<PAGE>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON D.C. 20549

                            ------------------------

                                   FORM 10-Q

             /X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995

                                       OR

             / /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
         FOR THE TRANSITION PERIOD FROM               TO
                         COMMISSION FILE NUMBER 0-14613

                            CST ENTERTAINMENT, INC.
                   (FORMERLY CST ENTERTAINMENT IMAGING, INC.)
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                          <C>
         DELAWARE                 13-2614435
      (State or other          (I.R.S. Employer
      jurisdiction of         Identification No.)
     Incorporation or
       organization)
</TABLE>

                      5901 GREEN VALLEY CIRCLE, SUITE 400
                         CULVER CITY, CALIFORNIA 90230
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (310) 417-3444
              (Registrant's telephone number including area code)

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

                            ------------------------

    Indicate  by check  mark whether  the registrant  (1) has  filed all reports
required to be filed by  Section 13 or 15(d) of  the Securities Exchange Act  of
1934  during  the preceding  12  months (or  for  such shorter  period  that the
registrant was required to file such reports)  and (2) has been subject to  such
filing requirements for the past 90 days.  Yes _X_  No ___

    The  Registrant has 26,203,890  shares of common stock,  par value $0.15 per
share, issued and outstanding as of October 15, 1995.

    Total number of sequentially numbered pages in this document: 12

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                            CST ENTERTAINMENT, INC.
                          FORM 10-Q FOR QUARTER ENDED
                               SEPTEMBER 30, 1995

                                     INDEX

<TABLE>
<CAPTION>
                                                                                                       PAGE NO.
                                                                                                       ---------
<S>        <C>                                                                                         <C>
PART I -- FINANCIAL INFORMATION
Item 1.    Balance Sheets at June 30, 1995 and September 30, 1995....................................      4
           Statements of Operations for the Quarter Ended September 30, 1994 and 1995................      5
           Statements of Cash Flows for the Quarter Ended September 30, 1994 and 1995................     6-7
           Notes to Financial Statements.............................................................      8
Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.....      9

PART II -- OTHER INFORMATION
Item 1.    Legal Proceedings.........................................................................     11
Item 2.    Changes in Securities.....................................................................     11
Item 3.    Defaults upon Senior Securities...........................................................     11
Item 4.    Submission of Matters to a Vote of Securities Holders.....................................     11
Item 5.    Other Information.........................................................................     11
Item 6.    Exhibits and Reports on Form 8-K..........................................................     11
           Signature Page............................................................................     12
</TABLE>

<PAGE>
                 (This page has been left blank intentionally.)
<PAGE>
ITEM 1. FINANCIAL STATEMENTS

                            CST ENTERTAINMENT, INC.
                                 BALANCE SHEETS
                                     ASSETS

<TABLE>
<CAPTION>
                                                                                       JUNE 30,     SEPTEMBER 30,
                                                                                         1995           1995
                                                                                     -------------  -------------
<S>                                                                                  <C>            <C>
                                                                                                     (UNAUDITED)
Current assets:
  Cash.............................................................................  $      24,694  $      40,023
  Accounts receivable, net.........................................................        368,868        443,528
  Work-in-process..................................................................      1,161,868      1,857,349
  Prepaid expenses.................................................................         33,384         69,191
  Receivable from related parties..................................................        215,000         15,000
                                                                                     -------------  -------------
    Total current assets...........................................................      1,803,814      2,425,091
Property and equipment:
  Color conversion equipment.......................................................      3,896,789      3,896,789
  Leasehold improvements and other equipment.......................................      1,591,550      1,596,201
  Software.........................................................................        985,382      1,093,897
                                                                                     -------------  -------------
                                                                                         6,473,721      6,586,887
Less accumulated depreciation......................................................      5,118,680      5,299,053
                                                                                     -------------  -------------
                                                                                         1,355,041      1,287,834
                                                                                     -------------  -------------
Other assets:
  Patent, net of accumulated amortization of $520,633 and $531,442.................         34,211         23,402
  Film library, net of accumulated amortization of $2,340,275 and $2,562,275.......      1,878,010      1,698,151
  Other assets.....................................................................         16,147         16,147
  Notes receivable from officers...................................................        192,263        192,263
  Accounts receivable - long term..................................................        137,559        137,559
                                                                                     -------------  -------------
                                                                                         2,258,190      2,067,522
                                                                                     -------------  -------------
                                                                                     $   5,417,045  $   5,780,447
                                                                                     -------------  -------------
                                                                                     -------------  -------------
                                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Notes payable....................................................................  $     492,430  $     967,017
  Accounts payable.................................................................        333,163        331,304
  Accrued expenses.................................................................        537,852        875,588
  Deferred income..................................................................        493,087        610,060
  Commitments payable -- short-term................................................        174,258
  Loans payable to related party...................................................                       100,000
                                                                                     -------------  -------------
Total current liabilities..........................................................      2,030,790      2,883,969
                                                                                     -------------  -------------

