<PAGE>   1
                                  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 August 2, 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- 28072

               ________West Coast Entertainment Corporation_______
             (Exact name of registrant as specified in its charter)
<TABLE>
<S>                                                                  <C>
                  Delaware                                           04-3278751
(State or other jurisdiction of incorporation or organization)      (I.R.S. Employer I.D. No.)
</TABLE>

One Summit Square, Suite 200, Rte. 413 & Doublewoods Rd.
Langhorne, Pennsylvania                                                  19047
(Address of principal executive offices)                              (Zip Code)

Registrant's telephone number, including area code:  (215)968-4318

       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) had been
       subject to such filing requirements for the past 90 days.

                                Yes   X   No

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

        Class                          Outstanding at September 8 ,1998
 Common Stock, $.01                                14,035,329
 par value per share
<PAGE>   2
                      WEST COAST ENTERTAINMENT CORPORATION

                                      INDEX


<TABLE>
<CAPTION>
Part I.              -  Financial Information                                          Page No.
<S>                                                                                   <C>
         Item 1.     -  Financial Statements

                     Consolidated Balance Sheets -
                           As of August 2, 1998 and January 31, 1998                      3

                     Consolidated Statements of Operations-
                           Quarters and Two Quarters Ended
                           August 2, 1998 and July 31, 1997                               4

                     Consolidated Statements of Cash Flows-
                           Two Quarters Ended August 2, 1998 and  July 31, 1997           5

                     Consolidated Statement of Stockholders Equity-
                           As of August 2, 1998 and January 31, 1998                      6

                     Notes to Consolidated Financial Statements                           7

         Item 2.     -  Management's Discussion and Analysis of Financial                12
                        Condition and Results of Operations


Part II.             -  Other Information                                                19

         Item 1.     -  Legal Proceedings
         Item 2.     -  Changes in Securities
         Item 3.     -  Defaults Upon Senior Securities
         Item 4.     -  Submission of Matters to a Vote of the Security Holders
         Item 5.     -  Other Information
         Item 6.     -  Exhibits and Reports on Form 8-K
</TABLE>


                                       2
<PAGE>   3
                      WEST COAST ENTERTAINMENT CORPORATION
                           CONSOLIDATED BALANCE SHEET
                      (in thousands, except for par value)



<TABLE>
<CAPTION>
                                                            August 2,       January 31,
                                                               1998           1998
                                                           ----------       -----------
                                                           (unaudited)
<S>                                                         <C>             <C>
Assets:

Current assets:
  Cash and cash equivalents                                 $   2,393       $   2,604
  Accounts receivable                                           2,014           1,629
  Merchandise inventory                                        12,687           8,216
  Income taxes receivable                                        --               441
  Deferred tax asset                                              820             820
  Market development funds and co-op receivable                 1,659           2,124
  Receivable from officers                                        363             341
  Prepaid expenses and other current assets                       901             652
                                                            ---------       ---------

    Total current assets                                       20,837          16,827

Videocassette rental inventory, net                            34,633          32,005
Furnishings, equipment and leasehold improvements, net         19,265          18,953
Intangible assets, net of accumulated amortization            114,076         117,047
Other assets                                                    2,476           2,404
                                                            ---------       ---------

    Total assets                                            $ 191,287       $ 187,236
                                                            =========       =========

Liabilities and Stockholders' Equity:

Current liabilities:
  Current portion of long-term debt                         $  10,008       $       8
  Accounts payable                                             15,263          11,719
  Accrued expenses and other liabilities                        5,166           4,926
  Income taxes payable                                            302            --
                                                            ---------       ---------

    Total current liabilities                                  30,739          16,653

Long-term debt (net of current portion)                        55,002          65,006
Deferred tax liability                                          1,741           1,741
Other long-term liabilities                                       102             155
                                                            ---------       ---------

    Total liabilities                                          87,584          83,555

Stockholders' equity:
  Common stock ($0.01 par value; 14,160
    shares as of August 2, 1998, of which
    14,023 shares were outstanding and
    137 shares to be issued; and 13,843
    shares outstanding at January 31, 1998,
    of which 13,706 shares were
    outstanding and 137 shares to be issued)                      142             138
  Preferred stock ($0.01 par value, 2,000 shares
    authorized, no shares issued)                                --              --
  Additional paid in capital                                  104,085         104,063
  Accumulated deficit                                            (282)           (520)
  Treasury stock (92 shares of common stock at cost)             (242)           --
                                                            ---------       ---------

    Total stockholders' equity                                103,703         103,681
                                                            ---------       ---------

    Total liabilities and stockholders' equity              $ 191,287       $ 187,236
                                                            =========       =========
</TABLE>

                 See accompanying notes to financial statements

                                      -3-
<PAGE>   4
                      WEST COAST ENTERTAINMENT CORPORATION
                      CONSOLIDATED STATEMENT OF OPERATIONS
                      (in thousands, except per share data)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                               Quarter ended               Two quarters ended
                                                               -------------               ------------------
                                                           August 2,      July 31,       August 2,     July 31,
                                                             1998           1997           1998          1997
                                                           --------       --------       --------      --------
<S>                                                        <C>            <C>            <C>           <C>
Revenues:
  Rental revenue                                           $ 25,034       $ 24,930       $ 51,193      $ 47,368
  Merchandise and other sales                                 4,734          4,025          9,449         8,149
  Franchise fees                                                948            510          1,631         1,339
                                                           --------       --------       --------      --------

    Total revenues                                           30,716         29,465         62,273        56,856
                                                           --------       --------       --------      --------

Operating costs and expenses:
  Store operating expenses                                   14,187         14,838         28,110        26,685
  Cost of goods sold                                          3,337          2,725          6,683         5,606
  Amortization of videocassette and video game rental
    inventory (Note 2)                                        6,392          6,106         12,664        11,459
  Selling, general and administrative                         3,752          3,874          7,270         8,063
  Amortization of intangible assets                           1,611          1,573          3,265         3,000
  Debt offering write offs (Note 6)                            --            5,125           --           5,125
                                                           --------       --------       --------      --------

    Total operating costs and expenses                       29,279         34,241         57,992        59,938
                                                           --------       --------       --------      --------

Income (loss) from operations                                 1,437         (4,776)         4,281        (3,082)
                                                           --------       --------       --------      --------

Interest expense                                              1,627          1,188          3,265         1,944
Other expense (income)                                           70            (29)           144           (64)
                                                           --------       --------       --------      --------

Income (loss) before provision for income taxes                (260)        (5,935)           872        (4,962)

