<PAGE>   1
                                      U.S.
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
     ----------------------------------------------------------------------

 (Mark One)

[X]            QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
               EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1998

[ ]            TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

                         Commission file number 0-27070
               ---------------------------------------------------

                              VENTURE SEISMIC LTD.
                     (Exact name of small business issuer as
                            specified in its charter)

        ALBERTA, CANADA                                   N/A
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation of organization)

                             3110 - 80th Avenue S.E.
                            Calgary, Alberta T2C 1J3
                    (Address of principal executive offices)

                                 (403) 777-9070
                           (Issuer's telephone number)
              ----------------------------------------------------

        Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. 
Yes [X]  No [ ] 

        State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 6,714,584 Common Shares, no
par value, were outstanding as of August 12, 1998.

Transitional Small Business Disclosure Format (Check one):
Yes [ ]   No  [X] 


<PAGE>   2
                              VENTURE SEISMIC LTD.
                              INDEX TO FORM 10-QSB
                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998

PART I.  FINANCIAL INFORMATION


<TABLE>
<CAPTION>
Item 1.  Financial Statements                                                Page
                                                                             ----
<S>                                                                          <C>
      Consolidated Balance Sheets
        June 30, 1998 and September 30, 1997 .......................           3

      Consolidated Statements of Income (Loss)
        Three and nine months ended June 30, 1998 and 1997 .........           4

      Consolidated Statements of Cash Flows
        Nine months ended June 30, 1998 and 1997 ...................           5

      Notes to Consolidated Financial Statements ...................           6


Item 2.  Management's Discussion and Analysis of Financial 
         Condition and Results of Operations .......................          10

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings .........................................          18

Item 4.  Submission of Matters to a Vote of Security Holders .......          18

Item 6.  Exhibits and Reports on Form 8-K ..........................          19

Signatures .........................................................          19
</TABLE>


                                       2


<PAGE>   3
PART 1.  FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

                              VENTURE SEISMIC LTD.
                           CONSOLIDATED BALANCE SHEETS
                                (IN U.S. DOLLARS)


<TABLE>
<CAPTION>
                                                       June 30, 1998        September 30, 1997
                                                       -------------        ------------------
<S>                                                    <C>                  <C>          
ASSETS
CURRENT
  Cash                                                 $     345,158          $      68,066
  Accounts receivable                                      4,648,828              2,586,688
  Work-in-progress                                           133,000                521,594
  Other receivables                                          148,427                297,707
  Prepaid expenses and deposits                              166,831                204,276
                                                       -------------          -------------
                                                           5,442,244              3,678,331

ADVANCE TO CONTINENTAL HOLDINGS LTD. (NOTE 4)              4,000,000                     --
CAPITAL ASSETS                                            20,149,803             17,383,026
INTANGIBLE ASSETS                                          1,420,763              1,554,503
                                                       -------------          -------------
                                                       $  31,012,810          $  22,615,860
                                                       =============          =============



LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
  Bank indebtedness                                    $     550,000          $          --
  Accounts payable and accrued liabilities                 4,063,238              1,036,147
  Deferred revenue                                                --                800,000
  Income taxes payable                                        35,504                118,708
  Current portion of long term debt (note 5)               2,672,700              6,580,703
                                                       -------------          -------------
                                                           7,321,442              8,535,558
                                                       -------------          -------------
LONG TERM DEBT (NOTE 5)                                    5,389,533              3,746,490
                                                       -------------          -------------
DEFERRED INCOME TAXES                                        322,426                674,076
                                                       -------------          -------------
SHAREHOLDERS' EQUITY
  Share capital (note 6)                                  16,760,098              7,671,366
  Retained earnings                                        1,343,890              1,949,549
  Cumulative translation adjustment                         (124,579)                38,821
                                                       -------------          -------------
                                                          17,979,409              9,659,736
                                                       -------------          -------------
                                                       $  31,012,810          $  22,615,860
                                                       =============          =============
</TABLE>


                                       3


<PAGE>   4
                              VENTURE SEISMIC LTD.
                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                                (IN U.S. DOLLARS)


<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED                           NINE MONTHS ENDED
                                                         JUNE 30,                                     JUNE 30,
                                          ------------------------------------          ------------------------------------
                                              1998                    1997                  1998                   1997
                                          -------------          -------------          -------------          -------------
<S>                                       <C>                    <C>                    <C>                    <C>          
REVENUE                                   $   4,367,091          $   5,623,773          $  26,073,516          $  21,306,774
DIRECT EXPENSES                               5,958,200              4,330,862             21,864,969             15,481,083
                                          -------------          -------------          -------------          -------------
GROSS MARGIN                                 (1,591,109)             1,292,911              4,208,547              5,825,691
                                          -------------          -------------          -------------          -------------

EXPENSES
    General and administrative                  615,767                479,652              1,716,388              1,365,942
    Depreciation                                886,242                558,258              2,427,170              1,644,207
    Amortization                                 44,580                 44,580                133,740                121,740
                                          -------------          -------------          -------------          -------------
                                              1,546,589              1,082,490              4,277,298              3,131,889
                                          -------------          -------------          -------------          -------------

INCOME (LOSS) FROM OPERATIONS                (3,137,698)               210,421                (68,751)             2,693,802

OTHER INCOME (EXPENSE)
    Interest and other income                    40,385                 13,952                161,855                 20,502
    Interest expense                           (265,671)              (104,112)              (854,993)              (377,450)
                                          -------------          -------------          -------------          -------------
                                               (225,286)               (90,160)              (693,138)              (356,948)
                                          -------------          -------------          -------------          -------------

