<PAGE>
 
                                   FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

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

     For the quarterly period ended June 30, 1998
                                       OR
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

Commission File Number 000-21593

                  WESTERN PENNSYLVANIA ADVENTURE CAPITAL FUND
              (Exact Name of Registrant as Specified in its Charter)

         Pennsylvania                                       25-1792727
(State of Other Jurisdiction of                         (I.R.S. Employer
Incorporation or Organization)                         Identification No.)

                        2000 Technology Drive, Suite 150
                           Pittsburgh, PA 15219-3109
              (Address of Principal Executive Offices and Zip Code)

                                  412-687-0977
               (Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days.

    X    Yes                     No
 --------               --------           

Number of shares outstanding of the issuer's Common Stock, par value $.01 per
share, as of July 27, 1998:  2,210,434 shares

                                       1
<PAGE>
 
                        Part I -- Financial Information
<TABLE>
<CAPTION>
 
 
Item 1.   Financial Statements
                                                                       Page No.
                                                                       --------
<S>                                                                    <C>
 
     Report on Review by Independent Certified                            3
     Public Accountants
 
     Statements of Assets and Liabilities, as                             4
     of June 30, 1998 (unaudited) and December 31, 1997
 
     Statements of Operations, for the Periods                            5
     April 1, 1998 through June 30, 1998 (unaudited) and
     January 1, 1998 through June 30, 1998 (unaudited)
 
     Statements of Operations, for the Periods                            6
     April 1, 1997 through June 30, 1997 (unaudited) and
     January 1, 1997 through June 30, 1997 (unaudited)
 
     Statements of Changes in Net Assets,                                 7
     for the Periods April 1, 1998 through June 30, 1998
     (unaudited) and January 1, 1998 through June 30, 1998 (unaudited)
 
     Statements of Changes in Net Assets (Deficit),                       8
     for the Periods April 1, 1997 through June 30, 1997
     (unaudited) and January 1, 1997 through June 30, 1997 (unaudited)
 
     Statements of Cash Flows, for the Periods                            9
     April 1, 1998 through June 30, 1998 (unaudited)
     and January 1, 1998 through June 30, 1998 (unaudited)
 
     Statements of Cash Flows, for the Periods                            10
     April 1, 1997 through June 30, 1997 (unaudited)
     and January 1, 1997 through June 30, 1997 (unaudited)
 
     Notes to Financial Statements                                        11
 
Item 2.  Management's Discussion and Analysis of Financial                19
         Condition and Results of Operations
 
Statement by Management Concerning Review of Interim                      20
Information by Independent Certified Public Accountants
 
Statement by Management Concerning the Fair                               21
Presentation of Interim Financial Information
</TABLE>

                                       2
<PAGE>
 
                   REPORT ON REVIEW BY INDEPENDENT CERTIFIED
                              PUBLIC ACCOUNTANTS

To the Board of Directors
Western Pennsylvania Adventure Capital Fund

We have reviewed the accompanying statement of assets and liabilities of Western
Pennsylvania Adventure Capital Fund as of June 30, 1998, and the related
statements of operations, changes in net assets, and cash flows for the three
and six month periods ended June 30, 1998.  These financial statements are the
responsibility of the company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants.  A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters.  It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole.  Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the statement of assets and liabilities as of December 31, 1997 and
the related statements of operations, changes in net assets (deficit), and cash
flows for the period January 1, 1997 to December 31, 1997 (not presented
herein), and in our report dated March 27, 1998, we expressed an unqualified
opinion on those financial statements.


s/ Goff, Ellenbogen, Backa & Alfera, LLC
------------------------------------------

Goff, Ellenbogen, Backa & Alfera, LLC
Pittsburgh, July 30, 1998

                                       3
<PAGE>
 
                  Western Pennsylvania Adventure Capital Fund
                      Statements of Assets and Liabilities
                                     As of
<TABLE>
<CAPTION>
 
                                             June 30, 1998   December 31, 1997
                                             --------------  ------------------
                                              (unaudited)
<S>                                          <C>             <C>
 
                  Assets
                  ------                        
 
Cash and Cash Equivalents                       $  339,569          $  368,618
 
Short Term Investments, Net                      1,252,507           1,571,082
 
Investment in Portfolio Companies                  451,550             100,000
 
Prepaid Taxes                                        1,003                   -
 
Organization Costs                                  13,680              15,200
                                                ----------          ----------
 