Stockholders' equity:
  Common stock, par value $0.15 per share; authorized 40,000,000 shares; issued
   26,199,624 and 26,203,890 shares................................................      3,929,944      3,929,944
  Additional paid-in capital.......................................................     55,667,022     55,667,022
  Accumulated deficit..............................................................    (56,210,711)   (56,700,488)
                                                                                     -------------  -------------
                                                                                         3,386,255      2,896,478
                                                                                     -------------  -------------
                                                                                     $   5,417,045  $   5,780,447
                                                                                     -------------  -------------
                                                                                     -------------  -------------
</TABLE>

                 See Accompanying Notes to Financial Statements

                                       4
<PAGE>
                            CST ENTERTAINMENT, INC.
                            STATEMENTS OF OPERATIONS
                 THREE MONTHS ENDED SEPTEMBER 30, 1994 AND 1995
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         1994           1995
                                                                                     -------------  -------------
<S>                                                                                  <C>            <C>
Revenue:
  Coloring income..................................................................  $   1,569,718  $     678,780
  Licensing/royalty income.........................................................        243,019        400,000
  Other income.....................................................................          2,435
                                                                                     -------------  -------------
                                                                                         1,815,172      1,078,780
                                                                                     -------------  -------------

Expense:
  Production.......................................................................      1,179,029        526,735
  Research and development.........................................................         41,604         36,782
  Depreciation and amortization....................................................        366,942        137,071
  Film library amortization........................................................        114,629        222,000
  General and administrative.......................................................        476,756        631,361
  Interest expense.................................................................         24,345         14,608
                                                                                     -------------  -------------
                                                                                         2,203,305      1,568,557
                                                                                     -------------  -------------
  Loss before extraordinary item...................................................       (388,133)      (489,777)
  Extraordinary item -- gain from forgiveness of debt..............................         13,998
                                                                                     -------------  -------------
  Net profit (loss)................................................................  $    (374,135)      (489,777)
                                                                                     -------------  -------------
                                                                                     -------------  -------------

Per share:
  Loss before extraordinary item...................................................  $       (0.01) $       (0.02)
  Extraordinary item...............................................................           0.00           0.00
                                                                                     -------------  -------------
  Net profit (loss) per share......................................................  $       (0.01) $       (0.02)
                                                                                     -------------  -------------
                                                                                     -------------  -------------
  Weighted average number of common shares outstanding.............................     25,017,128     26,201,046
                                                                                     -------------  -------------
                                                                                     -------------  -------------
</TABLE>

                 See Accompanying Notes To Financial Statements

                                       5
<PAGE>
                            CST ENTERTAINMENT, INC.
                            STATEMENTS OF CASH FLOWS
                 THREE MONTHS ENDED SEPTEMBER 30, 1994 AND 1995
                                  (UNAUDITED)
                          INCREASE (DECREASE) IN CASH