INCOME (LOSS) BEFORE INCOME TAXES            (3,362,984)               120,261               (761,889)             2,336,854
                                          -------------          -------------          -------------          -------------
INCOME TAXES (RECOVERY)
    Current                                    (511,000)               (99,738)               105,834                603,878
    Deferred                                   (696,745)               161,638               (262,064)               428,800
                                          -------------          -------------          -------------          -------------
                                             (1,207,745)                61,900               (156,230)             1,032,678
                                          -------------          -------------          -------------          -------------

NET INCOME (LOSS)                         $  (2,155,239)         $      58,361          $    (605,659)         $   1,304,176
                                          =============          =============          =============          =============

EARNINGS (LOSS) PER COMMON SHARE
   (NOTE 3)
    Basic                                 $       (0.46)         $        0.02          $       (0.14)         $        0.42
    Diluted (U.S. GAAP)                   $       (0.46)         $        0.02          $       (0.14)         $        0.42
    Fully diluted (Cdn GAAP)              $       (0.46)         $        0.02          $       (0.14)         $        0.33
WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING
    Basic                                     4,635,000              3,114,000              4,188,000              3,108,000
    Diluted (U.S. GAAP)                       4,635,000              3,114,000              4,188,000              3,108,000
    Fully diluted (Cdn GAAP)                  4,635,000              5,354,000              4,188,000              5,348,000
</TABLE>


                                       4


<PAGE>   5
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (IN U.S. DOLLARS)


<TABLE>
<CAPTION>
                                                           NINE MONTHS ENDED
                                                               JUNE 30,
                                                  -----------------------------------
                                                      1998                  1997
                                                  -------------         -------------
<S>                                               <C>                   <C>          
OPERATING ACTIVITIES:
  Net income (loss)                               $    (605,659)        $   1,304,176
  Items not involving cash:
    Depreciation and amortization                     2,560,910             1,765,947
    Deferred income taxes                              (262,064)              428,800
    Gain on sale of capital assets                      (74,034)                   --
Cumulative translation adjustment                      (252,716)              (84,231)
Net change in non-cash working capital                  657,066              (692,630)
                                                  -------------         -------------
                                                      2,023,503             2,722,062
                                                  -------------         -------------

FINANCING ACTIVITIES:
  Proceeds on issuance of common shares               9,088,462               100,000
  Increase in bank indebtedness                         550,000               342,249
  Proceeds from long term debt                        6,444,122             4,472,041
  Principal payments on long term debt               (8,709,082)           (3,261,932)
  Net change in non-cash working capital                     --              (100,000)
                                                  -------------         -------------
                                                      7,373,502             1,552,358
                                                  -------------         -------------

INVESTING ACTIVITIES:
  Purchase of capital assets                         (5,279,833)           (3,118,167)
  Proceeds on sale of capital assets                    159,920                    --
  Advance to Continental Holdings Ltd.               (4,000,000)                   --
  Acquisitions                                               --              (312,000)
                                                  -------------         -------------
                                                     (9,119,913)           (3,430,167)
                                                  -------------         -------------

INCREASE IN CASH FOR THE PERIOD                         277,092               844,253
CASH, BEGINNING OF PERIOD                                68,066                    --
                                                  -------------         -------------
CASH, END OF PERIOD                               $     345,158         $     844,253
                                                  =============         =============
</TABLE>


                                       5


<PAGE>   6
                              VENTURE SEISMIC LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1998


1.  Basis of Financial Statement Presentation

The interim consolidated financial statements of Venture Seismic Ltd. (the
"Company") are unaudited and reflect all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management, necessary for a
fair presentation of the financial position of the Company as at June 30, 1998,
operating results for the three and nine month periods ended June 30, 1998 and
1997 and statements of cash flows for the nine months ended June 30, 1998 and
1997. The unaudited consolidated financial statements presented herein should be
read in conjunction with the audited consolidated financial statements and notes
thereto, together with management's discussion and analysis of financial
condition and results of operations, contained in the Company's Annual Report on
Form 10-KSB for its fiscal year ended September 30, 1997, as amended. The
foregoing interim results for the three and nine month periods ended June 30,
1998 are not necessarily indicative of the results for the fiscal year ending
September 30, 1998 or any other period.

The consolidated financial statements are prepared in accordance with Canadian
generally accepted accounting principles ("Cdn GAAP"). Certain of these
principles differ from those applicable in the United States ("U.S. GAAP").
Differences, if material, are disclosed in note 3 - Reconciliation to United
States Accounting Principles.

2.  Currency Presentation and Exchange Rates

All dollar amounts, unless otherwise stated, are expressed in U.S. dollars.
Since the completion of its initial public offering in November 1995, the
Company has selected U.S. dollars as its currency for financial reporting and
display purposes on the basis that the securities of the Company are listed for
trading on the Nasdaq National Market ("Nasdaq") and the primary users of the
financial statements of the Company are U.S. residents. Accordingly, the Company
applies the "current rate" method to translate its accounts measured in Canadian
("Cdn") dollars to U.S. dollars. Under this method, average exchange rates are
used for items included in the consolidated income statement and period end
exchange rates are used for the assets and liabilities. Any significant gains or
losses are included as a separate component of shareholders' equity.

For translation purposes, the exchange rates of Cdn dollars to U.S. dollars, is
calculated using the exchange rates reported by the Federal Reserve Bank of New
York, as the noon buying rate in New York for cable transfers in Cdn dollars, as
certified for custom purposes. The average exchange rates during the three month
periods ended June 30, 1998 and 1997 are US $0.6912 = $1.00 Cdn and US $0.7214 =
$1.00 Cdn, respectively. The average exchange rates during the nine month
periods ended June 30, 1998 and 1997 are US $0.6999 = $1.00 Cdn and US $0.7326 =
$1.00 Cdn, respectively. The period end 


                                       6


<PAGE>   7
exchange rates at June 30, 1998 and September 30, 1997 are US $0.6795 = $1.00
Cdn and US $0.7241 = $1.00 Cdn, respectively.