 Total Assets                                   $2,058,309          $2,054,900
                                                ==========          ==========
 
                  Liabilities
                  -----------                
 
Accounts Payable                                $   19,880          $   10,011
 
Accrued Liabilities                                  7,500               8,520
                                                ----------          ----------
 
     Total Liabilities                          $   27,380          $   18,531
                                                ==========          ==========
 
                  Net Assets
                  ----------                  
 
Common Stock, Par Value $.01
Per Share, Authorized 10,000,000
Shares, Issued and Outstanding
2,210,434 Shares                                $   23,543          $   23,543
 
Additional Paid in Capital                       2,083,290           2,083,290
 
Syndication Costs                                  (85,507)            (85,507)
 
Retained Earnings                                   11,042              16,482
 
Treasury Stock -- 143,899 Shares, at cost           (1,439)             (1,439)
                                                ----------          ----------
 
 Net Assets Applicable to
 Shares Outstanding                             $2,030,929          $2,036,369
                                                ==========          ==========
 
 Net Assets Value Per Share                          $0.92               $0.92
                                                ==========          ==========
</TABLE>
See Accountant's Report and accompanying notes to financial statements.

                                       4
<PAGE>
 
                  Western Pennsylvania Adventure Capital Fund
                            Statements of Operations
                                For the Periods


<TABLE>
<CAPTION>
                                         April 1, 1998           January 1, 1998
                                            through                  through
                                         June 30, 1998            June 30, 1998
                                      --------------------  --------------------------
                                          (unaudited)              (unaudited)
 
<S>                                   <C>                   <C>
Revenues -- Interest Income                       $21,626                     $46,605
 
Expenses:
     General and Administration                    12,024                      20,679
     Interest                                          50                          50
     Other Operating Expenses                      16,270                      27,035
                                                  -------                     -------
 
          Total Expenses                           28,344                      47,764
                                                  -------                     -------
 
Profit (Loss) Before
Income Taxes                                       (6,718)                     (1,159)
 
Income Tax Expense                                  2,891                       4,281
                                                  -------                     -------
 
Net Income (Loss)                                 $(9,609)                    $(5,440)
                                                  =======                     =======
 
Earnings (Loss) Per Share                           $(.00)                      $(.00)
                                                  =======                     =======
</TABLE>



See Accountant's Report and accompanying notes to financial statements.

                                       5
<PAGE>
 
                  Western Pennsylvania Adventure Capital Fund
                            Statements of Operations
                                For the Periods

<TABLE>
<CAPTION>

                              April 1, 1997           January 1, 1997
                                 through                   through
                              June 30, 1997            June 30, 1997
                              -------------            -------------
                               (unaudited)              (unaudited)

<S>                           <C>                     <C>  
Revenues                        $      0                  $      0
 
Expenses:
 
 General and Administrative       5,470                     13,598
 Interest                            20                         40
 Bank Charges                        26                         51
                                -------                   --------
 
          Total Expenses          5,516                     13,689
                                -------                   --------
 
Net Loss                        $(5,516)                  $(13,689)
                                =======                   ========
 
Earnings (Loss) Per Share       $ (0.02)                  $  (0.05)
                                =======                   ========
</TABLE>


See Accountant's Report and accompanying notes to financial statements.

                                       6
<PAGE>
 
                  Western Pennsylvania Adventure Capital Fund
                      Statements of Changes in Net Assets
                                For the Periods



<TABLE>
<CAPTION>
                                     April 1, 1998           January 1, 1998
                                        through                  through
                                     June 30, 1998            June 30, 1998
                                  --------------------  --------------------------
                                      (unaudited)              (unaudited)
<S>                               <C>                   <C>
From Operations
     Net (Loss)                            $   (9,609)                 $   (5,440)
 
From Share Transactions:
     Syndication Costs                              0                           0
                                           ----------                  ----------
     Net Increase (Decrease) in
          Net Assets Derived from
          Share Transactions                        0                           0
                                           ----------                  ----------
 
               Net (Decrease)
                   in Net Assets               (9,609)                     (5,440)
 
Net Assets:
     Beginning of Period                    2,040,538                   2,036,369
                                           ----------                  ----------
     End of Period                         $2,030,929                  $2,030,929
                                           ==========                  ==========
</TABLE>
                                                                                



                                        



See Accountant's Report and accompanying notes to financial statements.

