<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 May 2, 1999

                                       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)

                  Delaware                                    04-3278751
          -------------------------                           ----------
(State or other jurisdiction of incorporation         (I.R.S. Employer I.D. No.)
               or organization)

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 June 14, 1999
                        -----                      ----------------------------
                  Common Stock, $.01                      14,084,704
                  par value per share




<PAGE>   2


                      WEST COAST ENTERTAINMENT CORPORATION


                                      INDEX


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

                           Consolidated Balance Sheets -
                                    As of May 2, 1999 and January 31, 1999                            3

                           Consolidated Statements of Operations-
                                    Quarters Ended May 2, 1999 and May 3, 1998                        4

                           Consolidated Statements of Cash Flows-
                                    Quarters Ended May 2, 1999 and May 3, 1998                        5

                           Consolidated Statement of Stockholders Equity-
                                    As of May 2, 1999 and January 31, 1999                            6

                           Notes to Consolidated Financial Statements                                 7

         Item 2.           -  Management's Discussion and Analysis of Financial Condition            11
                              and Results of Operations


Part II.                   -  Other Information                                                      14

         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 SHEETS
                        (IN THOUSANDS, EXCEPT PAR VALUE)

<TABLE>
<CAPTION>

                                                                                                 JANUARY 31,           MAY 2,
                                                                                                    1999                1999
                                                                                                 ---------           ---------
<S>                                                                                              <C>                 <C>
                                        ASSETS
Current assets:
  Cash ................................................................................          $   2,424           $   1,894
  Accounts receivable and other receivables (net of allowance for doubtful
    accounts of $67 and $56 at January 31, 1999 and May 2, 1999, respectively).........              1,512               1,379
  Merchandise inventory ...............................................................              8,404               8,941
  Market development funds and co-op receivable .......................................              1,242               1,046
  Receivables from officers ...........................................................                373                 384
  Prepaid expenses and other current assets ...........................................                472                 374
                                                                                                 ---------           ---------
     Total current assets .............................................................             14,427              14,018

Videocassette rental inventory, net (Note 2), .........................................             20,375              19,985
Furnishings, equipment and leasehold improvements, net ................................             17,892              17,697
Intangible assets (net of accumulated amortization of $16,497 and $18,048 at
  January 31, 1999 and May 2, 1999, respectively)......................................            110,530             108,721
Other assets ..........................................................................              2,456               2,132
                                                                                                 ---------           ---------
     Total assets .....................................................................          $ 165,680           $ 162,553
                                                                                                 =========           =========


                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current portion of long-term debt (Note 4) ..........................................          $   8,081           $  68,571
  Accounts payable ....................................................................             14,659              12,388
  Accrued expenses ....................................................................              7,783               7,687
  Income taxes payable ................................................................                655                 714
                                                                                                 ---------           ---------
     Total current liabilities ........................................................             31,178              89,360

Long-term debt (Note 4) ...............................................................             58,187                  --
Other Liabilities .....................................................................                 59                  24
                                                                                                 ---------           ---------

Total Liabilities .....................................................................             89,424              89,384
                                                                                                 ---------           ---------

Commitments and contingencies .........................................................                 --                  --

Stockholders' equity:

   Common stock ($0.01 par value; 14,185 shares as of May 2, 1999 and January 31, 1998,
     of which 14,073 shares were to be issued).........................................                142                 142

   Preferred stock ($0.01 par value, 2,000 shares authorized, no shares issued) .......                 --                  --

   Additional paid-in capital..........................................................            104,093             104,093
   Accumulated (deficit)...............................................................            (27,737)            (30,824)
   Treasury stock (92 shares of common stock, at cost) (Note 5), ......................               (242)               (242)
                                                                                                 ---------           ---------
     Total stockholders' equity .......................................................             76,256              73,169
                                                                                                 ---------           ---------
     Total liabilities and stockholders' equity .......................................          $ 165,680           $ 162,553
                                                                                                 =========           =========
</TABLE>