<TABLE>
<CAPTION>
                                                                                             1994         1995
                                                                                          -----------  -----------
<S>                                                                                       <C>          <C>
Cash flows from operating activities:
  Net loss..............................................................................  $  (374,135) $  (489,777)
Adjustments to reconcile net loss to net cash provided by (used in) operating
 activities:
  Depreciation and amortization.........................................................      481,571      359,071
  Non-cash revenue from commitments payable.............................................                  (174,258)
  Gain from forgiveness of debt.........................................................      (13,998)
(Increase) decrease in operating assets:
  Accounts receivable...................................................................     (171,944)     (74,660)
  Work in process.......................................................................      199,307     (641,370)
  Prepaid expenses......................................................................       15,955      (35,807)
  Receivable from related parties.......................................................                   200,000
Increase (decrease) in liabilities:
  Accounts payable......................................................................      (18,471)      (1,859)
  Accrued expenses......................................................................      (19,343)     337,736
  Deferred income.......................................................................     (340,940)     116,973
  Loans payable to related party........................................................                   100,000
                                                                                          -----------  -----------
Total adjustments.......................................................................      132,137      185,826
                                                                                          -----------  -----------
    Net cash used in operating activities...............................................     (241,998)    (303,951)
                                                                                          -----------  -----------
Cash flows from investing activities:
  Additions to property and equipment...................................................      (62,194)      (4,651)
  Additions to capitalized software.....................................................     (142,078)    (108,515)
  Additions to film library.............................................................                   (42,141)
  Additions to note receivables from officers...........................................      (15,000)
                                                                                          -----------  -----------
    Net cash used in investing activities...............................................     (219,272)    (155,307)
                                                                                          -----------  -----------
Cash flows from financing activities:
  Payments of notes payable.............................................................       (2,126)     (25,413)
  Additions to notes payable............................................................                   500,000
  Proceeds from exercise of stock options...............................................       20,494
                                                                                          -----------  -----------
Net cash provided by financing activities...............................................       18,368      474,587
                                                                                          -----------  -----------
Net increase (decrease) in cash.........................................................     (442,902)      15,329
Cash at beginning of period.............................................................      601,602       24,694
                                                                                          -----------  -----------
Cash at end of period...................................................................  $   158,700  $    40,023
                                                                                          -----------  -----------
                                                                                          -----------  -----------
</TABLE>

                                  (Continued)

                                       6
<PAGE>
                SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                                                                1994       1995
                                                                                              ---------  ---------
<S>                                                                                           <C>        <C>
Cash paid during the quarter for interest...................................................  $  24,345  $     145
                                                                                              ---------  ---------
                                                                                              ---------  ---------
</TABLE>

       SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING & FINANCING ACTIVITIES

THREE MONTHS ENDED SEPTEMBER 30, 1994
    The  Company liquidated $13,998 of  accounts payable through the forgiveness
of debt.

THREE MONTHS ENDED SEPTEMBER 30, 1995
    The  Company  capitalized   $54,111  of  depreciation   expense  under   its
work-in-process.

                 See Accompanying Notes to Financial Statements

                                       7
<PAGE>
                            CST ENTERTAINMENT, INC.

                    NOTES TO UNAUDITED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1995

1.  COMMENTS:

    In  the  opinion of  the  Company's management,  the  accompanying unaudited
financial  statements  contain  all  adjustments,  consisting  of  only   normal
recurring accruals, necessary to present fairly the Company's financial position
at September 30, 1995, the results of operations for the quarter ended September
30,  1995 and 1994 and  the cash flows for the  quarter ended September 30, 1995
and 1994. Although management  of the Company believes  that the disclosures  in
the  financial statements  are adequate  to make  the information  presented not
misleading, certain information  and footnote disclosures  normally included  in
financial  statements  that  have  been prepared  in  accordance  with generally
accepted accounting principles have  been condensed or  omitted pursuant to  the
rules  and regulations  of the Securities  and Exchange  Commission. For further
information, refer to the financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended June 30, 1995.

    The results of operations  for the quarter ended  Septmebr 30, 1995 are  not
necessarily  indicative of the results of operations to be expected for the full
year ending June 30, 1996.

    Certain prior period amounts  have been reclassified  to conform to  current
period's presentation.

2.  LICENSE AGREEMENT:

    In  August 1995,  the Company  entered into  a $800,000  licensing agreement
whereby the  Company will  produce  and deliver  eight colorized  one-half  hour
episodes.  In exchange,  the Company will  receive foreign  licensing fees which
will be  recognized as  revenue upon  delivery  to the  customer. As  such,  the
Company  will  maintain certain  domestic distribution  rights and  is currently
pursuing licensing those  rights. Subsequent  to September 30,  the Company  was
negotiating  to  amend  the agreement  to  produce an  additional  18 (eighteen)
one-half hour episodes under similar terms and conditions.