                                       7
<PAGE>
 
                  Western Pennsylvania Adventure Capital Fund
                 Statements of Changes in Net Assets (Deficit)
                                For the Periods
<TABLE>
<CAPTION>

                              April 1, 1997           January 1, 1997
                                 through                  through
                              June 30, 1997            June 30, 1997
                              -------------            -------------
                                (unaudited)             (unaudited)
<S>                           <C>                     <C>  

From Operations
 Net Loss                       $ (5,516)                $ (13,689)

From Share Transactions:
 Syndication Costs                (5,940)                  (38,421)
                                --------                 ---------
 Net Decrease in Net Assets
   Derived from Share
    Transactions                  (5,940)                  (38,421)
                                --------                 ---------
 
     Net (Decrease) in Net
      Assets                     (11,456)                  (52,110)
 
Net Assets (Deficit):
 Beginning of Period             (79,427)                  (38,773)
                                --------                 ---------
 
 End of Period                  $(90,883)                 $(90,883)
                                ========                 =========
 
</TABLE>



See Accountant's Report and accompanying notes to financial statements.

                                       8
<PAGE>
 
                  Western Pennsylvania Adventure Capital Fund
                            Statements of Cash Flows
                                For the Periods


<TABLE>
<CAPTION>
                                                          April 1, 1998     January 1, 1998
                                                             through            through
                                                          June 30, 1998      June 30, 1998
                                                        -----------------  -----------------
                                                           (unaudited)        (unaudited)
<S>                                                     <C>                <C>
Cash Flow from Operating Activities:
                                                               $  (9,609)         $  (5,440)
     Income (Loss)
 
     Change in Assets and Liabilities:
          Organization Costs -- Amortization                         760              1,520
          Prepaid Taxes -- Increase                               (1,003)            (1,003)
          Accounts Payable -- Increase (Decrease)                 (6,713)             9,869
          Accrued Liabilities -- Increase (Decrease)               4,514             (1,020)
                                                               ---------          ---------
 
     Net Cash Provided by (Used in)
          Operating Activities                                   (12,051)             3,926 
                                                               ---------          --------- 
  
Cash Flow from Investing Activities:
 
     Redemption of Short Term Investments,
          Net of Purchases                                       200,494            318,575
     Investment in Portfolio Companies                          (151,550)          (351,550)
                                                               ---------          ---------
     Net Cash Provided by (Used in) Investing                  
      Activities                                                  48,944            (32,975)
                                                               ---------          --------- 
     Net Increase (Decrease) in Cash
          and Cash Equivalents:                                   36,893            (29,049)
 
     Cash and Cash Equivalents
           at Beginning of Period                                302,676            368,618
                                                               ---------          ---------
  
     Cash and Cash Equivalents
          at End of Period                                     $ 339,569          $ 339,569
                                                               =========          =========
</TABLE>
See Accountant's Report and accompanying notes to financial statements.

                                       9
<PAGE>
 
                  Western Pennsylvania Adventure Capital Fund
                            Statements of Cash Flows
                                For the Periods
<TABLE>
<CAPTION>
                                           April 1, 1997           January 1, 1997
                                              through                  through
                                           June 30, 1997            June 30, 1997
                                           -------------            -------------
                                             (unaudited)            (unaudited)
<S>                                        <C>                     <C>
Cash Flow from Operating Activities:
 Operating Expenses Paid                      $ (510)                 $  (785)
                                              -------                  -------
    Net Cash Used by Operating Activities       (510)                    (785)
                                              -------                  -------
 
Cash Flow from Financing Activities:
 Advance from The Enterprise                     500                      500
    Corporation                              -------                  -------
    
 Net Cash Provided by
    Financing Activities                         500                      500
                                              -------                  -------
 
 
Net Increase (Decrease) in Cash:                 (10)                    (285)
 Cash at Beginning of Period                     143                      418
                                              -------                  -------
 Cash at End of Period                        $  133                   $  133
                                              =======                  =======
 
</TABLE>



See Accountant's Report and accompanying notes to financial statements.