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




                                       3
<PAGE>   4


                      WEST COAST ENTERTAINMENT CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                               QUARTER           QUARTER
                                                                ENDED             ENDED
                                                                MAY 3,            MAY 2,
                                                                 1998              1999
                                                               --------          --------
<S>                                                            <C>               <C>
Revenues:
  Rental revenue ....................................          $ 26,159          $ 23,406
  Merchandise sales .................................             4,715             3,559
  Franchise fees ....................................               683               308
                                                               --------          --------
                                                                 31,557            27,273
Costs and expenses:
  Store operating expenses ..........................            13,923            13,942
  Cost of goods sold ................................             3,346             2,484
  Amortization of videocassette and video game rental
     inventory (Note 2 ) ............................             6,272             6,494
  Selling, general and administrative ...............             3,518             3,757
  Amortization of intangible assets .................             1,654             1,641
                                                               --------          --------
                                                                 28,713            28,319
                                                               --------          --------
Income (loss) from operations .......................             2,844            (1,046)

Interest expense ....................................             1,638             2,012
Other expense (income) ..............................                74               (11)
                                                               --------          --------
Income (loss) before provision for income taxes .....             1,132            (3,047)
Provision for income taxes ..........................               634                40
                                                               --------          --------
Net income (loss) ...................................          $    498          $ (3,087)
                                                               ========          ========
Income (loss) per common share data:
  Net income (loss) - basic and diluted .............          $   0.04          $  (0.22)
                                                               --------          --------
Weighted average number of common shares outstanding             14,146            14,085
                                                               ========          ========
</TABLE>

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





                                       4
<PAGE>   5


                      WEST COAST ENTERTAINMENT CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                     QUARTERS ENDED
                                                                                     --------------
                                                                                MAY 3,            MAY 2,
                                                                                 1998              1999
                                                                                ------            ------
<S>                                                                             <C>               <C>
Cash flows from operating activities:
  Net income (loss) ..................................................          $   498           $(3,087)
  Adjustments to reconcile net income (loss) to cash flows provided by
     operating activities:
     Amortization of debt financing costs ............................              115               326
     Amortization of videocassette rental inventory ..................            6,272             6,493
     Depreciation and amortization of furnishings, equipment
       and leasehold improvements ....................................              784               901
     Amortization of intangible assets ...............................            1,654             1,642
     Changes in assets and liabilities:
     Accounts receivable .............................................               87               133
     Merchandise inventory ...........................................           (3,738)             (537)
     Prepaid expenses and other assets ...............................              186               448
     Accounts payable ................................................            1,670            (2,272)
     Accrued expenses and other liabilities ..........................             (253)             (129)
     Income taxes payable ............................................              715                59
                                                                                -------           -------
     Net cash provided by operating activities .......................            7,990             3,977
                                                                                -------           -------
Cash flows related to investing activities:
  Purchases of property and equipment ................................             (965)             (706)
  Purchases of videocassette rental inventory ........................           (6,763)           (6,104)
                                                                                -------           -------
     Net cash used in investing activities ...........................           (7,728)           (6,810)
                                                                                -------           -------
Cash flows related to financing activities:
  Purchase of treasury stock .........................................             (242)               --
  Proceeds from long-term debt .......................................               --             2,341
  Repayments of long-term debt .......................................               (2)              (38)
  Proceeds from issuance of common stock .............................               25
                                                                                -------           -------
Net cash provided by (used in) financing activities ..................             (219)            2,303
                                                                                -------           -------
Net increase (decrease) in cash ......................................               43              (530)
Cash, beginning of period ............................................            2,604             2,424
                                                                                -------           -------
Cash, end of period ..................................................          $ 2,647           $ 1,894
                                                                                -------           -------
Supplemental cash flow data:
  Interest paid ......................................................          $ 1,407           $ 1,668
                                                                                =======           =======
  Income taxes paid ..................................................          $   150           $     4
                                                                                =======           =======
</TABLE>