3.  Reconciliation to United States Accounting Principles

For the periods ended June 30, 1998 and 1997 there were no material differences
in net income as calculated in accordance with Cdn GAAP and U.S. GAAP.

The Company adopted the Financial Accounting Statements Board Statement of
Financial Accounting Standards No. 128 "Earnings per Share" in the quarter ended
December 31, 1997. In accordance with this pronouncement, basic earnings (loss)
per share ("EPS") is computed by dividing net earnings (loss) by the weighted
average number of common shares of the Company ("Shares") outstanding during the
period. Diluted EPS is determined on the assumption that outstanding dilutive
stock options and warrants have been exercised and the aggregate proceeds were
used to reacquire Shares using the average price of Shares for the period.
During the three and nine month periods ended June 30, 1998, all outstanding
stock options and warrants were anti-dilutive so were not considered in the
calculation of diluted EPS.


<TABLE>
<CAPTION>
                                           Three months ended June 30, 1998
                               -------------------------------------------------------- 
                                   Loss                  Shares            Per Share
                                (Numerator)          (Denominator)           Amount
                               -------------         -------------        ------------- 
<S>                            <C>                   <C>                  <C>           
Basic and Diluted EPS          $  (2,155,239)            4,635,000        $       (0.46)
</TABLE>


<TABLE>
<CAPTION>
                                           Nine months ended June 30, 1998
                               -------------------------------------------------------- 
                                    Loss                 Shares             Per Share
                                (Numerator)          (Denominator)            Amount
                               -------------         -------------        ------------- 
<S>                            <C>                   <C>                  <C>           
Basic and Diluted EPS          $    (605,659)            4,188,000        $       (0.14)
</TABLE>


4.  Advance to Continental Holdings Ltd.

In April 1998, the Company loaned $4,000,000 to Continental Holdings Ltd.
("Continental") in conjunction with a definitive Securities Purchase Agreement
to acquire 100% of the outstanding capital stock of Continental (the
"Acquisition") entered into in March 1998. The loan was used by Continental to
fund a portion of the cost, aggregating approximately $13,500,000, of equipping
and refurbishing (the "Refurbishment") a second marine vessel, the Pacific
Titan. The loan is payable in quarterly installments of principal and interest
commencing December 1, 1999 and bears interest at the prime lending rate of the
Royal Bank of Canada, plus 1%. Subsequent to June 30, 1998, the Acquisition was
completed (see note 7 (i)) and the loan became intercompany debt, due and
payable to the Company.


                                       7


<PAGE>   8
5.  Long term debt

<TABLE>
<CAPTION>
                                                                                         June 30,            September 30,
                                                                                           1998                  1997
                                                                                       ------------           ------------
<S>                                                                                    <C>                    <C>         
Capital loans, bearing interest at the lender's cost of funds plus 2.75%,
  payable in monthly principal installments of $169,225 ($241,750 Cdn) due
  February, September and November 2001, and July 2002                                 $  6,245,225           $  5,244,650


Equipment lease, bearing interest at 9%, payable in quarterly installments of
  $196,290 comprised of principal and interest, due April 2001                            1,817,008                     --

Equipment lease purchase contracts                                                               --              5,082,543
                                                                                       ------------           ------------
                                                                                          8,062,233             10,327,193
Less current portion                                                                     (2,672,700)            (6,580,703)
                                                                                       ------------           ------------
                                                                                       $  5,389,533           $  3,746,490
                                                                                       ============           ============
</TABLE>


A general security agreement on all equipment and a fixed charge on certain
equipment have been pledged as collateral for the long term debt. Aggregate
principal payments on a fiscal year basis for long term debt are as follows:


<TABLE>
<S>                                               <C>        
1998, remainder of fiscal year                    $   662,930
1999                                                2,687,583
2000                                                2,748,964
2001                                                1,593,506
2002                                                  369,250
                                                  ------------
                                                   $8,062,233
                                                  ============
</TABLE>

6.  Share capital

On November 10, 1997, the Company called for redemption, at a redemption price
of $0.10 per Warrant, all of the Company's 1,610,000 outstanding redeemable
Warrants ("Warrants") which were not exercised prior to 5:00 p.m. on January 5,
1998 (the "Redemption Date"). During December 1997 and January 1998, 1,513,690
Warrants were exercised, at an exercise price of $6.00 per Warrant to purchase
one Share, resulting in the issuance of 1,513,690 Shares and gross proceeds to
the Company of $9,082,140. The Company incurred issue costs of $73,170 on the
Redemption Date in connection with the exercise of the Warrants. The 96,310
Warrants outstanding which were not exercised prior to the Redemption Date were
redeemed by the Company for an aggregate of $9,631.

During the nine month period ended June 30, 1998, the Company recorded in the
share capital account an income tax benefit of $89,123 associated with expenses
related to the issuance of Shares in the fiscal year ended September 30, 1996.