                                       10
<PAGE>
 
                  Western Pennsylvania Adventure Capital Fund
                         Notes to Financial Statements
                                 June 30, 1998


Note 1 -- Summary of Significant Accounting Policies:
-----------------------------------------------------

This summary of significant accounting policies of Western Pennsylvania
Adventure Capital Fund ("the Fund") is presented to assist in understanding the
Fund's financial statements.  These accounting policies conform with generally
accepted accounting principles and have been consistently applied in the
preparation of the financial statements.

Nature of Operations

The Fund was incorporated on May 23, 1996, and began its primary business
activities in November, 1997.  The Fund has been formed to become a Business
Development Company ("BDC") and to be subject to the applicable provisions of
the Investment Company Act of 1940, as amended (the "1940 Act").  The Fund
invests primarily in the equity and/or debt securities of development stage
companies located in western Pennsylvania.  The Fund seeks to make its
investments in conjunction with a consortium of investment partners such as
individual investors, private non-profit or for-profit companies or foundations,
and federal, state or local public, quasi-public or publicly-supported economic
development organizations, agencies or authorities which provide investment
capital or low interest or other financing for economic development.

The Fund's Board of Directors ("Board"), which is elected by the shareholders
annually, has responsibility for management of the Fund, including authority to
select portfolio securities for investment by the Fund.  The Board is advised by
the officers of the Fund and by The Enterprise Corporation of Pittsburgh
("Enterprise"), the Fund's investment advisor.  Enterprise screens potential
Portfolio Companies and presents them to the Fund's Board for investment
consideration, conducts due diligence reviews of investment candidates and
manages the day-to-day operations of the Fund including, portfolio management,
preparing reports to shareholders and performing administrative services.  The
recommendations of Enterprise as to investments are advisory only and are not
binding on the Fund or its Board of Directors.  Enterprise is a private, non-
profit consulting firm founded in 1983 for the purpose of assisting
entrepreneurs in developing new businesses in western Pennsylvania.

Enterprise receives a fee equal to 5 percent of the aggregate amount of assets
invested by the Fund in portfolio securities for providing investment advisory
and administrative services to the Fund.  Enterprise may also receive
compensation from investment partners or members of any investment consortium
that invests with the Fund in portfolio securities, all on such basis as such
other parties and Enterprise shall agree.

                                       11
<PAGE>
 
Basis of Presentation -- Interim Financial Statements

The financial information included herein has been prepared from the books and
records without audit.  The accompanying financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all of the
information and the footnotes required by generally accepted accounting
principles for complete statements.  In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial condition, results of operations, changes in
net assets, and cash flows, have been included.

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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.

These financial statements should be read in conjunction with the financial
statements and notes thereto for the period January 1, 1997 to December 31,
1997, contained in the Fund's 1997 Annual Report on Form 10-K.

Basis of Presentation -- Net Assets

During 1996, the Fund began offering a total of 5,000,000 shares of its common
stock, par value $.01, at a price of $1.00 per share under Regulation E of the
Securities Act of 1933 (the "Offering").  In connection with its services in
organizing the formation and development of the Fund, Enterprise purchased
250,000 shares of common stock for $.01 per share, which represented 4.8 percent
of the total potential outstanding shares of the Fund.  The Shares purchased by
Enterprise represented founder's shares.  If less than 5,000,000 Shares were
sold in the Offering, the Fund had the right to repurchase from Enterprise for
$.01 per share such number of Shares as would result in Enterprise's ownership
percentage in the Fund immediately following the Offering being 4.8 percent.

During 1997, the Fund sold 2,104,333 shares of its common stock and closed the
Offering.  As of December 31, 1997, the Fund repurchased 143,899 shares of its
common stock from Enterprise, thereby reducing Enterprise's ownership to 106,101
shares, which represented 4.8 percent of the then total shares issued and
outstanding (2,210,434 shares).  The repurchased shares are presented as
Treasury Stock, at cost.

There were no transactions involving the Fund's Shares during the three and six
month periods ending June 30, 1998, although there were transactions among the
Fund's shareholders during these periods.

                                       12
<PAGE>
 
Syndication Costs

For the three and six month periods ending June 30, 1997, legal and other costs
of $5,940 and $32,481, respectively, incurred in connection with the Offering
were capitalized and reported as a permanent reduction of net assets in
accordance with generally accepted accounting principles.  No syndication costs
were incurred in the three and six month periods ending June 30, 1998.