Provision for (benefit of) income taxes                           0         (1,853)           634        (1,415)
                                                           --------       --------       --------      --------

Net income (loss)                                          ($   260)      ($ 4,082)      $    238      ($ 3,547)
                                                           ========       ========       ========      ========

Net income (loss) per common share-basic and diluted       ($  0.02)      ($  0.30)      $   0.02      ($  0.26)
                                                           ========       ========       ========      ========

Weighted average shares outstanding                          14,159         13,826         14,153        13,806
                                                           ========       ========       ========      ========
</TABLE>

                 See accompanying notes to financial statements


                                      -4-
<PAGE>   5
                      WEST COAST ENTERTAINMENT CORPORATION
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                 Two quarters ended
                                                             August 2,        July 31,
                                                               1998           1997
                                                             --------       ---------
<S>                                                          <C>            <C>
Cash flows from operating activities:
  Net income (loss)                                          $    238       ($ 3,547)
  Adjustments to reconcile net income to cash
    flows provided by (used in) operating activities:
    Amortization of debt financing costs                          222             91
    Amortization of videocassette rental inventory             12,664         11,459
    Depreciation and amortization of furnishings,
      equipment and leasehold improvements                      1,588            970
    Amortization of intangible assets                           3,265          2,999
    Changes in assets and liabilities:
      Accounts receivable                                        (385)           418
      Merchandise inventories                                  (4,471)        (2,892)
      Prepaid expenses and other assets                          (395)        (2,138)
      Accounts payable                                          3,544          6,456
      Accrued expenses and other liabilities                      188            687
      Income taxes                                                743         (3,440)
                                                             --------       --------

    Net cash provided by operating activities                  17,201         11,063
                                                             --------       --------

Cash flows from investing activities:
  Purchase of property and equipment                           (1,900)        (4,910)
  Purchase of videocassette rental inventory                  (15,292)       (14,499)
  Purchase of businesses, net of cash acquired                   --          (18,897)
                                                             --------       --------

    Net cash used in investing activities                     (17,192)       (38,306)
                                                             --------       --------

Cash flows from financing activities:
  Proceeds from long-term debt                                   --           29,500
  Repayment of long-term debt                                      (4)            (4)
  Proceeds from issuance of common stock, net                      26             80
  Purchase of treasury stock                                     (242)          --
                                                             --------       --------

    Net cash provided by (used in) financing activities          (220)        29,576
                                                             --------       --------

Net increase (decrease) in cash and cash equivalents             (211)         2,333

Cash and cash equivalents, beginning of period                  2,604          1,311
                                                             --------       --------

Cash and cash equivalents, end of period                     $  2,393       $  3,644
                                                             ========       ========

Supplemental cash flow data:
  Interest paid                                              $  2,892       $  1,688
                                                             ========       ========

  Income taxes paid                                          $    185       $  2,199
                                                             ========       ========
</TABLE>

                 See accompanying notes to financial statements

                                      -5-
<PAGE>   6
                      WEST COAST ENTERTAINMENT CORPORATION
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                          (in thousands, except shares)

<TABLE>
<CAPTION>
                                                                                                                          Total
                                                                                 Additional    Accumulated                Stock-
                                                            Common Stock          Paid-In        Surplus      Treasury   holders'
                                                      ----------------------
                                                        Shares        Amount     Capital        (Deficit)      Stock     Equity
                                                      ----------    --------     ---------     ----------    -------     ---------
<S>                                                  <C>           <C>          <C>           <C>            <C>         <C>
Balance at January 31, 1995                            7,272,801    $     73     $     819     ($    527)       --       $     365
Shares issued-West Coast Entertainment
  Corporation                                          6,727,200          67          --            --          --              67
Net income                                                  --          --            --             334        --             334
S Corporation distribution                                  --          --            --            (223)       --            (223)
                                                     -----------    --------     ---------     ---------     -------     ---------

Balance at January 31, 1996                           14,000,001         140           819          (416)       --             543
May 14, 1996 0.340-1 reverse stock split              (9,243,713)        (92)           92          --          --            --
Shares issued-public offering                          5,400,000          54        60,778          --          --          60,832
Shares issued or to be issued-1996 Acquisitions        3,614,174          36        42,258          --          --          42,294
Net income                                                  --          --            --           3,466        --           3,466
                                                     -----------    --------     ---------     ---------     -------     ---------

Balance at January 31, 1997                           13,770,462         138       103,947         3,050        --         107,135
Shares issued-Employee Stock Purchase Plan                36,567        --             116          --          --             116
Shares issued-1996 acquisitions                           36,077        --            --            --          --            --
Net (loss)                                                  --          --            --          (3,570)       --          (3,570)
                                                     -----------    --------     ---------     ---------     -------     ---------

Balance at January 31, 1998                           13,843,106         138       104,063          (520)       --         103,681
Shares issued-1996 acquisitions                          302,065           3            (3)         --          --            --
Shares issued-Employee Stock Purchase Plan                14,590           1            25          --          --              26
Shares received in treasury stock                           --          --            --            --          (242)         (242)
Net income                                                  --          --            --             238        --             238
                                                     -----------    --------     ---------     ---------     -------     ---------

Balance at August 2, 1998                             14,159,761    $    142     $ 104,085     ($    282)    ($  242)    $ 103,703
                                                     ===========    ========     =========     =========     =======     =========
</TABLE>


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


                                      -6-
<PAGE>   7
                      WEST COST ENTERTAINMENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 2, 1998 (unaudited)


1        Basis of Presentation

         The accompanying unaudited consolidated financial statements have been
         prepared in accordance with generally accepted accounting principles
         for interim financial information and pursuant to the rules and
         regulations of the Securities and Exchange Commission ("SEC").
         Accordingly, they do not include all of the information and footnotes
         required by generally accepted accounting principles for complete
         financial statements. For further information, refer to the
         consolidated financial statements and footnotes included in West Coast
         Entertainment Corporation's (the "Company's") Form 10-K filed with the
         SEC on May 1, 1998.

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amounts of revenue
         and expenses during the reported period. Actual results could differ
         from these estimates.

         On April 30, 1998, the Company adopted a fiscal year ending on the
         first Sunday following January 30, which will result in the Company
         having a 52 or periodically, a 53 week fiscal year. Results for this
         fiscal year will reflect a 52-week year ending on January 31, 1999.
         The Company's quarter and two quarters ended August 2, 1998 includes
         revenue and certain operating expenses such as salaries, wages and
         other miscellaneous expenses, on a daily basis. All other expenses,
         primarily rents, depreciation and amortization, are calculated and
         recorded monthly, with twelve months included in each fiscal year.