3.  NOTES PAYABLE:

    In July 1995, the Company obtained  short term financing by entering into  a
$500,000  note payable. The note bears interest  at 12.50% and the principal and
accrued interest are due November 1, 1995. The note is convertible at the option
of the creditor  into shares  of the Company's  common stock.  The Company  also
issued  750,000 warrants to the creditor.  The warrants are exercisable at $0.65
per share. The exercise  price will be  reduced to $0.50 per  share if the  note
payable is not repaid in full by November 1, 1995. The note is collateralized by
certain  fixed  assets of  the Company.  Subsequent to  September 30,  1995, the
Company had not repaid the principal or  interest due and was negotiating as  to
repayment of the amounts owed.

4.  LOANS PAYABLE TO RELATED PARTY:

    In July 1995, Mr. Jonathan D. (Jody) Shapiro issued a short-term loan to the
Company  for $100,000 at an  interest rate of 10.25%.  Principal and interest is
due  on  demand  subject   to  certain  terms  and   conditions.  The  loan   is
collateralized by certain fixed assets of the Company.

5.  LINE OF CREDIT:

    The  Company is currently in negotiations for a line of credit and term loan
with Coast Business Credit. The line of  credit is for $750,000 and is based  on
valid trade receivables. The term loan portion is also for $750,000, and will be
due  three years from  loan inception. The interest  rate is approximately prime
+2.5% and 3%, respectively and minimum monthly interest payments of $25,000 will
be due regardless of outstanding balances. The line of credit and term loan will
be collateralized by the majority of the assets of the Company.

                                       8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

RESULTS OF OPERATIONS

    Coloring revenue for  the quarter  ended September 30,  1995 decreased  over
50%,  as  compared  to 1994.  At  September  30, 1995,  two  colorizing projects
included in work-in-process  were awaiting customer  approval for  approximately
$425,000  (188 minutes). Furthermore,  in the quarter  ended September 30, 1994,
the Company delivered over $1,000,000 of "The Little Rascals" colorized  product
(approximately 585 minutes).

    The  increase in  Licensing/royalty income in  1995 is due  primarily to the
results of  the  Featurizations  division.  The Company  did  not  complete  any
projects  for its Featurizations division during the quarter ended September 30,
1995. However, the Company did  license its four previously completed  30-minute
science fiction anthology segments (See Note 2).

    The  average price per  minute delivered increased 68%  in the quarter ended
September 30, 1995  as compared to  1994. The  difference is the  result of  the
change in the Company's product mix in the quarter whereby a significant portion
of  its deliverable color conversion work was  on Color F/X projects (i.e. music
videos and commercials) in 1995.

    Delivered minutes  decreased  74%  in  the quarter  September  30,  1995  as
compared  to  1994. Minutes  produced  decreased 22%  in  the quarter  and ended
September 30, 1995 as compared to  1994. The decreases in 1995 are  attributable
to  the differences in the  Company's operations in 1995  as compared to 1994 as
described above.

    The ratio of cost of production  to color conversion revenue increased  122%
in  the quarter ended September 30, 1995 as compared to 1994 and is attributable
the differences  in the  Company's operations  in 1995  as compared  to 1994  as
described  above.  This  increase  is also  due  primarily  to  unexpected costs
incurred in the completion of the Warner Brothers Project.

    The average  cost of  minute produced  increased 24%  in the  quarter  ended
September  30, 1995 as compared  to 1994 and is  attributable the differences in
the Company's operations in 1995 as compared to 1994 as described above.

    Research and development costs decreased 12% in the quarter ended  September
30,  1995 as  compared to  1994. The  decreases are  the result  of more  of the
Company's research and development personnel  in 1994 being deployed to  provide
alternative adaptions and enhancements of animation and coloring software.

    General  and  administrative expenses  increased  32% in  the  quarter ended
September 30, 1995, as compared to 1994.  The increase was primarily due to  the
Company  recording  a  $280,000  license fee  expense  in  conjunction  with the
delivery of  the four  30-minute science  fiction anthology  segments  described
above.  The increase was  offset slightly by decreased  costs resulting from the
employment of  fewer  corporate  personnel in  the  Company's  three  additional
operating divisions.

    Interest expense decreased $9,737 in the quarter ended September 30, 1995 as
compared  to  1994.  The decrease  is  primarily  the result  of  interest costs
incurred in financing arrangements entered  into in the quarter ended  September
30, 1994 whereby Company receivables were sold at discounted values.