Cash and Cash Equivalents

Cash and Cash Equivalents consist of cash in checking accounts and high quality
money market instruments having or deemed to have remaining maturities of 13
months or less.

Short Term Investments

The Fund's short term investments consist of high quality commercial paper and
U.S. Government securities.  These investments generally are purchased at a
discount from face value and are redeemed at maturity at face value.  The
difference represents interest income which will accrue over the period from
date of acquisition to date of maturity.  The Fund uses the effective yield to
maturity method to recognize the accretion of interest income over the life of
each individual short term investment.  This method produces a rate of return
which is constant over the period from acquisition to maturity.  Using this
method, the interest income recognized on each individual investment will
increase over time as the carrying value of that investment increases.  The Fund
records these investments net of remaining unearned interest income.

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," the Fund has
classified all short term investments as held-to-maturity ("HTM").

Investments in Portfolio Companies

Investments are stated at value.  Investments for which market quotations are
readily available are valued at the last trade price on or within one local
business day of the date of determination as obtained from a pricing source.  If
no such trade price is available, such investments are valued at the quoted bid
price or the mean between the quoted bid and asked price on the date of
determination as obtained from a pricing source.  Securities for which market
quotations are not readily available are valued at fair value in good faith
using methods determined by or under the direction of the Fund's Board of
Directors.

Start-Up and Organization Costs

A total of $15,200 has been incurred in connection with the start-up and
organization of the Fund.  These costs have been deferred and are being
amortized ratably over a period of 60 months beginning January 1, 1998.

                                       13
<PAGE>
 
Earnings Per Share

During 1997, the Fund adopted SFAS No. 128, "Earnings Per Share".  Its
application is not expected to affect the calculations of basic and diluted
earnings per share.

Earnings per share is computed using the weighted average number of shares
outstanding during the respective periods.  There are no outstanding stock
options, warrants, or other contingently issuable shares.

Income Taxes

The Fund has adopted the SFAS Standard No. 109, "Accounting for Income Taxes",
from its inception.  SFAS 109 requires an asset and liability approach that
recognizes deferred tax assets and liabilities for the expected future tax
consequences of events that have been recognized in the Fund's financial
statements or tax returns.  In estimating future tax consequences, SFAS 109
generally considers all expected future events other than enactments of changes
in the tax law or rates.  As of June 30, 1998 and December 31, 1997, the Fund
had no significant temporary or permanent differences and, therefore, it did not
have any deferred taxes.


Note 2 -- Sale of Securities
----------------------------

During 1997, the Fund sold 2,104,333 shares of its common stock at $1.00 per
share, under an Offering Circular dated November 7, 1996 ("Offering Circular").
The proceeds were required to be deposited in an escrow account with the Fund's
escrow agent, PNC Bank, until such time as the escrow account reached $1
million.  At that time, the Fund was permitted to withdraw the funds from the
escrow account and begin to invest in portfolio securities.  No shares were sold
during the three and six month periods ending June 30, 1998.

As of July 11, 1997, the proceeds in the escrow account totaled $1,860,100.  On
that date, the Fund withdrew substantially all of the funds from the escrow
account.

The funds released from escrow have been temporarily invested, pending
investment in Portfolio Securities, in cash equivalents, government securities,
and high quality debt securities.  A portion of the funds released from escrow
were disbursed to pay accumulated obligations whose payment was deferred until
funds were released from escrow.  As of June 30, 1998 and December 31, 1997,
$451,550 and $100,000, respectively, were invested in Portfolio Securities, and
the balance of the funds remained invested in cash equivalents, government
securities, and high quality debt securities.


Note 3 -- Investments in Portfolio Companies
--------------------------------------------

On April 20, 1998, the Fund purchased 80,000 shares of ISLIP Media Network, Inc.
("ISLIP") Series A Preferred Stock at $1.25 per share for a total investment of
$100,000, which represented approximately 0.7 percent ownership on a fully
diluted basis.  At approximately the same time, other private investors in the
Fund purchased

                                       14
<PAGE>
 
$250,000 of ISLIP Series A Preferred Stock. The total investment, including
shares already owned by private investors in the Fund, represents approximately
3.0 percent ownership of ISLIP on a fully diluted basis. ISLIP develops and
supplies products and services that create and deliver network-based searchable
digital video and audio libraries.