         In the opinion of management, all adjustments necessary for a fair
         presentation of this interim financial information have been included.
         Such adjustments consisted only of normal recurring items. The results
         of operations for the quarter and two quarters ended August 2, 1998 are
         not necessarily indicative of the results to be expected for the year
         ending January 31, 1999.

         Income per common share data has been calculated per Financial
         Accounting Standards Board Statement No. 128 "Earnings Per Share"
         ("SFAS 128"), which requires current and retroactive presentation of
         basic and diluted earnings per share. Basic earnings per share is
         computed by dividing net income by the weighted average number of
         common shares outstanding during the period. Diluted earnings per share
         is computed in a similar manner except that the weighted average number
         of common shares is increased for dilutive potential common shares.
         Potentially dilutive common shares were considered to be anti-dilutive
         for the computation of diluted earnings per share for the quarters and
         two quarters ended August 2, 1998 and July 31, 1997.

2        Videocassette Rental Inventory

         Videocassette rental inventory and related amortization are as follows
(in thousands):
<TABLE>
<CAPTION>
                                     August 2, 1998         January 31, 1998
                                     ---------------        ----------------
<S>                                   <C>                   <C>
Videocassette rental inventory        $ 84,549              $ 69,257
Accumulated amortization               (49,916)              (37,252)
                                      --------              --------
                                      $ 34,633              $ 32,005
                                      ========              ========
</TABLE>

         Amortization expense related to videocassette rental inventory totaled
         $6,392,000, $12,664,000, $6,106,000, and $11,459,000 for the quarters
         and two quarters ended August 2, 1998 and July 31, 1997, respectively.

                                      7
<PAGE>   8
                      WEST COST ENTERTAINMENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
August 2, 1998 (unaudited)


         Effective August 1, 1997, the Company adopted an accelerated method of
         amortizing its videocassette rental inventory. Under this new method,
         videocassette rental inventory base stock (the first three copies of a
         title in a particular store) is amortized over its economic life of 36
         months, to its estimated salvage value of $6. New release base stock,
         less the $6 salvage value, is amortized 50% in the first six months,
         then amortized on a straight-line basis to the $6 salvage value over
         the remaining 30 months. All copies of new release videocassette rental
         inventory in excess of 3 copies per store are amortized on a
         straight-line basis during the first nine months to $10, and the
         balance is amortized on a straight-line basis over the remaining 27
         months to the $6 salvage value.

         The new method of amortization was adopted because the Company believes
         accelerated expense recognition for new release videocassettes during
         the first six months more closely matches the typically higher revenue
         generated following a title's release, and believes $6 represents a
         reasonable salvage value for all tapes after 36 months.

         The new method of amortization has been applied to videocassette rental
         inventory that was held in inventory at August 1, 1997. The adoption of
         the new method of amortization has been accounted for as a change in
         accounting estimate effected by a change in accounting principle and,
         accordingly, the Company recorded an $803,000 pre-tax charge to
         operating expense in the quarter ended October 31, 1997 and the year
         ended January 31, 1998.

         Prior to August 1, 1997, videocassette rental inventory, which includes
         video games, was stated at cost and was amortized over its estimated
         economic life with no provision for salvage value. Videocassettes that
         were considered base stock (the first three copies of a title in a
         particular store) were amortized over 36 months on a straight-line
         basis. New release videocassettes were amortized as follows: the first
         through third copies of each title per store were amortized as base
         stock and the fourth and succeeding copies of each title per store were
         amortized over nine months on a straight-line basis. The unamortized
         cost, if any, of videocassette rental inventory that was sold is
         charged to operations at the time of sale.

         Videocassette rental inventory amortization expense resulting from the
         allocation of purchase price to videocassette rental tapes of the
         acquired entities is based on current replacement cost for bulk
         purchases of used tapes as well as the assignment of a three year
         amortizable life which serves to extend the remaining economic useful
         lives of videocassette rental tapes acquired. Replacement cost for bulk
         purchases of used tapes is significantly less than the cost of new tape
         purchases. As a result, future amortization relating to these tapes, on
         a per tape basis, will be significantly less than the amortization
         relating to new tape purchases. In addition, to the extent the acquired
         tapes have book values lower than newly purchased tapes, sales of the
         acquired tapes should result in higher operating income than sales of
         new tape purchases. The favorable effects resulting from purchase
         accounting will diminish with the passage of time and will not extend
         beyond the three year period subsequent to acquisition which is the
         period over which these tapes will be amortized.

3        Acquisitions

         May 1996 Acquisitions

     On May 17, 1996, the Company acquired 172 video specialty stores (the "May
     1996 Acquisitions"), including 13 stores owned by franchisees of the
     Company. Taking into account certain adjustments and calculation of certain
     contingent payments, the aggregate consideration of $83.9 million was paid
     consisting of the following: $53.0 million in cash, approximately $26.2
     million in shares of common stock (2.1 million shares), and approximately
     $4.7 million of
                                       8
<PAGE>   9
                      WEST COST ENTERTAINMENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
     August 2, 1998 (unaudited)


         acquisition costs. Of these amounts, approximately $0.4 million
         represents remaining minimum contingent consideration (of which
         approximately $0.1 million and $0.3 million (19,734 shares) is to be
         paid in cash and stock, respectively). These common shares to be issued
         have been considered outstanding as of August 2, 1998 and July 31, 1997
         as their issuance is dependent only on the passage of time.

         Early Fall 1996 Acquisitions

         Between August 26 and October 25, 1996, the Company acquired the assets
         of 21 video specialty stores (the "Early Fall 1996 Acquisitions").
         Aggregate consideration of $13.6 million was paid, consisting of the
         following: $8.2 million in cash, $4.9 million in shares of common stock
         (519,000 shares), and approximately $0.5 million of acquisition costs.
         The shares (465,000) associated with one of these acquisitions were
         issued in three equal installments (six, twelve and eighteen months
         from the acquisition date) and the number of shares issuable was
         increased in certain cases by the difference between the share price at
         issuance date and a formulaic common share price calculated as of the
         date of acquisition. A total of 340,000 shares were issued due to this
         difference. Additionally, 92,000 shares associated with another Early
         Fall 1996 Acquisition are to be issued. In both instances these common
         shares and other common shares to be issued in installments have been
         considered outstanding as of the beginning of the periods presented as
         their issuance is dependent only on the passage of time.