                                       8


<PAGE>   9
7. Subsequent events

Subsequent to June 30, 1998:

        i) on July 29, 1998, the Company completed the acquisition (the
        "Acquisition") of 100% of the outstanding capital stock of Continental
        in exchange for consideration paid by the Company to the Continental
        shareholders of an aggregate of: cash payments of $500,000, the issuance
        of negotiable promissory notes in the aggregate principal amount of
        $1,000,000, due and payable on or before January 1, 1999, bearing
        interest at the prime rate of the Royal Bank of Canada plus 1%, and
        2,080,000 Shares or approximately 31% of the Shares outstanding as of
        August 11, 1998. The Acquisition was approved at a Special Meeting of
        the Company's Shareholders held on July 20, 1998.

        ii) on July 29, 1998, Continental closed a financing agreement with a
        third party for a term loan of approximately $3,100,000 principal
        amount, bearing interest at 8.75%, payable in quarterly installments of
        approximately $200,000 comprised of principal and interest, due October
        2003. The term loan is secured by a first priority security interest in
        the lease of the Pacific Titan and mortgage in certain equipment. The
        Company has agreed to act as guarantor for the term loan and has
        subordinated any debt owed to it by Continental to the lender of the
        term loan. The proceeds of the loan were used to finance a portion of
        the Refurbishment.


                                       9


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

Except for the description of historical facts contained herein, this Form
10-QSB contains certain forward-looking statements that involve risks and
uncertainties. Actual results could differ from those anticipated due to a
number of factors including the timing of deployment of the Pacific Titan, the
capital intensive nature of the Company's business and its need for additional
funds for operations and debt service requirements (including funds to upgrade
Continental's seismic vessels with 3D capability, if undertaken), quarterly
fluctuations in operating results, dependence upon principal customers and on
the activity of the oil and gas industry, fluctuations in commodity prices,
risks associated with international operations and regulatory, competitive and
contractual risks. Factors which could cause such results to differ materially
from those described in the forward looking statements include those set forth
in the Company's Annual Report on Form 10-KSB for its fiscal year ended
September 30, 1997 as filed with the Securities and Exchange Commission on
December 24, 1997, as amended. References to the Company herein, include, where
appropriate, its wholly owned subsidiaries Boone Geophysical, Inc. ("Boone") and
Hydrokinetic Surveys of Canada Ltd. ("Hydrokinetic"). Except where specifically
noted, the discussion herein does not include reference to Continental Holdings
Ltd. ("Continental"), which became a wholly-owned subsidiary of the Company on
July 29, 1998, after the June 30, 1998 period.

RESULTS OF OPERATIONS

Revenue for the three month period ended June 30, 1998 ("1998 three months")
decreased by approximately 22% to $4,367,091 as compared to $5,623,773 for the
three month period ended June 30, 1997 ("1997 three months"). This decrease was
primarily due to substantially lower than expected revenues generated by Boone,
which was significantly compounded by substantially less activity by the Company
in the Canadian market during the quarter, as compared to the 1997 three months.
The reduced revenue at Boone was primarily related to production inefficiencies
for projects in progress as a result of timing demands and equipment shortages.
The shortage of equipment for the number of projects in progress and the overlap
in the timing of such projects resulted in excessive equipment movement during
the quarter, which in turn resulted in significantly reduced production and
revenue. In addition, certain disputes arose regarding charges for performance
of extra and/or premium rate charges for work outside the normal conditions
anticipated, which resulted in collection difficulties and a subsequent
write-off of disputed charges of approximately $400,000.

Boone contributed revenue of $4,259,695 for the 1998 three months as compared to
$2,478,853 for the 1997 three months. As a percentage of revenue, Boone
contributed approximately 98% of the Company's revenue for the 1998 three months
as compared to approximately 44% for the 1997 three months. Revenue from
operations in the Canadian market for the 1998 three months decreased by
approximately 97% to $107,396 as compared to $3,144,920 for the 1997 three
months. This significant decline in revenue in the Canadian market was primarily
the result of management's decision to focus its efforts in the Southern United
States market and the need to relocate a 


                                       10


<PAGE>   11
greater amount of Canadian seismic equipment and crews to the Southern United
States to attempt to meet increased demands in that market segment.

Revenue for the nine month period ended June 30, 1998 ("1998 nine months")
increased by approximately 22% to $26,073,516 as compared to $21,306,774 for the
nine month period ended June 30, 1997 ("1997 nine months"). This increase was
primarily attributable to additional revenue generated from increased operations
in the Southern United States by Boone, offset partially by significantly lower
than expected revenues generated by Boone and the minimal activity in the
Canadian market for the 1998 three months, as discussed above. Boone contributed
revenue of $16,243,612 for the 1998 nine months as compared to $5,539,711 for
the 1997 nine months. As a percentage of revenue, Boone contributed
approximately 62% of the Company's revenue for the 1998 nine months as compared
to approximately 26% for the 1997 nine months. Revenue for the 1998 nine months
from operations in the Canadian market decreased by approximately 38% to
$9,829,904 as compared to $15,767,063 for the 1997 nine months.

During the 1998 nine months, three customers accounted for 37% of the Company's
revenue and during the 1997 nine months, one customer accounted for 42% of the
Company's revenue. Although the projects performed by the Company were generally
short term, the inability to replace significant customers would cause the
Company's revenue and operating results to fluctuate significantly from period
to period, and the loss of certain customers would have a material adverse
impact on the Company's business. Because of the limited number of data
acquisition crews owned by the Company, and thus the limited number of crews the
Company is able to deploy at any given time, the Company anticipates that a
substantial portion of future revenues will continue to be attributable to a few
customers, who may change from time to time.