On June 11, 1998, the Fund purchased an additional 116,279 shares of Medtrex
Incorporated ("Medtrex") Series B Preferred Stock ("Preferred Stock") at $.43
per share for a total investment of $50,000, increasing the Fund's investment in
Medtrex to $150,000 representing 348,837 shares of Preferred Stock.  At
approximately the same time, other private investors in the Fund purchased an
additional 204,094 shares of Medtrex Preferred Stock increasing their investment
to $271,360 representing 631,073 shares of Preferred Stock.  As a result of
these transactions, the Fund's investment represents approximately 5.5 percent
ownership of Medtrex on a fully diluted basis, and the Fund's and the private
investors in the Fund's combined investment represents approximately 15.1
percent ownership of Medtrex on a fully diluted basis.  These shares carry
warrants exercisable at $.01 for a period of 10 years.  The warrants are
exercisable on the basis of five warrants per share, reducible to 4:1 or 3:1
upon the achievement of certain milestones.

Medtrex designs, manufactures, and distributes electrosurgical instruments and
accessories for the hospital, surgery center, and physicians' office market.

On June 23, 1998, the Fund purchased 45,261 shares of Medtrex Common Stock at
$.0342 per share for a total investment of $1,550, as its pro rata portion of a
block of founder's shares returned to Medtrex and available for purchase by
Medtrex shareholders.  If any portion of this founder's block is not purchased
pro rata by existing shareholders, the Fund will be eligible to purchase
additional shares of this founder's block (See Note 8).


Note 4 -- Rescission Offer
--------------------------

The Fund's Offering Circular authorized the Fund to sell shares through July 31,
1997.  In August, September, and October 1997, a total of 194,233 shares of the
Fund's common stock in the aggregate were offered and sold to residents of the
Commonwealth of Pennsylvania for $1.00 per share ($194,233 in the aggregate).
Consequently, the provisions of Section 201 of the Pennsylvania Securities Act
of 1972 relating to the registration of securities may not have been complied
with in connection with the offer or sale of these securities.

Accordingly, the Fund made an offer of rescission to all of the affected
shareholders.  The offer of rescission expired January 30, 1998.  None of the
affected shareholders elected to exercise the right of rescission.


Note 5 -- Co-Investor Agreement
-------------------------------

On June 30, 1998, the Fund and the Urban Redevelopment Authority of Pittsburgh
("URA") entered into a co-investment agreement ("Agreement").  Under the terms
of

                                       15
<PAGE>
 
this Agreement, the URA will create an escrow account of $1,000,000 to be used
for direct investment in certain select Fund's portfolio companies, located
within the City of Pittsburgh and meeting other criteria established by the URA.
The escrow account also will be used for payment of the Fund's investment and
management fees related to such investments. The URA will match, on a dollar-
for-dollar basis, the Fund's investment in portfolio companies, subject to the
limitations of the portfolio companies' location within the City of Pittsburgh
and such companies meeting the URA's criteria for funding.

The annual management fee payable to the Fund is $25,000.  Further, the URA will
pay the Fund's investment advisor a transaction fee of five percent (5%) of the
URA's portion of its investment.  All fees will be paid from the escrow account.

In addition, the URA, as part of the Agreement, has agreed to subordinate its
rights to any return on its investment until the private equity participants,
investing in each of the contemplated transactions, including the Fund, have
recovered their original investments in the portfolio companies.  Thereafter,
the URA and all equity participants, including the Fund, will participate in all
future distributions in accordance with their investment.

                                       16
<PAGE>
 
Note 6 -- Short Term Investments
--------------------------------

The Fund, pending investments in Portfolio Securities, temporarily invests its
excess funds in short term high quality commercial paper and U.S. Government
securities.  These investments generally are purchased at a discount from face
value and are redeemed at maturity at face value.  The discount from face value
represents unearned interest income and is recognized over the remaining term of
the security using the effective yield to maturity method.  All of the short
term investments are classified as HTM in accordance with SFAS No. 115.  The
face value, carrying value, and market value for HTM investments were as follows
at June 30, 1998 and December 31, 1997:


                              As of June 30, 1998
                              -------------------
<TABLE>
<CAPTION>
 
Investment                          Face Value         Carrying Value       Market Value
-------------------------------  -----------------  --------------------  ----------------
 