         Late Fall 1996 Acquisitions

         Between November 15 and December 3, 1996, the Company acquired the
         assets of 47 video specialty stores (the "Late Fall 1996
         Acquisitions"), including 19 stores owned by franchisees of the Company
         for aggregate consideration of $27.7 million consisting of the
         following: $14.4 million in cash, $11.0 million in shares of common
         stock (1.0 million shares) and approximately $2.3 million of
         acquisition costs. Additionally, 243,000 and 25,000 shares were to be
         issued as of July 31, 1997 and August 2, 1998 respectively. These
         common shares to be issued have been considered outstanding as of the
         beginning of the periods presented as their issuance is dependent only
         on the passage of time.


         June, 1997 Acquisitions

         On June 16, 1997, and June 24, 1997 the Company acquired a total of 38
         video specialty stores (the "June 1997 Acquisitions"), including 5
         stores owned by a franchisee of the Company for aggregate consideration
         of $17.9 million consisting of $17.2 million in cash and approximately
         $0.7 million of acquisition costs.

         The excess of the cost over the fair value of the assets acquired is
         being amortized over 20 years on a straight-line basis. The results of
         operations of the acquired stores have been included in operations of
         the Company since the date of acquisition. The purchase method of
         accounting was used to account for the acquisitions.

         The following unaudited pro forma information presents the results of
         operations as though (i) the June 1997 Acquisitions had occurred as of
         the beginning of the periods presented, (ii) each entity included in
         the consolidated statement of operations had been included in the
         Company's consolidated income tax returns and subject to corporate
         income taxation as a C corporation during all periods presented, and
         (iii) the borrowings under the Credit Facility (see Note 4) had
         occurred as of the beginning of the periods presented.

                                       9
<PAGE>   10
                      WEST COST ENTERTAINMENT CORPORATION

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 
         August 2, 1998 (unaudited)

         The following unaudited pro forma net income per share for the quarters
         and two quarters ended August 2, 1998 and July 31, 1997 was calculated
         by dividing the respective unaudited pro forma net income by the pro
         forma weighted average number of shares of common stock outstanding
         after giving effect to (i) the 0.340-for-1 reverse stock split approved
         by the Board of Directors on May 14, 1996, and the shares issued in
         conjunction with the Initial Public Offering on May 17, 1996 ("the
         Offering"), (ii) issuance of shares in connection with the May 1996,
         Early Fall 1996 and Late Fall 1996 Acquisitions, (iii) repayment of
         outstanding debt at the date of the Offering, and (iv) the impact of a
         detachable warrant with a primary supplier of videocassettes and a
         portion of a convertible note which was converted into shares of the
         Company's common stock as if the transactions had occurred on the first
         day of the periods presented. The pro forma weighted average number of
         common shares used to calculate pro forma net income per share was
         14,159,761 for the quarters and two quarters ended August 2, 1998 and
         14,125,839 for the quarter ended July 31,1997.


<TABLE>
<CAPTION>
                                                               Unaudited
                                                              Pro Forma
                                             ----------------------------------------------------
                                                  (in thousands, except per share data)

                                             Quarter Ended                      Two Quarters Ended
                                             -------------                      ------------------
                                      August 2, 1998    July 31, 1997     August 2, 1998   July 31, 1997
                                      --------------    -------------     --------------   -------------
<S>                                   <C>              <C>                 <C>             <C>
Pro forma revenues                    $ 30,716         $ 31,562            $ 62,273        $ 63,147
Pro forma net income (loss)               (260)          (3,971)                238          (3,196)
Pro forma net income (loss)
   per share-basic and diluted        $  (0.02)        $  (0.28)           $   0.02        $  (0.23)
</TABLE>

4        Long Term Debt

         On May 17, 1996 the Company obtained a $60,000,000 Credit Facility
         ("the Credit Facility") from a bank which consists of a 17 month
         revolving credit facility followed by a three year term loan. In
         association with the borrowing the Company paid a fee of $700,000 on
         May 17, 1996 which has been recorded in other long term assets and will
         be amortized over the term of the Credit Facility. Borrowings under the
         Credit Facility are available for working capital, capital
         expenditures, refinancing of existing indebtedness, and for certain
         permitted acquisition financing.

         On October 31, 1996 the Company received a commitment from the Bank to
         increase the Credit Facility to $65,000,000 effective August 5, 1996.
         As of August 2, 1998, the Company had $65,000,000 outstanding under the
         Credit Facility.

         On December 15, 1997 the Company signed an amendment increasing the
         Credit Facility to $70,000,000 with current commitments from the
         participating banks for $65,000,000 (the "Amended Facility"). The
         Amended Facility has a three year term ending December 14, 2000 with
         two one-year options to extend the term to December 14, 2002. If the
         Company attains certain total debt to operating cash flow ratios, as
         defined, the commitment reduces quarterly commencing June 15, 1999 and
         continues through the end of the term. If such total debt to operating
         cash flow ratios are not attained, the quarterly commitment reductions
         start on December 15, 1998 whereby a $3 million reduction occurs for
         the year ended January 31, 1999. Any amounts in excess of the
         commitment, as it may be reduced from time to time, must be repaid. On
         September 14, 1998, the Company signed an amendment to the Amended
         Facility



                                       10
<PAGE>   11
                      WEST COST ENTERTAINMENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
August 2, 1998 (unaudited)


         changing certain maximum debt to operating cash flow ratios and minimum
         operating cash flow requirements as defined, as well as modifying
         certain permitted capital expenditures.

         Borrowings under the Amended Facility are limited to a multiple of
         operating cash flow, as defined, over the previous four quarters. As a
         result of the above mentioned amendment, at August 2, 1998, this
         multiple was modified from 3.50 to 3.75 times operating cash flow, and
         reduces over the next two fiscal quarters to a low of 3.25 times
         operating cash flow on January 31, 1999 and thereafter. Interest rates
         vary from either the Bank's base rate, as defined, to 1.5% above such
         base rate, or from the Eurodollar rate, as defined, to 5.0% above such
         Eurodollar rate. On January 14, 1998, the Company entered into an
         interest rate swap agreement with the bank for $30,000,000 of the
         Amended Facility. As of January 31, 1998, the bank estimates that it
         would have received $74,000 to terminate the interest rate swap
         agreements. The interest rate swap agreement is for a three year period
         ending on January 16, 2001 and fixes the Eurodollar rate to 5.62%. The
         Company's weighted average borrowing rate under the Amended Facility
         was 9.06% for the quarter ended August 2, 1998. Additionally, the
         Amended Facility provides for a commitment fee payable quarterly,
         computed at up to 0.5% of the unused portion of the available Amended
         Facility during the previous quarter.

