will 
be able to meet all of the requirements necessary to re-list on the NASDAQ 
SmallCap Market.

     In order to meet its cash flow needs, an officer of the Company has 
placed, with the Company's factor, sufficient  collateral to guarantee a cash 
over advance of up to $108,000 above the Company's factor line.  The Company 
may decide to continue to fund its current cash flow needs in this fashion, 
by securing additional collateral to cover over advances above the existing 
factor line, or the Company may attempt to fund its operations through public 
or private offerings of securities or debt, with collaborative or other 
arrangement with corporate partners or from other sources. Additional 
financing may not be available when needed or on terms acceptable to the 
Company.  The Company may be required to delay, scale back or eliminate 
certain of its development  programs, to relinquish rights to certain of its 
products or to license to third parties the right to commercialize products 
the Company would otherwise seek to develop internally.

     In March the Company signed a non-binding Letter of Intent to purchase 
the assets of CMG, Inc., a Los Angeles based manufacturer of men's and 
women's apparel.  The Company recently ceased discussions with CMG, Inc., 
deciding it was no longer an acquisition candidate.

     The Company continues to review and meet with companies that meet the 
acquisition criteria developed by the Company. Recently the Company entered 
into substantive discussions with a Los Angeles based women's apparel 
manufacturer. Various strategic combinations including a merger or an 
acquisition have been discussed,  but to date no agreements have been signed. 
Consummation of this or any acquisition or merger is subject to the 
execution of a definitive purchase agreement and other conditions.  There is 
no assurance that this or any other such strategic combination will be 
consummated. 

<PAGE>

                            SIGNATURES

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


                           Pacific Coast Apparel Company, Inc.
                        
                           By        /s/ Terrence L. McGovern
                                 -------------------------------
                                       Terrence L. McGovern
                                   Chief Executive Officer and
                                     Chief Financial Officer

August 14, 1998