    Depreciation  and amortization expense  decreased 63% for  the quarter ended
September 30, 1995. The decrease is attributed to the allocation of depreciation
and amortization expense to production products in the current quarter and  many
of  the  assets  becoming  fully depreciated  during  the  current  and previous
quarter.  Depreciation  and  amortization   expense  before  capitalization   to
production products was $191,182 for the quarter ended September 30, 1995.

    The increase in film amortization expense in the quarter ended September 30,
1995 is a direct result of amortization costs associated with licensing revenues
earned in 1995.

LIQUIDITY AND CAPITAL RESOURCES

    The  Company's  working capital  position  as of  September  30, 1995  was a
negative $458,878 as compared to a  negative $428,613 as of September 30,  1994.
The Company has experienced significant negative cash

                                       9
<PAGE>
flows from operations and the Company's independent certified public accountants
included  an explanatory  paragraph in  their last  fiscal year-end  report with
respect to the Company's ability to continue as a going concern.

    The following are the Company's  plans for improving operations:  securement
of   production  work;  securement  of   working  capital;  production  capacity
expansion; development of Featurization products and other products for its  own
library;  expansion of  the Company's Color  FX division;  animation "inking and
painting" production; and animation software sales.

    The Company  has  secured some  contracts  for color  conversion  work.  The
Company  continues to  negotiate for contracts  on substantial  amounts of color
conversion work. Future color conversion revenues and profits are dependent upon
the successful attainment of these contracts, neither of which can be assumed.

    During the quarter ended September 30, 1995, the Company completed the color
conversion of the final picture for  credit under its commitment obligation  and
recognized revenue of $273,258.

    During  the quarter ended September 30, 1995, the Company expended $4,651 on
property and  equipment  for leasehold  improvements  and other  equipment.  The
Company  anticipates  it will  have capital  expenditures  over the  next twelve
months of  between $100,000  and $300,000  for additional  work-stations  and/or
upgrade of current work-stations.

    The  Company  expended $49,962  on the  adaption  of animation  software for
alternative uses and  $58,553 on  the enhancement  of coloring  software in  the
quarter  ended  September 30,  1995. The  Company  expects to  devote additional
resources in the current fiscal year for the production and enhancements of  its
proprietary software.

    During  the quarter ended  September 30, 1995, the  Company did not complete
any productions for its film library. However, the Company delivered the Science
Fiction Anthology "Attack of  the Killer "B" Movies"  to a foreign  distributor.
The  Company anticipates future expenditures  of $3 to $4  million over the next
twelve months for future library products.

    Should the Company be successful in obtaining the contracts currently  under
negotiation,  the Company anticipates cash flows  from operations to be positive
over the next twelve months. The Company believes it will cover any needed  cash
requirements  over the next twelve months through operating cash flow, pre-sales
of its library products, sales of software products, placements of the Company's
equity securities or other financing arrangements which the Company is currently
pursuing (See Note 5).

    The Company does not anticipate significant amounts of warrants or  employee
stock  options  will be  exercised  in 1995  as  the majority  of  the Company's
outstanding warrants  and options  are at  an exercise  price greater  than  the
current market price of the Company's common stock.

    Future  color  conversion  revenues  and  profits  are  dependent  upon  the
successful attainment of  contracts currently in  negotiations. The Company  has
not  yet attained  operating profitability. There  can be no  assurance that the
Company's efforts  will  be  sufficiently  successful  to  ensure  the  ultimate
viability of the Company.

                                       10
<PAGE>
                          PART II -- OTHER INFORMATION

<TABLE>
<S>        <C>
Item 1.    Legal Proceedings. None.
Item 2.    Changes in Securities. None.
Item 3.    Defaults upon Senior Securities. None.
Item 4.    Submissions of Matters to a Vote of Security Holders. None.
Item 5.    Other Information. None.
Item 6.    Exhibits and Reports on Form 8-K. None.
</TABLE>

                                       11
<PAGE>
                                   SIGNATURES

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

                                          CST ENTERTAINMENT, INC.

                                                 /s/ JONATHAN D. SHAPIRO
                                          --------------------------------------
                                          JONATHAN D. SHAPIRO
                                          PRESIDENT AND CHIEF EXECUTIVE OFFICER

                                                  /s/ JEFFREY M. JACOBS
                                          --------------------------------------
                                          JEFFREY M. JACOBS
                                          CONTROLLER

November 7, 1995

                                       12