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





                                       5
<PAGE>   6


                      WEST COAST ENTERTAINMENT CORPORATION

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                                                                           TOTAL
                                                               COMMON STOCK         ADDITIONAL  ACCUMULATED                STOCK-
                                                         -----------------------     PAID-IN      SURPLUS     TREASURY    HOLDERS'
                                                            SHARES        AMOUNT     CAPITAL     (DEFICIT)     STOCK       EQUITY
                                                         ------------     ------    ---------    ---------    --------   ---------
    <S>                                                  <C>              <C>       <C>          <C>           <C>       <C>
    Balance at January 31, 1998 ...................      $ 13,843,106     $ 138     $ 104,063    $    (520)    $   --    $ 103,681
    Shares issued - Employee Stock Purchase Plan...            39,506         1            33           --         --           34
    Shares issued - 1996 acquisitions .............           302,065         3            (3)          --         --           --
    Treasury stock, at cost .......................                --        --            --           --       (242)        (242)
    Net (loss) ....................................                --        --            --      (27,217)        --      (27,217)
                                                         ------------     -----     ---------    ---------     ------    ---------
    Balance at January 31, 1999 ...................      $ 14,184,677       142       104,093      (27,737)      (242)      76,256
    Net (loss) ....................................                --        --            --       (3,087)        --       (3,087)
                                                         ------------     -----     ---------    ---------     ------    ---------
    Balance at May 2, 1999 ........................      $ 14,184,677     $ 142     $ 104,093    $ (30,824)    $ (242)   $  73,169
    Net (loss).....................................               --        --            --       (3,087)        --       (3,087)
                                                         ------------     -----     ---------    ---------     ------    ---------
    Balance at May 2, 1999 ........................      $ 14,184,677     $ 142     $ 104,093    $ (30,824)    $ (242)   $  73,169
                                                         ============     =====     =========    =========     ======    =========
</TABLE>


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




                                       6
<PAGE>   7


                      WEST COAST ENTERTAINMENT CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 2, 1999 (unaudited)


1        Basis of Presentation

         The accompanying consolidated financial statements have been prepared
         assuming West Coast Entertainment Corporation and subsidiaries
         (collectively the "Company") will continue as a going concern. As
         discussed in Note 4, the Company has approximately $68.6 million of its
         debt maturing by February 15, 2000.

         Although the Company believes that its projected cash flow will be
         sufficient to meet its operating needs until the debt maturity date
         mentioned above, there can be no assurances beyond that date.

         While the Company is continuing to monitor and reduce its operating
         expenses, including payroll, it is also considering the sale of certain
         assets or operations as well as exploring other alternatives,
         including, but not limited to a merger or refinancing.

         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 16, 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.

         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 ended May 2, 1999 are not necessarily
         indicative of the results to be expected for the year ending February
         6, 2000.

         Business

         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 53- week year ending on February 6, 2000. The Company's
         first quarter ended May 2, 1999 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.

         As of May 2, 1999 the Company owned and operated 253 video rental
         stores and was a franchisor of approximately 150 video stores.

         Earnings Per Share

         Income per common share data has been calculated per Financial
         Accounting Standards Board



                                       7
<PAGE>   8


                      WEST COAST ENTERTAINMENT CORPORATION


         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 ended May 2, 1999 and May
         3, 1998.

2        Videocassette Rental Inventory

         Videocassette rental inventory and related amortization are as follows
         (in thousands):

<TABLE>
<CAPTION>
                                             January 31, 1998           May 2, 1999
                                             ----------------           -----------
         <S>                               <C>                         <C>
         Videocassette rental inventory         $ 87,985                  $ 94,088
         Accumulated amortization                (67,610)                  (74,103)
                                                --------                  --------
                                                $ 20,375                  $ 19,985
                                                ========                  ========
</TABLE>

         Amortization expense related to videocassette rental inventory totaled
         $6,493,000 and $6,272,000 for the quarters ended May 2, 1999 and May 3,
         1998, respectively.