Direct expenses for the 1998 three and nine months increased by 38% and 41% to
$5,958,200 and $21,864,969, respectively, as compared to $4,330,862 and
$15,481,083 for the 1997 three and nine months, respectively. Direct expenses as
a percentage of revenue increased to approximately 136% and 84% for the 1998
three and nine months, respectively, as compared to approximately 77% and 73%
for the 1997 three and nine months, respectively. The increase in direct
expenses as a percentage of revenue in the 1998 three and nine months as
compared to the 1997 three and nine months was primarily due to increased
operations in the Southern United States, where the Company typically engages in
lower margin projects due to a more highly competitive marketplace, and was
compounded in the 1998 three months by inefficiencies in meeting certain
customer commitments for projects in progress as a result of timing demands and
equipment shortages. The increase in direct expenses as a percentage of revenue
for the 1998 three and nine months as compared to the 1997 three and nine months
was also related to the decision to write-off disputed charges for performance
of extra and/or premium rate charges for work outside the normal conditions
anticipated and the decreased activity by the Company in the Canadian market,
where the Company typically undertakes projects which generate higher margins
than in the Southern United States' market.


                                       11


<PAGE>   12
General and administrative expenses for the 1998 three and nine months increased
by approximately 28% and 26% to $615,767 and $1,716,388, respectively, as
compared to $479,652 and $1,365,942 for the 1997 three and nine months,
respectively. This increase was primarily attributable to increased activity
levels in the Southern United States' market.

Depreciation expense for the 1998 three and nine months increased by 59% and 48%
to $886,242 and $2,427,170, respectively, as compared to $558,258 and $1,644,207
for the 1997 three and nine months, respectively. The increase in depreciation
expense is primarily attributable to seismic data acquisition equipment acquired
to expand Boone's operations, but also includes the acquisition of three 2D
systems used in operations in Canada during the period, the purchase of 250
seismic acquisition remote units for use in both markets and the purchase of
various other seismic equipment mainly for use in the United States' market.

Amortization expense for the 1998 three and nine months of $44,580 and $133,740,
respectively, is related to the amortization of goodwill recognized on the
acquisition of Boone, which the Company acquired in June 1996, and the
acquisition of Hydrokinetic, which the Company acquired in April 1997. The
comparable charge for the 1997 three months was $44,580. The comparable charge
for the 1997 nine months of $121,740 did not include a charge for the
amortization of Hydrokinetic goodwill for the entire period since this
acquisition occurred in April 1997.

Interest and other income for the 1998 three and nine months increased to
$40,385 and $161,855, respectively, as compared to $13,952 and $20,502 for the
1997 three and nine months, respectively. The increase primarily resulted from
interest earned on additional funds on deposit resulting from the exercise of
the Warrants in the first and second quarter of fiscal 1998.

Interest expense for the 1998 three and nine months increased by approximately
155% and 127% to $265,671 and $854,993, respectively, as compared to $104,112
and $377,450 for the 1997 three and nine months, respectively. This increase
primarily resulted from additional capital loans and equipment leases for
seismic equipment to meet demand for increased operations in the Southern United
States during the 1998 nine months compared to the 1997 nine months. The
purchase options on these lease contracts were exercised in December 1997 and
January 1998 for an aggregate purchase price of approximately $3,200,000 with
proceeds from the exercise of the Warrants.

As a result of the Acquisition, on a going-forward basis, the Company will incur
significant increases in expenses related to operations at Continental,
particularly depreciation and amortization expenses and, to a lesser extent,
will also incur an increase to interest expense on long term debt.

The Company's effective income tax rate was approximately 36% and 21% for the
1998 three and nine months, respectively, as compared to 44% for the 1997 three
and nine months. Variances from this rate are primarily due to a greater portion
of the net loss for the 1998 three and nine months being incurred in the United
States where the Company is subject to a lower statutory tax rate and
amortization of goodwill on the acquisitions of Boone and Hydrokinetic, which
have no tax basis.


                                       12


<PAGE>   13
The Company from time to time explores various acquisitions and/or business
combinations or financing opportunities and is currently engaged in discussions
relating to such opportunities. Any such initiatives may involve the issuance of
Shares or other securities and/or cash and financial commitments, either of
which may adversely affect the Company's consolidated financial condition or
results of operations.

YEAR 2000

The Company has commenced a review of its computer systems to identify the
systems that could be affected by the "Year 2000" issue and will develop an
implementation plan to resolve the issue. The Year 2000 issue 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
or hardware may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a major system failure or miscalculations. The
Company expects to identify Year 2000 problems in its existing software and
hardware and if necessary modify its existing software and hardware or convert
to new software or hardware in late 1998 or early 1999, in order to address Year
2000 problems, if any. The cost, if any, for any required modifications or
conversions, has not yet been determined. If necessary modifications or
conversions to new software and hardware are not completed on a timely basis,
the Year 2000 problem may have a material adverse effect on the Company's
business, financial condition and results of operations. The Company has not
developed any contingency plans, in the event it is unable to make any required
modifications or conversions.


CONTINENTAL ACQUISITION

After receipt of shareholder approval at a Special Meeting held on July 20,
1998, on July 29, 1998, the Company completed the Acquisition of 100% of the
outstanding capital stock of Continental in exchange for consideration paid by
the Company to the Continental shareholders of an aggregate of: (i) cash
payments of $500,000, (ii) the issuance of negotiable promissory notes in the
aggregate principal amount of $1,000,000, due and payable on or before January
1, 1999, bearing interest at the prime rate of the Royal Bank of Canada plus 1%,
and (iii) 2,080,000 Shares. As a result of the Acquisition, the former
Continental shareholders own approximately 31% of the outstanding Shares as of
August 11, 1998. In addition, Mr. Leslie Stinn, a former principal shareholder
of Continental, and a 13.6% shareholder of the Company after the Acquisition,
was elected a director of the Company. The Company has agreed for a period of
three years following closing of the Acquisition to use its best efforts to
nominate to its Board of Directors an individual selected by the former
Continental shareholders. Pursuant to the Acquisition, Continental entered into
three year employment agreements with Mr. Stinn and Mr. Roy Self, providing for
monthly compensation of $7,000 each. Mr. Self is also a former principal
shareholder of Continental, and a 13.6% shareholder of the Company after the
Acquisition.