<S>                              <C>                <C>                   <C>
Commercial Paper                        $  537,000            $  532,124        $  531,417
 
U.S. Government Securities                 734,667               720,383           720,273
                                        ----------            ----------        ----------
 
Total                                   $1,271,667            $1,252,507        $1,251,690
                                        ==========            ==========        ==========
</TABLE>
                                                                                



                            As of December 31, 1997
                            -----------------------
<TABLE>
<CAPTION>
 
Investment                          Face Value         Carrying Value       Market Value
-------------------------------  -----------------  --------------------  ----------------
 
<S>                              <C>                <C>                   <C>
Commercial Paper                        $  943,000            $  929,252        $  926,176
 
U.S. Government Securities                 652,000               641,830           641,703
                                        ----------            ----------        ----------
 
Total                                   $1,595,000            $1,571,082        $1,567,879
                                        ==========            ==========        ==========
</TABLE>
                                                                                

Note 7 -- Related Party Transactions
------------------------------------

Accounts payable as of June 30, 1998, includes $7,500 payable to Enterprise for
investment advisory services.  Accounts payable at June 30, 1998 also includes
$6,000 for accounting services payable to a consulting firm in which one of the
Fund's officers is a significant shareholder.

Accounts payable as of December 31, 1997, includes $6,439 payable to Enterprise
for investment advisory and administrative services ($5,000) and for the
repurchase of 143,899 shares of the Fund's Common Stock from Enterprise
($1,439).

                                       17
<PAGE>
 
Note 8 -- Subsequent Events
---------------------------

On July 21, 1998, the Fund purchased 27,074 shares of Common Stock of Medtrex at
$.0342 per share for a total of $927.  This represents the Fund's pro rata
portion of the balance of a founder's block of shares available for purchase by
Medtrex shareholders which was not purchased by existing shareholders under
their pro rata rights.  This transaction has not been completed as of the date
of this report.

At its Board of Directors meeting on June 29, 1998, the Fund approved the
investment of $100,000 in RadNet Corporation ("RadNet") through the purchase of
Convertible Notes ("Notes").  The Notes are convertible into the same equity,
and on the same terms, as RadNet will issue in its next securities offering.  In
addition, the Notes carry warrants for the purchase of RadNet's Preferred Stock
equal to 1/3 of the value of the Notes.  The warrants expire after 10 years.
This transaction has not been completed as of the date of this report.

RadNet has developed and sells software to hospital radiology departments.  The
software creates an electronic folder which includes film images, voice
dictation, text reports, and order status.

                                       18
<PAGE>
 
Item 2.   Management's Discussion and Analysis of Financial Condition and
-------------------------------------------------------------------------
Results of Operations
---------------------


Results of Operations
---------------------

Revenues for the three and six month periods ending June 30, 1998, consisted of
interest income of $21,626 and $46,605, respectively.  General and
administrative expenses for the three and six month periods amounted to $12,024
and $20,679, respectively, and consisted primarily of legal and accounting fees.
Other operating expenses for the three month period ending June 30, 1998
amounted to $16,270 and included $7,500 for investment advisory and
administrative services due to Enterprise, the Fund's investment advisor and
$7,500 of Board of Directors fees.  Other operating expenses for the six month
period ending June 30, 1998 amounted to $27,035 and included $17,500 for
investment advisory and administrative services due to Enterprise and $7,500 of
Board of Directors fees.

There were no revenues for the three and six month periods ending June 30, 1997.
Expenses for the three and six month periods ending June 30, 1997, were $5,516
and $13,689, respectively, and consisted primarily of professional fees.


Financial Condition, Liquidity and Capital Resources
----------------------------------------------------

The Registrant, through its sale of Common Stock under the Offering, raised
$2,104,333 in 1997.  As of June 30, 1998, the Registrant had invested $451,550
in Portfolio Companies, and held cash, cash equivalents, and short-term
investments in high quality commercial paper and U.S. Government securities of
$1,592,076.  Most of this amount, except for normal operating expenses, is
available for investment in Portfolio Securities.

                                       19
<PAGE>
 
         Statement by Management Concerning Review of Interim Financial
            Information by Independent Certified Public Accountants



The June 30, 1998 financial statements included in this filing on Form 10-Q have
been reviewed by Goff, Ellenbogen, Backa & Alfera, LLC, independent certified
public accountants, in accordance with established professional standards and
procedures for such review.  The report of Goff, Ellenbogen, Backa & Alfera, LLC
commenting on their reviews accompanies the financial statements included in
Item 1 of Part I.