Effective November 2, 1998, the Company adopted a new method of amortizing its
videocassette rental inventory in order to better match an industry change in
the stream of revenues resulting from the new practice of revenue sharing
adopted during 1998 as an alternative to historical business models of directly
purchasing rental titles. Under revenue sharing, the retailer typically incurs
an upfront fee to acquire videocassettes, with an ongoing requirement to share
the revenue generated on a pre-determined percentage over a specific period of
time with the studios. Given the lower cost of product, the retailer has the
additional requirement of acquiring 2 to 4 times the number of copies of a title
than they would have acquired under the prior purchase models. This new practice
is founded upon the slope over time of consumer demand and the related
desirability of titles over time. Under the Company's new method of
amortization, all new release, non-revenue sharing videocassettes, regardless of
the number of copies of a title, will be amortized to a salvage value of $6 over
a period of 6 months. Videocassettes purchased through revenue sharing
agreements will be amortized to the $6 salvage value over the life of the
respective contracts. Studios' share of revenues will be expensed as such
revenues are earned as specified in each agreement.

    Prior to November 2, 1998 videocassette rental inventory, which includes
video games, was stated at cost and amortized as follows: videocassette rental
inventory base stock was amortized over its economic life of 36 months, to its
estimated salvage value of $6. New release base stock (the first three copies of
a title in a particular store), less the $6 salvage value, was 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 three copies per store were amortized to $10 on a
straight-line basis during the first nine months, and the balance was then
amortized on a straight-line basis over 27 months to the $6 salvage value. The
unamortized cost, if any, of videocassette rental inventory that was sold was
charged to operations at the time of the sale.



                                       8
<PAGE>   9


                      WEST COAST ENTERTAINMENT CORPORATION


3        Long Term Debt

On December 15, 1997, the Company signed an agreement which incorporated the
major points of, but superceded, its previous bank loan agreement (the "New
Facility"). On June 11, 1998 and September 14, 1998, the Company signed
amendments to the New Facility changing the term of the loan as well as certain
maximum debt-to-operating cash flow ratios and minimum operating cash flow
requirements as defined, as well as modifying certain permitted capital and
other expenditures.

On January 12, 1999, the Company signed an amendment to the New Facility (the
"Revised Facility") increasing the Bank's commitment by $5 million (the
"Overadvance") to a total of $70 million as well as providing for certain credit
enhancements. The Revised Facility is a non-revolving loan maturing on February
15, 2000. At May 2, 1999, the Company had approximately $1.5 million
available under the Revised Facility.

The first $65 million of the Revised Facility bears interest at 2% above the
Prime rate (9.75% at May 2, 1999). The interest rate on the first $4
million of the Overadvance is equal to the Prime rate plus 2.5% (10.25% at
May 2, 1999); the interest rate on the remaining $1 million is equal to the
Prime rate plus 3.5%. Should the Company not repay all debt in full on or prior
to June 30, 1999, an additional 3% of interest for the preceding six months on
the $65 million and on any Overadvance borrowed in the last six months will
become due. In addition, Commitment Extension Fees equaling 143 basis points
times the total outstanding debt will be due and payable each month as of July
1, 1999 through February 15, 2000 should the debt remain unpaid as of August 31,
1999, subject to certain conditions.

Any payments of principal of the Revised Facility after the Overadvance
permanently reduces the available amounts under the Facility. Commitment
reductions commence on August 1, 1999 whereby a $3 million reduction occurs,
followed by $2.5 million reductions on November 1, 1999 and on February 1, 2000
with the remaining balance of $58.1 million maturing on February 15, 2000.


                                       9
<PAGE>   10


                      WEST COAST ENTERTAINMENT CORPORATION


The Revised Facility also provided for delivery to the agent on behalf of the
banks of a warrant to purchase, in the event that the all debt is not paid in
full by September 30, 1999, subject to certain conditions, up to 5% of the
Company's capital stock at a price equal to 75% of the average price of the
stock during the 15 days prior to July 1, 1999.

The Revised 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 those of a financial
nature.