         The Amended Facility is secured by a first security interest in
         substantially all of the Company's assets, including the stock of its
         subsidiaries, and provides for certain restrictive covenants, including
         among others compliance with certain financial tests and ratios and
         dividend restrictions.

5        Treasury Stock

         In the quarter ended May 3, 1998, treasury stock valued at $242,000
         (92,000 shares) was received in satisfaction of amounts owed to the
         Company.


6        Debt Offering Write-Off

         On July 1, 1997 the Company's private placement of debt securities (the
         "Proposed Private Placement") and related acquisitions were
         indefinitely delayed due to market conditions. The Company has
         written-off $5.1 million in costs during the quarter ended July 31,
         1997 that were incurred in connection with the Proposed Private
         Placement and related acquisitions.


                                       11
<PAGE>   12
                      WEST COST ENTERTAINMENT CORPORATION

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

         RESULTS OF OPERATIONS

         Quarter ended August 2, 1998 compared to Quarter ended July 31, 1997

         Revenues

         Revenues increased $1.2 million, or 4.1%, from $29.5 million for the
         quarter ended July 31, 1997 to $30.7 million for the quarter ended
         August 2, 1998. This change reflected an increase of $0.8 million in
         merchandise sales and an increase of $0.4 million in franchise fee
         revenue. Rental revenues remained unchanged at $25.0 million for the
         quarters ended July 31, 1997 and August 2, 1998.

         Merchandise sales increased $0.8 million, or 20.0%, from $4.0 million
         for the quarter ended July 31, 1997 to $4.8 million for the quarter
         ended August 2, 1998. Merchandise sales increased by $0.6 million as a
         result of placing a greater emphasis on such revenues by expanding
         inventory levels of new movies for sale. In addition, $0.2 million of
         merchandise sales were added through the acquisition of a total of 38
         video specialty stores, consisting of 37 stores acquired on June 16,
         1997 and 1 store on June 24, 1997. These stores were owned for only
         approximately one-half of the quarter ended July 31, 1997 as compared
         to a full quarter in 1998.

         Franchise fee revenues increased $0.4 million, or 80.0%, from $0.5
         million for the quarter ended July 31, 1997 to $0.9 million for the
         quarter ended August 2, 1998. This increase is primarily related to the
         settlement of a lawsuit which recovered old franchise fee revenues
         previously not recognized.

         Rental revenues remained unchanged at $25.0 million for the quarters
         ended July 31, 1997 and August 2, 1998. An additional $1.5 million of
         rental revenues added through the acquisition of the 38 video specialty
         stores in mid quarter of 1997 as described above as compared to owning
         the 38 stores for a full quarter in 1998 was offset by a decrease in
         rental revenues by the Company's stores owned prior to the 38 store
         acquisition. The rental revenue decrease was primarily caused by
         unusually dry weather.

         As a result of the Company's acquisition activities and other
         developments described above the mix of revenue sources changed to
         approximately 81.4% rental, 15.6% merchandising, and 2.9% franchising
         during the quarter ended August 2, 1998 from approximately 84.7%,
         13.6%, and 1.7%, respectively, during the quarter ended July 31, 1997.

         Store Operating Expenses

         Store operating expenses decreased $0.6 million, or 4.1 %, from $14.8
         million for the quarter ended July 31, 1997 to $14.2 million for the
         quarter ended August 2, 1998. Actual store operating expenses decreased
         by $1.5 million after factoring in the additional $0.9 million of store
         operating expenses the 38 acquired stores as described above
         contributed for a full quarter this year as compared to the
         approximately one-half quarter that they were owned the comparable
         quarter last year. In addition, as a percentage of total revenues,
         store operating expenses decreased 3.9 percentage points from 50.2% for
         the quarter ended July 31, 1997 to 46.3% for the quarter ended August
         2, 1998. These decreases in both dollars and as a percentage of
         revenues are primarily due to the continued efforts of management to
         control and reduce store operating costs which were implemented in
         July, 1997.

         Cost of Goods Sold

         Cost of goods sold increased $0.6 million, or 22.2%, from $2.7 million
         for the quarter ended July 31, 1997 to $3.3 million for the quarter
         ended August 2, 1998, primarily as a result of an increase in
         merchandise sales volume due to the acquisition of the 38 video
         specialty stores and increased emphasis on merchandise sales by
         expanding inventories as described above. As a percentage of
         merchandise and 

                                       12
<PAGE>   13
                      WEST COST ENTERTAINMENT CORPORATION

         Results of Operations (continued)

         other sales, cost of goods sold decreased by 0.8 percentage points from
         67.5% for the quarter ended July 31, 1997 to 66.7% for the quarter
         ended August 2, 1998. This decrease was primarily due to a change in
         sales mix.

         Amortization of Videocassette and Video Game Rental Inventory

         Amortization of rental inventory increased $0.3 million, or 4.9%, from
         $6.1 million for the quarter ended July 31, 1997 to $6.4 million for
         the quarter ended August 2, 1998 primarily as a result of the
         acquisition of the 38 video specialty stores as described above. As a
         percentage of rental revenues this amortization increased 1.2
         percentage points from 24.4 % for the quarter ended July 31, 1997 to
         25.6% for the quarter ended August 2, 1998. This is primarily due to
         the net effects of purchase accounting for acquired stores and the
         adoption of the new method of amortization of rental inventory as
         described in Note 2.

         General and Administrative Expense

         General and administrative expenses decreased $0.1 million, or 2.6%,
         from $3.9 million for the quarter ended July 31, 1997 to $3.8 million
         for the quarter ended August 2, 1998. As a percentage of total
         revenues, general and administrative expenses decreased 0.8 percentage
         points from 13.2% for the quarter ended July 31,1997 to 12.4% for the
         quarter ended August 2, 1998. These decreases, both in dollars and in
         percentage of revenues, are primarily due to the Company's efforts to
         reduce overhead costs particularly corporate payroll.

         Amortization of Intangible Assets

         Intangible amortization expense remained unchanged at $1.6 million for
         the quarters ended July 31, 1997 and August 2, 1998. As a percentage of
         total revenues, intangible amortization decreased 0.2 percentage points
         from 5.4% for the quarter ended July 31, 1997 to 5.2% for the quarter
         ended August 2, 1998. This percentage decrease is a function of the
         $1.2 increase in total revenues.