                                       20
<PAGE>
 
            Statement by Management Concerning the Fair Presentation
                        of Interim Financial Information



The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments), which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods.  The report of Goff,
Ellenbogen, Backa & Alfera, LLC commenting upon their reviews accompanies the
financial statements included in Item 1 of Part I.

                                       21
<PAGE>
 
                          Part II -- Other Information

                                        

Item 5.  Other Information

         On June 30, 1998, the Registrant and the Urban Redevelopment Authority
         of Pittsburgh ("URA") entered into a co-investment agreement
         ("Agreement").  Under the terms of this Agreement, the URA will create
         an escrow account of $1,000,000 to be used for direct investment in
         certain select Registrant's portfolio companies, located within the
         City of Pittsburgh and meeting other criteria established by the URA.
         The escrow account also will be used for payment of Registrant's
         investment and management fees related to such investments.  The URA
         will match, on a dollar-for-dollar basis, the Registrant's investment
         in portfolio companies, subject to the limitations of the portfolio
         companies' location within the City of Pittsburgh and such companies
         meeting the URA's criteria for funding.

         The annual management fee payable to the Registrant is $25,000.
         Further, the URA will pay the Registrant's investment advisor a
         transaction fee of five percent (5%) of the URA's portion of its
         investment.  All fees will be paid from the escrow account.

         As an incentive to encourage investment within the City of Pittsburgh,
         the URA, as a part of this Agreement, has agreed to subordinate its
         rights to any return of its investment until the private equity
         participants, investing in each of the contemplated transactions,
         including the Registrant, have recovered their original investments in
         the portfolio companies.  Thereafter, the URA and all equity
         participants, including the Registrant, will participate in all future
         distributions in accordance with their investments.


Item 6.  Exhibits and Reports on Form 8-K

     (a) List of Exhibits

         11    Computation of earnings per share for the three and six month
               periods ended June 30, 1998 and June 30, 1997

         27    Financial Data Schedule

     (b) Reports on Form 8-K

         There were no reports on Form 8-K filed during the quarter ended
         June 30, 1998.

                                       22
<PAGE>
 
                                                          Item 6 (a), Exhibit 11



                  Western Pennsylvania Adventure Capital Fund
              Schedule of Computation of Earnings Per Common Share
                                For the Periods


<TABLE>
<CAPTION>
                                           April 1, 1998             January 1, 1998
                                              through                    through
                                           June 30, 1998              June 30, 1998
                                      ------------------------  -------------------------
                                            (unaudited)                (unaudited)
 
<S>                                   <C>                       <C>
Net Income (Loss)                            $  (9,609)                $   (5,440)
                                            ==========                 ==========
 
Weighted Average Number of Common
 Shares Outstanding                          2,210,434                  2,210,434
                                            ==========                 ==========
 
Earning (Loss) per Common Share              $    (.00)                 $    (.00)
                                             ==========                 ==========
</TABLE>
                                                                                

<TABLE>
<CAPTION>
                                           April 1, 1997             January 1, 1997
                                              through                    through
                                           June 30, 1997              June 30, 1997
                                      ------------------------  -------------------------
                                            (unaudited)                (unaudited)
 
<S>                                   <C>                       <C>
Net Income (Loss)                         $     (5,516)                 $ (13,689)
                                          ============                 ==========

Weighted Average Number of                               
Common Shares Outstanding                      250,000                    250,000
                                          ============                 ==========

Earning (Loss) per Common Share           $       (.02)                 $    (.05)
                                          ============                 ==========
</TABLE>

                                       23
<PAGE>
 
                                   SIGNATURES

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


Western Pennsylvania Adventure Capital Fund
(Registrant)



                                            /s/ G. Richard Patton
                                           -----------------------------------
Date   July 30, 1998                        G. Richard Patton
       -------------                        President, Chief Executive Officer 
                                            and Director
                         



                                            /s/ Alvin J. Catz
                                           ------------------------------------
Date   July 30, 1998                       Alvin J. Catz
       -------------                       Chief Financial Officer, Treasurer
                                           and Director                       
                         

                                       24