                                       10
<PAGE>   11


                      WEST COAST ENTERTAINMENT CORPORATION


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

         RESULTS OF OPERATIONS

         Quarter ended May 2, 1999 compared to Quarter ended May 3, 1998

         Revenues. Revenues decreased $4.2 million, or 13.3%, from $31.5 million
         for the quarter ended May 3, 1998 to $27.3 million for the quarter
         ended May 2, 1999. This change reflected a decrease of $2.7 million in
         rental revenues, a decrease of $1.1 million in merchandise sales and a
         decrease of $0.4 million in franchise fee revenue. The decreases in
         store rental and merchandise sales revenues of $3.8 million are
         attributable to a lower weighted average number of stores owned (after
         closing underperforming stores primarily in the fourth quarter of last
         year ending January 31, 1999) which decreased by 29 stores from 285
         stores owned during the quarter ended May 3, 1998 to 256 stores owned
         during the quarter ended May 2, 1999 and accounted for $3.1 million of
         the total decrease. In addition, a decrease in average per store
         revenues accounted for the remaining decrease of $0.7 million in store
         revenues.

              Rental revenues decreased $2.7 million, or 10.3%, from $26.1
         million for the quarter ended May 3, 1998 to $23.4 million for the
         quarter ended May 2, 1999. This decrease is primarily attributable to
         the closing of underperforming stores during the forth quarter of last
         year and, the resulting decrease in weighted average number of stores
         owned as discussed above. This decrease in stores owned accounted for
         $1.7 million of the decrease. The remaining $1.0 million decrease is
         related to a decrease in average store rental revenues as same store
         rental revenues decreased by 4.3%.

              Merchandise and other sales decreased $1.1 million, or 23.4%, from
         $4.7 million for the quarter ended May 3, 1998 to $3.6 million for the
         quarter ended May 2, 1999. This decrease is attributable to the closing
         of underperforming stores during the fourth quarter of last year as
         described above which caused merchandise and other sales to decrease by
         $0.5 million. The remaining $0.6 million decrease is due to lower
         merchandise and other sales as a result of lower store inventory
         levels, as compared to inventory levels during the quarter ended
         May 2, 1999.

              Franchise fee revenues decreased $0.4 million, or 57.1%, from $0.7
         million for the quarter ended May 3, 1998 to $0.3 million for the
         quarter ended May 2, 1999. This decrease is attributable to a decline
         in the amount 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.

              Store Operating Expenses. Store operating expenses increased $0.2
         million, or 1.4%, from $13.8 million for the quarter ended May 3, 1998
         to $14.0 million for the quarter ended May 2, 1999. An increase of $1.2
         million is related to the ability of the Company to begin utilizing
         revenue sharing through contractual agreements with studios as more
         fully discussed in Note 2 of the consolidated financial statements.
         This increase is offset by a decrease of approximately $1.2 million
         caused by the closing of underperforming stores during the fourth
         quarter of last year as described above. The remaining increase of $0.2
         million was primarily caused by higher occupancy costs.

              Cost of Goods Sold. Costs of goods sold decreased $0.9 million, or
         27.3 %, from $3.3 million for the quarter ended May 3, 1998 to $2.4
         million for the quarter ended May 2, 1999. Of this decrease, $0.4
         million is related to lower merchandise and other sales caused by the
         closing of underperforming stores during the fourth quarter of last
         year as previously discussed. The remaining $0.5 million decrease is
         related to lower merchandise and other sales caused by a decrease in
         inventory levels of new movies for sale. As a percentage of
         merchandising sales, cost of goods sold decreased by 1.4 percentage
         points from 68.1% for the quarter ended May 3, 1998 to 66.7 % for the
         quarter ended May 2, 1999. This percentage decrease was caused by a
         change in sales mix consisting of movies for sale with lower margins.

              Amortization of Videocassette and Video Game Rental Inventory.
         Amortization of rental inventory decreased $0.2 million, or 3.2 %, from
         $6.3 million for the quarter ended May 3, 1998 to $6.5 million for the
         quarter ended May 2, 1999, primarily as a result of the Company
         entering into revenue sharing agreements with studios as discussed
         under -Store Operating Expenses.