Continental, based in Alberta, Canada, is engaged in marine seismic data
acquisition. Since 1987 Continental has been engaged primarily in performing
offshore seismic surveys to acquire seismic data on possible oil and gas
reserves for its customers. Continental also performs surveys, as a joint
venture or independently, on a non-exclusive basis, for sale to multiple
parties. Continental has completed seismic surveys in the Persian Gulf, the
North Sea, the Falkland Islands area, the Mediterranean and off the coasts of
West Africa and Norway. Continental has entered into an agreement in principle
to lease a second marine vessel (the "Pacific Titan"), for a five year period


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<PAGE>   14
commencing February 1998, at an annual cost (the "Lease Payments") of $2,700,000
increasing to $3,100,000 by the final year of the lease (the "Lease").
Continental is currently negotiating certain terms of the Lease, including the
timing of the Lease Payments. Depending upon the outcome of such negotiations
and the final terms of the Lease, Continental may be required to make, within
the next few months, a substantial portion of the Lease Payments for the first
year of the Lease, or a substantial deposit on the Lease, which may have a
material adverse effect on the Company's financial condition and results of
operations. The Pacific Titan, which is being refurbished and outfitted with
certain capital improvements (the "Refurbishment") at a cost estimated as of
August 12, 1998, to be approximately $13,500,000 (in addition to the Lease
Payments), is scheduled to be ready for deployment in September 1998. The
Company currently anticipates, based upon customer demand, market conditions and
available acceptable financing, that within the next twelve months it may elect
or enter into agreements which would require it to undertake additional capital
expenditures of approximately $2,000,000 per vessel, to outfit each of the SV
Calgary and the Pacific Titan, with equipment to conduct 3D seismic surveys.

In connection with the Acquisition, (i) in April 1998, the Company loaned
$4,000,000 to Continental to fund a portion of the cost of equipping the Pacific
Titan, and (ii) Continental paid bonuses aggregating approximately $721,500 to
certain members of management and redeemed for approximately $524,000 certain of
its preferred shares.

As the Acquisition has been consummated, the assets and liabilities and results
of operations of Continental will be reflected on a consolidated basis in the
financial statements of the Company as of July 1, 1998. The financial statements
included herein and, except where specifically noted, Management's Discussion
and Analysis of Financial Condition and Results of Operations do not reflect the
Acquisition. As a result of the Acquisition, the Company's long term debt has
increased by approximately $3,100,000 in connection with a term loan entered
into by Continental with a third party on July 29, 1998 bearing interest at
8.75%, payable in quarterly installments of approximately $200,000 comprised of
principal and interest, due October 2003. The term loan is secured by a first
priority security interest in the Lease and mortgage in certain equipment. The
Company has agreed to act as guarantor for the term loan and has subordinated
any debt owed to it by Continental to the lender of the term loan. In addition,
any future debt of Continental, including any debt incurred to finance
additional capital expenditures to upgrade Continental's vessels to 3D
capability, would be reflected on a consolidated basis in the Company's
financial statements.

Reference is made to the Company's Annual Report on Form 10-KSB for its fiscal
year ended September 30, 1997, as amended, the Company's Current Report on Form
8-K, as filed with the SEC on May 28, 1998, and the Company's Proxy Statement,
as filed with the SEC on June 23, 1998 which includes certain financial and
other information relating to Continental and the Acquisition.

QUARTERLY FLUCTUATIONS

The Company's business is subject to substantial quarterly variations as a
result of seasonal activity variations in the seismic industry in Western
Canada. Generally, increased activity occurs in the Canadian seismic industry
during the Canadian winter season, from November to March. During this period,
the colder weather freezes the 


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<PAGE>   15
ground and permits easier access to marshy terrain in the northern areas of
Western Canada and agricultural areas. During the spring, bans are placed on
road use, which temporarily limits access to many areas where the Company
conducts its operations. Further, due to the soft wet ground conditions and
marshy terrain in the northern areas of Western Canada, both of which are
extremely sensitive to traffic and heavy equipment, the extent to which the
Company can conduct its operations during the spring and summer is significantly
reduced. As a result the Company has historically experienced a fluctuation in
quarterly results with generally increased activity in the Company's first and
second fiscal quarters and a significant decrease in revenues and net income
during its third and fourth fiscal quarters. With the acquisition of Boone in
June 1996, the Company has diversified its operations by expanding into the
Southern United States, which has somewhat reduced the seasonality traditionally
associated with Company's Canadian operations. Management believes that, as a
result of the Acquisition, seasonality associated with the Company's operations
will be further reduced. Due to the factors noted above, the Company's results
of operations may be subject to fluctuations, particularly on a quarterly basis
and the Company's stock price may be affected by such results.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 1998 the Company had cash of $345,158 and a working capital deficit
of $1,882,198, which includes the current portion of long term debt in the
amount of $2,672,700.