         Debt Offering Write-Offs

         During the quarter ended July 31, 1997 the Company wrote-off $5.1
         million in Debt Offering expense associated with the Proposed Private
         Placement and related acquisitions due to the Company's decision to
         indefinitely delay such offering.

         Interest Expense and Other

         Net interest expense and other increased $0.5 million, or 41.7%, from
         $1.2 million for the quarter ended July 31, 1997 to $1.7 million for
         the quarter ended August 2, 1998. Interest expense comprises almost all
         of this net amount. As a percentage of total revenues, interest expense
         increased 1.1 percentage points from 4.1% for the quarter ended July
         31, 1997 to 5.2% for the quarter ended August 2, 1998. The increase is
         substantially attributable to additional interest expense incurred in
         connection with borrowings related to acquisitions.

         Net Income

         As a result of the foregoing, net income increased $3.8 million, or
         92.7%, from a $4.1 million net loss for the quarter ended July 31, 1997
         to a $0.3 million net loss for the quarter ended August 2, 1998.


                                       13
<PAGE>   14
                      WEST COST ENTERTAINMENT CORPORATION

         RESULTS OF OPERATIONS (continued)

         Two Quarters ended August 2, 1998 compared to Two Quarters ended July
         31, 1997

         Revenues

         Revenues increased $5.4 million or 9.5% from $56.9 million for the two
         quarters ended July 31, 1997 to $62.3 million for the two quarters
         ended August 2, 1998. This change reflected an increase of $3.8 million
         in rental revenues, an increase of $1.3 million in merchandise sales
         and an increase of $0.3 million in franchise fee revenue.

         Rental revenues increased $3.8 million or 8.0% from $47.4 million for
         the two quarters ended July 31, 1997 to $51.2 million for the two
         quarters ended August 2, 1998. An additional $5.2 million of rental
         revenues added by the acquisition of the 38 video specialty stores in
         mid June, 1997 which only represented approximately 25% of the two
         quarters in 1997 in which the 38 stores generated $1.9 million of
         rental revenues as compared to $7.1 million of rental revenues for a
         full two quarters in 1998 was offset by a decrease in rental revenues
         of the Company's stores owned prior to the 38 store acquisition. This
         decrease in rental revenues was primarily caused by unusually dry
         weather.

         Merchandise sales increased $1.3 million or 15.9% from $8.2 million for
         the two quarters ended July 31, 1997 to $9.5 million for the two
         quarters ended August 2, 1998. Merchandise sales increased by $0.6
         million as a result of placing greater emphasis on such revenues by
         expanding inventory levels of new movies for sale. In addition, $0.7
         million of merchandise sales were added through the acquisition of the
         38 video specialty stores as described above.

         Franchise fee revenue increased $0.3 million, or 23.1% from $1.3
         million for the two quarters ended July 31, 1997 to $1.6 million for
         the two quarters ended August 2, 1998. This increase is primarily
         related to the settlement of a lawsuit which recovered old franchise
         fee revenues previously not recorded for $0.4 million which was
         partially offset by a $0.1 million decrease in the quarter ended May 3,
         1998. The $0.1 million decrease in the prior quarter is attributable to
         a decline in the number of royalty payments received from franchisees
         due to both a decline in their business and a decline in the number of
         franchisees who make required payments.

         As a result of the Company's acquisition activities and other
         developments described above, the mix of revenue sources changed to
         approximately 82.2% rental, 15.2% merchandising and 2.6% franchising
         during the two quarters period ended August 2, 1998 from approximately
         83.3%, 14.4%, and 2.3%, respectively, during the two quarters ended
         July 31, 1997.

         Store Operating Expenses

         Store operating expenses increased $1.4 million, or 5.2%, from $26.7
         million for the two quarters ended July 31, 1997 to $28.1 million for
         the two quarters ended August 2, 1998. After factoring in the impact of
         the 38 video specialty stores acquired in mid June, 1997 as described
         above, store operating expenses actually decreased by $1.3 million.
         Store operating expenses for the full two quarters this year for these
         38 stores amounted to $3.7 million as compared to $1.0 million incurred
         for one-half of the quarter that the stores were owned in 1997. As a
         percentage of total revenues, store operating expenses decreased 1.8
         percentage points from 46.9% for the two quarters ended July 31, 1997
         to 45.1% for the two quarters ended August 2, 1998. These decreases in
         both dollars as adjusted above and as a percentage of revenues are
         primarily due to the continued efforts of management to control and
         reduce store operating expenses.

         Cost of Sales

         Cost of goods sold increased $1.1 million, or 19.6%, from $5.6 million
         for the two quarters ended July 31, 1997 to $6.7 million for the two
         quarters ended August 2, 1998, primarily as a result of an increase in
         merchandise sales volume due to the acquisition of the 38 video
         specialty stores and increased emphasis

                                       14
<PAGE>   15
                      WEST COST ENTERTAINMENT CORPORATION

         RESULTS OF OPERATIONS (continued)

         on merchandise sales by expanding inventories as described above.

         As a percentage of merchandise sales, cost of goods sold decreased by
         0.9 percentage points from 68.3% for the two quarters ended July 31,
         1997 to 67.4% for the two quarters ended August 2, 1998. This decrease
         was primarily due to a change in sales mix.

         Amortization of Videocassette and Video Game Rental Inventory

         Amortization of rental inventory increased $1.3 million, or 11.4%, from
         $11.4 million for the two quarters ended July 31, 1997 to $12.7 million
         for the two quarters ended August 2, 1998, as a result of the
         acquisition of the 38 video specialty stores as described above. As a
         percentage of rental revenues this amortization increased 0.7
         percentage points from 24.1% for the two quarters ended July 31, 1997
         to 24.8% for the two quarters ended August 2, 1998. This increase is
         due to the net effects of purchase accounting for acquired stores and
         the adoption of the new method of amortization of rental inventory as
         described in Note 2.

         General and Administrative Expense

         General and administrative expenses decreased $0.8 million, or 9.9%,
         from $8.1 million for the two quarters ended July 31, 1997 to $7.3
         million for the two quarters ended August 2, 1998. As a percentage of
         total revenues, general and administrative expenses decreased 2.5
         percentage points from 14.2% for the two quarters ended July 31, 1997
         to 11.7% for the two quarters ended August 2, 1998. These decreases,
         both in dollars and in percentage of revenues, are primarily due to the
         Company's efforts to reduce overhead costs particularly corporate
         payroll.