                                       11
<PAGE>   12


                      WEST COAST ENTERTAINMENT CORPORATION


              Selling, General and Administrative Expense. Selling, general and
         administrative expenses increased $0.3 million, or 8.6%, from $3.5
         million for the quarter ended May 3, 1998 to $3.8 million for the
         quarter ended May 2, 1999. This increase was primarily caused by
         increases in insurance and professional fees expenses. The increase in
         insurance expense was due to recording a retroactive premium reduction
         during the first quarter of the year ended May 3, 1998. The increase in
         professional fees is primarily related to higher legal expenses caused
         by disputes with franchisees. As a percentage of total revenues,
         selling, general and administrative expenses increased 2.8 percentage
         points from 11.1 % for the quarter ended May 3, 1998 to 13.9 % for the
         quarter ended May 2, 1999 as a result of lower revenues primarily
         related to store closures as previously discussed.


              Amortization of Intangible Assts. Intangible amortization expense
         decreased $0.1 million, or 5.9%, from $1.7 million for the quarter
         ended May 3, 1998 to $1.6 million for the quarter ended May 2, 1999.
         This decrease was primarily related to the $0.7 million of goodwill the
         Company wrote down during the fourth quarter ended January 31, 1999. As
         a percentage of total revenues, intangible amortization increased 0.5
         percentage points from 5.4 % for the quarter ended May 3, 1998 to 5.9%
         for the quarter ended May 2, 1999. This percentage increase is
         primarily to the decline in revenues for reasons discussed above.

              Interest Expense and Other. Net interest expense and other
         increased $0.3 million, or 17.6 %, from $1.7 million for the quarter
         ended May 3, 1998 to $2.0 million for the quarter ended May 2, 1999.
         Interest expense comprises almost all this net amount. This increase
         was caused both by higher interest rates as a result of the amended
         credit agreement of January 12, 1999 as more fully described in Note 4
         to the financial statements and by additional borrowings under the
         revised agreement.

              Net Income (Loss). As a result of the foregoing, net income
         decreased $3.7 million, from $0.6 million of net income for the quarter
         ended May 3, 1998 to a $3.1 million net loss for the quarter ended May
         2, 1999.


         LIQUIDITY AND CAPITAL RESOURCES

         The accompanying consolidated financial statements have been prepared
         assuming the Company will continue as a going concern. As discussed in
         Note 3 to the consolidated financial statements, the Company has
         approximately $68.6 million of its debt maturing by February 15, 2000.

         Although the Company believes that its projected cash flow will be
         sufficient to meet its operating needs until the debt maturity date
         discussed above, there can be no assurances beyond that date.

         While the Company is continuing to monitor and reduce its operating
         expenses, including payroll, it is also considering the sale of certain
         assets or operations as well as exploring other alternatives,
         including, but not limited to a merger or refinancing.

         For the year quarter ended May 2, 1999, the Company had net cash
         provided by operating activities of $4.0 million, net cash used in
         investing activities of $6.8 million (consisting primarily of cash used
         to purchase videocassette rental inventory of $6.0 million and $0.7
         million of cash paid for purchases of property and equipment) and net
         cash provided by financing activities of $2.3 million (consisting
         primarily



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<PAGE>   13


                      WEST COAST ENTERTAINMENT CORPORATION


         of net borrowings under the Credit Facility, as described in Note 3 to
         the Consolidated Financial Statements), resulting in a net decrease in
         cash of $0.5 million.

         During the current fiscal year, the Company has financed its operations
         and capital expenditures primarily through available operating cash
         flow as well as additional borrowing under the Credit Facility.

         On January 12, 1999, the Company signed an amendment to its bank
         agreement increasing the availability under the facility from
         $65,000,000 to $70,000,000, as well as providing for certain credit
         enhancements. The amended credit agreement is a non-revolving facility
         maturing February 15, 2000. The bank agreement includes covenants,
         including, but not limited to, minimum operating cash flow, minimum net
         worth, dividend restrictions, and limitations on indebtedness. The
         facility is secured by substantially all of the Company's assets.