The Company maintains operating lines of credit in Canada and the United States.
The Canadian line of credit provides for an aggregate of up to $1,200,000 in
advances available to the Company subject to a limit of: i) the excess in value
of current assets over current liabilities (excluding the current portion of
long-term debt) and ii) 70% of the value of the accounts receivable of the
Company which are less than ninety days old. Borrowings under the Canadian
operating line are payable on demand and bear interest at the bank's prime rate
plus .75%. The Company's Canadian trade receivables have been pledged as
collateral for borrowings under the Canadian operating line. The Canadian
operating line contains financial covenants, which, as a result of the
Acquisition, the Company anticipates that it may not be in compliance with such
covenants as of September 30, 1998 (the date of measurement), which would
require the Company to seek a waiver or pursue financing options in order to
attempt to restore compliance. The United States line of credit provides for an
aggregate of up to $250,000 in advances available to the Company. Borrowings
under the United States operating line are payable on demand and bear interest
at prime plus 1.00%. The Company's United States trade receivables have been
pledged as collateral for borrowings under the United States operating line. At
June 30, 1998, advances under the Company's operating lines of credit aggregated
$550,000.

In addition to operating lines of credit at June 30, 1998, the Company had long
term debt consisting of capital loans of $6,245,225 and an equipment lease of
$1,817,008. The capital loans bear interest at the lender's cost of funds plus
2.75% and are payable in 


                                       15


<PAGE>   16
monthly principal installments of $169,225 and mature in February, September and
November 2001, and July 2002. The equipment lease bears interest at 9% and is
repayable in quarterly installments of $196,290 comprised of principal and
interest and matures in April 2001. A general security agreement on all
equipment and a fixed charge on certain equipment have been pledged as
collateral for the long term debt. In addition, the Company has assigned a
portion (aggregating $1,400,000; $2,000,000 Cdn) of the proceeds of its key-man
life insurance policies (aggregating $2,100,000; $3,000,000 Cdn) on Brian Kozun,
the Company's Chief Executive Officer to two of its lenders. Debt service
requirements relating to the Company's long term debt at June 30, 1998
(excluding any long term debt of Continental, including the term loan;
Continental's long term debt at August 12, 1998 will increase the Company's debt
service requirements by approximately $120,000 per month) is estimated to
aggregate approximately $3,175,000 (including principal and interest payments)
during the twelve month period ending June 30, 1999. At June 30, 1998, the
Company was not in compliance with the capital loans covenant relating to the
maintenance of a working capital ratio of not less than 1:1, and has obtained a
waiver from the lender whereby the Company must continue to make timely payments
on its loans and must be in compliance with the working capital covenant by
September 30, 1998. The Company may not be in compliance with the capital loans
covenants at September 30, 1998, which would require the Company to seek a
waiver from each lender or pursue alternative financing options in order to
attempt to restore compliance, including a possible debt or equity (which would
be dilutive to existing shareholders) financing or strategic merger or other
corporate transaction, although there can be no assurance the Company would be
able to secure a waiver or restore compliance. In the event of a default
relating to the Company's indebtedness, it is likely that Shareholders would
forfeit all or a substantial portion of their investment in the Company.

Net operating cash flows provided by operating activities for the 1998 nine
months amounted to $2,023,503 as compared to $2,722,062 for the 1997 nine
months. The decrease in operating cash flow for the 1998 nine months as compared
to the 1997 nine months is attributable to operating inefficiencies and
collection difficulties in the United States which resulted in decreased cash
generated from operations, and a greater impact of non-cash items such as
depreciation offset partially by a positive change in non-cash working capital
amounts.

Net cash provided by financing activities for the 1998 nine months of $7,373,502
is attributable to cash provided on the exercise of 1,513,690 of the Company's
Warrants during December 1997 and January 1998 combined with increases in the
Company's long term debt and bank indebtedness. This increase in net cash
provided by financing activities was partially offset by the repayment of
approximately $8,700,000 of long term debt during the 1998 nine months,
including approximately $3,200,000 used to exercise equipment lease contract
purchase options.

Cash used in investing activities of $9,119,913 for the 1998 nine months
resulted from the purchase of additional seismic data acquisition equipment, the
disposal of certain field equipment, and a $4,000,000 advance to Continental
prior to the consummation of 


                                       16


<PAGE>   17
the Acquisition.

Included in the June 30, 1998 accounts receivable balance of $4,683,828 and the
accounts payable and accrued liabilities balance of $4,108,238 were certain
reimbursable amounts which are not included in the Company's revenue or direct
costs. In accordance with the terms of various project agreements, certain costs
are paid by the Company and passed on or flowed through to the customer at cost.
As a result, these reimbursable costs are included in accounts receivable and
accounts payable even though they do not impact revenue or direct expenses. The
collection of accounts receivable and the payment of accounts payable are
expected to continue to occur in the normal 30 to 60 day time period following
billing.

Work-in-progress as at June 30, 1998 was $133,000 as compared to $521,594 as at
September 30, 1997. The decreased value of work-in-progress primarily reflects
the smaller component of project work which was still in progress at June 30,
1998 and, in accordance with the project terms, will be billed and recognized in
accounts receivable upon completion of the project.

The Company had deferred revenue as at June 30, 1998 of $nil as compared to
$800,000 as at September 30, 1997. Deferred revenue represents billings in
excess of revenue amounts earned on projects, and varies depending upon the
completion status of projects.

The Company will require satisfactory operating cash flows and substantial
additional financing to continue operations, complete planned capital
expenditures and meet its principal and interest obligations with respect to the
Company's long term debt. There is no assurance that the Company will be able to
generate sufficient cash flow from operations or obtain additional financing on
acceptable terms, if at all. If funds generated from operations are not
sufficient and if the Company cannot obtain additional financing, the Company
will be required to alter its current plans and assumptions to generate
sufficient funds to satisfy the Company's cash requirements, although there can
be no assurance that the Company will be able to alter such plans. Further, as a
result of the Acquisition, the Company will require additional cash to fund
operations and capital expenditure requirements of Continental, including any
capital improvements the Company may elect or be required (as a result of a
contract for a project) to undertake to upgrade Continental's vessels to 3D
capability, and to meet Continental's obligation with respect to its long term
debt.