         Amortization of Intangible Assets

         Intangible amortization expense increased $0.2 million, or 6.7%, from
         $3.0 million for the two quarters ended July 31, 1997 to $3.2 million
         for the two quarters ended August 2, 1998. This increase is entirely
         related to amortization of goodwill associated with the acquisition of
         the 38 video specialty stores as described above. As a percentage of
         total revenues, intangible amortization decreased 0.2 percentage points
         from 5.3% for the two quarters ended July 31, 1997 to 5.1% for the two
         quarters ended August 2, 1998. This percentage decrease is a function
         of the $5.4 million increase in total revenues.

         Debt Offering Write-Offs

         During the two quarters ended July 31, 1997 the Company wrote-off $5.1
         million in Debt Offering expense associated with the Proposed Private
         Placement and related acquisitions due to the Company's decision to
         indefinitely delay such offering.

         Interest Expense and Other

         Net interest expense and other increased 1.5 million or 78.9% from $1.9
         million for the two quarters ended July 31, 1997 to $3.4 million for
         the two quarters ended August 2, 1998. Interest expense comprises
         almost all this net amount. As a percentage of total revenues, interest
         expense increased 2.0 percentage points from 3.3% for the two quarters
         ended July 31, 1997 to 5.3% for the two quarters ended August 2, 1998.
         This increase is substantially attributable to additional interest
         expense incurred in connection with borrowings related to acquisitions.

         Net Income

         As a result of the foregoing, net income increased $3.8 million, or
         108.6% from a $3.5 million net loss for the two quarters ended July 31,
         1997 to $0.3 million of net income for the two quarters ended August 2,
         1998.



                                       15
<PAGE>   16
                      WEST COST ENTERTAINMENT CORPORATION

         Certain Factors That May Affect Future Results

         The following important factors, among others, could cause actual
         results of operations to differ materially from any forward-looking
         statements made in this Quarterly Report on Form 10-Q or any
         forward-looking statements made elsewhere by management of the Company
         from time to time.

         The Company's rapid growth, particularly its acquisition of 280 video
         specialty stores since May of 1996 and franchising additional stores,
         could strain the Company's ability to manage operations, integrate
         newly acquired stores into its systems, and effectively pursue its
         growth strategy. The Company competes with many others, including the
         Blockbuster Entertainment division of Viacom, Inc., which has
         significantly greater financial and marketing resources, market share,
         and name recognition than the Company. Further developments in
         competing technologies could have a material adverse effect upon the
         video retail industry and the Company. Industry and Company revenues
         are somewhat seasonal and may be affected by many factors, including
         variation in the acceptance of new release titles available for rental
         and sale, the extent of competition, marketing programs, weather, the
         timing of any holiday weekends, special or unusual events, and other
         factors that may affect retailers in general. There can be no assurance
         that stores already acquired or acquired in future will perform as
         expected or that the prices paid for such stores will prove to be
         advantageous. The costs of integrating newly acquired stores into the
         Company's systems may vary significantly from the amounts assumed for
         purposes of the Company's pro forma financial statements. The Company's
         common stock has traded publicly only since May 14, 1996 and no
         prediction can be made as to future price levels for such stock.


         PRO FORMA RESULTS OF OPERATIONS (Note 3)

         Quarter ended August 2, 1998 compared to Quarter ended July 31, 1997

         Revenues

         Pro forma revenues decreased by $0.9 million, or 2.9% from $31.6
         million for the quarter ended July 31, 1997 to $30.7 for million for
         the quarter ended August 2, 1998. The mix of revenues, however, changed
         in the quarter ended August 2, 1998 compared to the quarter ended July
         31, 1997. Rental revenue decreased as a result of unusually dry
         weather, but was partially offset by an increase in merchandise sales
         due to increased inventory levels and an increase in franchise fee
         revenues as a result of the settlement of a lawsuit.

         Net Income

         Pro forma net income increased by $3.7 million, from a net loss of $4.0
         million for the quarter ended July 31, 1997 to a net loss of $0.3
         million for the quarter ended August 2, 1998. This increase is
         primarily due to the write-off of $5.1 million in debt offering costs
         as described in Note 6 offset by the decrease in revenues as described
         above.


         Two Quarters ended August 2, 1998 compared to Two Quarters ended July
         31, 1997

         Revenues

         Pro forma revenues decreased by $0.8 million, or 1.3%, from $63.1
         million for the two quarters ended July 31, 1997 to $62.3 for the two
         quarters ended August 2, 1998. This is due to a decrease in rental
         revenues due to unusually dry weather in the second quarter partially
         offset by an increase in merchandise sales due to an increase in
         inventory levels and in franchise fee revenues as a result of the
         settlement of a lawsuit.



                                       16
<PAGE>   17
         

                      WEST COST ENTERTAINMENT CORPORATION

         NET INCOME

         Pro forma net income increased by $3.4 million, from a $3.2 million net
         loss for the two quarters ended July 31, 1997 to $0.2 million net
         income for the two quarters ended August 2, 1998. This increase was
         primarily due to the $5.1 million write off of costs relating to the
         debt offering taken during quarter ended July 31, 1997 offset by the
         decrease in revenues of $0.8 million mentioned above.


         LIQUIDITY AND CAPITAL RESOURCES

         For the two quarters ended August 2, 1998, the Company had net cash
         provided by operating activities of $17.2 million, net cash used in
         investing activities of $17.2 million (consisting of cash used to
         purchase videocassette rental inventory of $15.3 million and to
         purchase property and equipment of $1.9 million) and net cash used in
         financing activities of $0.2 million, resulting in a $0.2 million
         decrease in cash and cash equivalents.

         During the current fiscal year, the Company has financed its operations
         and capital expenditures primarily through available operating cash
         flow .

         The amount of borrowings available under the Company's Credit Facility
         may decrease during the next twelve months ended August 1, 1999 if the
         Company does not attain certain debt-to-operating cash flow ratios (as
         defined); see Note 4. The Company presently believes that $10,000,000
         may have to be repaid during the next twelve months.

         Immediately following the Company's decision to indefinitely delay its
         proposed private placement of debt securities in July of 1997, the
         Company instituted cost-cutting measures, which included downsizing its
         general and administrative costs from the levels reached in
         contemplation of the proposed acquisitions and said debt securities.
         The effects of these cost cutting measures are reflected in the
         financial results of the quarter ended August 2, 1998 and will continue
         to be realized during the balance of this fiscal year. While there can
         be no assurance, the Company expects these modifications to be
         sufficient to allow the Company to attain its debt to operating cash
         flow ratios and to support its current operations and growth plans over
         the next year.