         In the event the debt is not repaid in full, subject to certain
         conditions, prior to September 30, 1999, the banks have the right under
         a warrant agreement to purchase 5% of the Company's common stock at 75%
         of the average market price 15 days prior to July 1, 1999.

         On October 7, 1998, the Company received formal notice from NASDAQ that
         its stock would no longer be eligible to be traded through the NASDAQ
         National Market, due to the Company's inability to meet the NASDAQ
         requirement to maintain $4 million of tangible net worth and a $1.00
         bid price, or in the alternative a $5.00 bid price and sales of $50
         million. Currently the Company stock is trading on the OTC Bulletin
         Board.

         During the third quarter of fiscal 1999, the Company implemented a plan
         to close certain under-performing stores, for which it recorded a
         charge of $5.6 million. In addition, the Company executed an expense
         reduction program, which when combined with the aforementioned store
         closures, is expected to result in a savings of $4 million annually.

         The Year 2000 Issue and Capital Commitments. The year 2000 problem is
         the result of computer programs being written using two digits (rather
         than four) to define the applicable year. Any of the Company's programs
         that have time-sensitive software may recognize a date using "00" as
         the year 1900 rather than the year 2000. This could result in system
         failures or miscalculations causing disruptions of operations,
         including, among other things, a temporary inability to process
         transactions, send invoices or engage in similar normal business
         activities. As a result, the computerized systems (including both
         information and non-information technology systems) and applications
         used by the Company are being reviewed, evaluated, and, if and where
         necessary, modified or replaced to ensure that all financial,
         information, and operating systems are Year 2000 compliant.

         The Company intends to upgrade its POS systems over the upcoming months
         in an effort to make more detailed data available on a system wide
         basis in a timely manner at a cost of approximately $0.6 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 has initiated formal communications with
         its suppliers to determine the extent to which the Company is
         vulnerable to those third parties' failure to remedy their own Year
         2000 issues. The Company will continue to address any further year 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 funds under the Credit Facility and its'
         ability to secure additional financing the Company's capital
         expenditure plan provides for conversion of the stores acquired in
         various prior acquisitions to West Coast Video(R) signage and format
         and installing certain West Coast layout and features 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 funds under the Credit
         Facility.

         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



                                       13
<PAGE>   14


                      WEST COAST ENTERTAINMENT CORPORATION


         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.


Item 3. Quantitative and Qualitative Disclosure about Market Risk

     The Company's exposure to market risk relates primarily to potential
changes in interest rates on the Company's long-term debt obligations. The
Company has cash flow exposure on its long-term obligations related to changes
in market interest rates. The Company enters into long-term debt obligations for
general corporate purposes, including the funding of capital expenditures for
acquisitions. The Company has not entered into any material derivative financial
instruments to hedge interest rate risk on these general corporate borrowings.

     The Company's management believes that fluctuations in interest rates in
the near term may materially affect the Company's consolidated operating
results, financial position or cash flows as the Company has significant
exposure to interest rate fluctuations.




                                    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
                           None

Item 5.           Other Information
                           None

Item 6.           Exhibits and Reports on Form 8-K

                  (a)    Exhibits

                         27.0  -  Financial Data Schedule


                                       14
<PAGE>   15


                      WEST COAST 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: June 21, 1999              By: /s/ T. Kyle Standley
                                    --------------------------------------------
                                    T. Kyle Standley, President and
                                    Chief Executive Officer
                                    (Principal Executive Officer)


Date: June 21, 1999              By: /s/ Richard G. Kelly
                                    --------------------------------------------
                                    Richard G. Kelly, Chief Financial Officer
                                    (Principal Financial Officer)



Date: June 21, 1999              By: /s/ Jerry L. Misterman
                                    --------------------------------------------
                                    Jerry L. Misterman, Chief Accounting Officer
                                    (Principal Accounting Officer)








                                       15