The Company's ability to meet its debt service and other obligations depends on
its future performance, which is subject to general economic conditions, oil and
gas commodity prices and other business factors beyond the Company's control. If
the Company is unable to generate sufficient cash flow from operations or to
comply with the terms of its long term debt it may be required to refinance all
or a portion of its existing debt or to obtain additional financing, although
there can be no assurance that the Company will be able to obtain such
refinancing or additional financing on terms acceptable to the Company, if at
all. Any future issuances of equity securities would likely result in dilution
to Shareholders, while incurring additional indebtedness would result in
increased interest expense and debt charges.


                                       17


<PAGE>   18
PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

The Company has received correspondence, including a draft of a statement of
claim, from, and has been advised by, Canaccord Capital Corporation
("Canaccord"), a Canadian investment bank, indicating that Canaccord may pursue
legal action against each of the Company and Continental with respect to a claim
of entitlement to a fee of approximately $300,000 in connection with the
Acquisition. In October and November, 1997, representatives of the Company,
Continental and Canaccord had preliminary discussions regarding the arrangement
by Canaccord for the Company of a possible private financing to assist in
funding costs related to a potential acquisition of Continental by the Company.
As of August 12, 1998, the Company had not received notice of any formal legal
proceedings.

In November 1997, the Company received notice that the Canadian taxation
authorities have disallowed certain expenses incurred by the Company related to
the 1994, 1995 and 1996 taxation years. The Company has also deducted similar
expenses in 1997. These reassessments and the potential reassessment for the
1997 taxation year, would result in additional income taxes aggregating
approximately $340,000 ($485,000 Cdn). Based on a recently decided court case,
involving another company with a set of circumstances similar to the Company's
situation, the Company has filed notices of objection with the basis of the
reassessment. The Company does not expect to receive a decision regarding the
outcome of these notices of objections until the similar court case proceeds
through the appeal process. Should the reassessments be upheld, any resulting
loss would be charged to operations in the year the outcome was determined. In
accordance with GAAP, the Company has not established a reserve for the
potential reassessment, due to the determination by management of the Company of
the probability of success on the merits by management of the Company. As of
August 12, 1998, the Company had not received a decision regarding the outcome
of the notices of objection.

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

         On July 20, 1998, the Company held a Special Meeting of Shareholders
         (the "Meeting"). At the Meeting the following matters were approved and
         ratified: (i) the Securities Purchase Agreement by and among the
         Company, Continental Holdings Ltd. and the shareholders of Continental
         named therein, dated March 27, 1998; (ii) the resolution fixing the
         number of directors of the Company at six until the next annual meeting
         of its shareholders; (iii) the resolution electing Leslie J. Stinn as
         director of the Company until the next annual meeting of its
         shareholders; and (iv) the amendment to the Company's 1995 Stock Option
         Plan, as amended, increasing the number of Common Shares reserved for
         issuance thereunder from 450,000 to 750,000.

         1. The Securities Purchase Agreement was approved and ratified by a
            vote of 1,722,203 for; 37,850 against; and 24,500 abstaining.

         2. The resolution fixing the number of directors of the Company at six
            until the next annual meeting of its shareholders was approved and
            ratified by a vote of 3,835,444 for; 16,450 against; and 23,400
            abstaining.

         3. The resolution electing Leslie J. Stinn as director of the Company
            until the next annual meeting of its shareholders was approved and
            ratified by a vote of 3,852,294 for and 23,000 withheld.

         4. The amendment to the Company's 1995 Stock Option Plan, as amended,
            increasing the number of Common Shares for issuance thereunder from
            450,000 to 750,000 was approved and ratified by a vote of 1,461,922
            for; 287,481 against; and 35,150 abstaining.


                                       18


<PAGE>   19
Item 6.  Exhibits and Reports on Form 8-K

        (a)  Exhibits

                10.10   1995 Stock Option Plan, as amended.

            
                10.37   Waiver letter from Roynat Inc., dated July 9, 1998.


        (b)  Reports on Form 8-K

         The Company filed the following report on Form 8-K during the quarterly
         period ended June 30, 1998:

         1. May 28, 1998, the Company reported the following information under 
         Item 7:

        (a)  Financial statements of Business acquired

            Continental Holdings Ltd. balance sheet as at December 31, 1997 and
            1996 and the statements of income and retained earnings and cash
            flows for each of the years in the three year period ended December
            31, 1997 and Auditors' Report thereon.


        (b)  Pro Forma Financial Information

            1)  Pro forma consolidated balance sheet (unaudited) as at September
                30, 1997 combining the audited balance sheet of Venture Seismic
                Ltd. and Continental Holdings Ltd. as at September 30, 1997 and
                December 31, 1997, respectively.

            2)  Pro forma consolidated income statement (unaudited) combining
                the income statement of Venture Seismic Ltd. for the year ended
                September 30, 1997 with the income statement of Continental
                Holdings Ltd. for the year ended December 31, 1997.

            3)  Pro forma interim consolidated income statement (unaudited)
                combining the income statement of Venture Seismic Ltd. for the
                six months ended March 31, 1998 with the income statement of
                Continental Holdings Ltd. for the six months ended December 31,
                1997.



SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the
Company caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

               Venture Seismic Ltd.

               /s/ Gregory B. Wiebe
           By: Gregory B. Wiebe
               Vice President Finance and Chief Financial Officer

           Dated:  August 14, 1998



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