         In the future, the Company may seek debt refinancing, additional debt
         financing or equity capital through additional private or public
         offerings of securities. The availability of debt refinancing,
         additional debt financing or equity capital will depend on prevailing
         market conditions, the market price of the Company's common stock and
         other factors over which the Company has no control, as well as the
         Company's financial condition and results of operations.

         The Board of Directors has adopted a resolution of the possible
         delisting by NASDAQ by declaring the advisability of, and submitting to
         the stockholders for approval during the annual meeting on July 1,
         1998, a proposal to amend the Company's Certificate of Incorporation to
         effect a reverse split of the Company's common stock, pursuant to which
         each four shares of common stock will be automatically converted into
         one share without any action on the part of the stockholder (the
         "Reverse Split"). Management has met with NASDAQ with respect to the
         Company's submitted request to maintain its national market listing.
         Upon receipt of the response from NASDAQ, management will only proceed
         with the reverse split if deemed necessary. For more information on the
         Reverse Split see the Company's proxy statement dated June 1, 1998.

         Capital Commitments. The remaining aggregate costs of upgrading West
         Coast's management information systems and integrating stores acquired
         in prior acquisitions onto such systems are expected to be
         approximately $1.8 million over the next 12-15 months.

         The Company has conducted a review of its computer systems to identify
         the systems that are affected by the year 2000. The year 2000 problem
         is the result of computer programs being written using two digits
         rather than four to define the applicable year. The Company intends to
         upgrade its POS systems over the next 12-15 months in an effort to make
         more detailed data available on a system wide basis in a timely manner
         at a cost of approximately $1.8 million. Such costs will be capitalized
         and amortized over the useful life of the new software. The Company
         believes that with modifications to existing software and conversions
         to the new POS system, the year 2000 issue will not pose significant
         operational problems for the Company's computer systems. The Company
         will continue to address any further year



                                       17
<PAGE>   18
                       WEST COST ENTERTAINMENT CORPORATION

         2000 issues and believes that any costs relating to such issues will
         not be material to the Company's financial condition or results of
         operations.

         Subject to the availability of sufficient funds under the Credit
         Facility, the Company's capital expenditure plan provides for
         continuing to convert the stores acquired in various prior acquisitions
         to West Coast Video(R) signage and format and installing certain West
         Coast layout and features at a rate of up to 50 stores per year at an
         estimated cost of $32,000 per store; the Company also has plans to 
         relocate and open up to 50 stores. Build-out costs for relocated
         stores are expected to range from $30,000 to $225,000 per store. The 
         Company's expansion plans are subject to the availability of 
         sufficient funds under the Credit Agreement and its' ability to 
         secure additional financing.

         Under certain cross-purchase and area development agreements, the
         Company will be entitled to acquire (and, subject to certain
         conditions, will be required to acquire, if the owners elect to put)
         all of the assets of up to 51 stores operated or to be operated by such
         owners at specified times between 1998 and 2002. In conjunction with
         such agreements, the Company is subject to puts during the next 12
         months; however it is not certain that any of the puts will be
         consummated. The purchase prices will be equal to specified multiples
         of the stores' net operating cash flow; the purchase prices of 24 such
         stores will be payable in shares of common stock and the other purchase
         prices will be payable in cash or in shares of common stock, at the
         Company's election.

         Rental inventories are treated as noncurrent assets under generally
         accepted accounting principles because they are not assets which are
         reasonably expected to be completely realized in cash or sold in the
         normal business cycle. Although the rental of this inventory generates
         the major portion of the Company's revenue, the classification of these
         assets as noncurrent results in their exclusion from working capital.
         The aggregate amount payable for this inventory, however, is reported
         as a current liability until paid and, accordingly, is included in the
         computation of working capital. Consequently, the Company believes
         working capital is not an appropriate measure of its liquidity.


                                       18
<PAGE>   19
                      WEST COST ENTERTAINMENT CORPORATION

                                     PART II
                                OTHER INFORMATION

Item 1.  Legal Proceedings
               None

Item 2.  Changes in Securities
               None

Item 3.  Defaults Upon Senior Securities
               Not Applicable

Item 4.  Submission of Matters to a Vote of the Security Holders

         At the Company's Annual Meeting of Stockholders held on July 1, 1998,
         (a) the vote with respect to the election of five directors was as
         follows: C. Stewart Forbes, 11,287,078 shares FOR and 400,171 shares
         WITHHELD; Wesley F. Hoag, 11,287,634 shares FOR and 399,615 shares
         WITHHELD; Ralph W. Standley III, 11,228,684 shares FOR and 458,565
         shares WITHHELD; T. Kyle Standley, 11,218,484 shares FOR and 468,765
         shares WITHHELD; M. Trent Standley, 11,227,128 shares FOR and 460,121
         shares WITHHELD, (b) the vote with respect to the approval of an
         amendment to the Company's Certificate of Incorporation to effect a
         four into one reverse split of the Company's common stock $0.01 par
         value per share, as described in the Company's Proxy Statement was
         9,907,052 shares FOR, 1,742,317 shares AGAINST and 6,000 shares
         ABSTAINING, and (c) the vote with respect to ratification of
         PricewaterhouseCoopers LLP as the Company's independent auditors for
         the current fiscal year was 11,645,462 shares FOR, 35,611 shares
         AGAINST and 6,176 shares ABSTAINING. All of the directors elected at
         the Annual Meeting were incumbent directors of the Company.


Item 5.  Other Information
              None

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits

                  27.0      -    Financial Data Schedule

         (b)      Reports on Form 8-K

                  A Form 8-K reporting on item 8 change in fiscal year filed on
                  May 15, 1998.


                                       19
<PAGE>   20
                      WEST COST ENTERTAINMENT CORPORATION

                                   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.


                                            WEST COAST ENTERTAINMENT
                                                  CORPORATION


Date:  September 16, 1998             By:       /s/ T. Kyle Standley      
                                               ---------------------------
                                               T. Kyle Standley, President and
                                               Chief Executive Officer
                                               (Principal Executive Officer)


Date: September 16, 1998              By:       /s/ Richard G. Kelly      
                                               ---------------------------  
                                               Richard G. Kelly, Chief Financial
                                               Officer
                                               (Principal Financial Officer)



Date: September 16, 1998              By:       /s/ Jerry L. Misterman    
                                               ---------------------------
                                               Jerry L. Misterman, Chief
                                               Accounting Officer
                                               (Principal Accounting Officer)


                                       20