U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   FORM 10-QSB/A No. 2


(Mark One) [X]  Quarterly  report under  Section 13 or 15 (d) of the  Securities
Exchange  Act of 1934 For the  quarterly  period  ended  September  30, 1998 

[  ]Transition  report  under  Section 13 or 15 (d) of the  Exchange Act For the
Transition period from ________ to __________ Commission file number 0-92402


                          ON STAGE ENTERTAINMENT, INC.
        -----------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)


           NEVADA                                          88-0214292 
----------------------------------                     ------------------ 
(State or Other Jurisdiction of                         (I.R.S. Employer  
Incorporation or Organization)                         Identification No.)


                  4625 W. NEVSO DRIVE, LAS VEGAS, NEVADA 89103
--------------------------------------------------------------------------------
              (Address of Principal Executive Offices)

                                 (702) 253-1333
                 ----------------------------------------------
                 Issuer's Telephone Number, Including Area Code
--------------------------------------------------------------------------------
         (Former Name, Former Address and Former Fiscal Year, if Changed
                               Since Last Report)


Check  whether  the issuer:  (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 [ ]



                      APPLICABLE ONLY TO CORPORATE ISSUERS


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


          Class                             Outstanding at November 2, 1998 
----------------------------       ----------------------------------------- 
Common Stock, $0.01 par value                        7,452,350

<PAGE>




                  ON STAGE ENTERTAINMENT, INC. and SUBSIDIARIES
                                TABLE OF CONTENTS


 PAGE NO. Part I. Financial Information

       Item 1. Consolidated Financial Statements

                   Balance Sheets.................................... 3
                   Statements of Operations.......................... 4
                   Statements of Cash Flows.......................... 6
                   Notes to Financial Statements..................... 7
       Item 2. Management's Discussion and Analysis
                   Of Financial Condition and Results of Operations.. 13-24
Part II. Other Information

       Item 1.  Legal Proceedings.................................... 25
       Item 2.  Changes in Securities................................ 25
       Item 3.  Defaults Upon Senior Securities...................... 26
       Item 4.  Submission of Matters to a Vote of Security Holders.. 26
       Item 5.  Other Information.................................... 26
       Item 6.  Exhibits and Reports on Form 8-K..................... 26
Signatures........................................................... 27


                                       2


<PAGE>



PART I.   FINANCIAL INFORMATION

Item 1.  Financial Statements

                  On Stage Entertainment, Inc. and Subsidiaries
                           Consolidated Balance Sheets


                                         December 31,        September 30,
                                            1997                  1998
                                        -----------------------------------
                                                   (Unaudited) Assets
Current Assets
 Cash and cash equivalents............  $ 2,323,559            $  783,370
  Accounts receivable.................      455,340             1,194,241
 Inventory ...........................      118,700               227,731
   Deposits...........................      342,096               455,248
   Prepaid and other assets...........      271,338               458,686
    Pre-opening costs, net............           --             1,071,557
   Notes receivable from officers, net      136,194                53,612
                                        ------------          ------------
      Total current assets ...........    3,647,227             4,244,445
                                        ------------          ------------
Property, equipment and leasehold
improvements (Note 5).................    5,008,835            24,152,219 
Less: Accumulated depreciation
and amortization......................   (2,553,347)           (3,256,717)
                                        ------------          ------------ 
Property, equipment and leasehold
improvements, net.....................    2,455,488            20,895,502
                                        ------------          ------------ 
Cost in excess of net assets acquired,
net of accumulated amortization
of  $7,370 and  $18,083...............      116,415               105,703 
Direct acquisition costs..............      258,133               235,474 
Deferred financing costs, net of
amortization of $49,121 (Note 5)......           --             1,346,049
                                        ------------          ------------
                                        $ 6,477,263           $26,827,173
                                        ============          ============ 
Liabilities and Stockholders Equity
Current Liabilities
 Accounts payable and accrued expenses. $   880,286             2,058,374
 Accrued payroll and other liabilities.     698,499             1,638,662
 Current maturities of long-term debt..     271,918             1,434,440
                                        ------------          ------------
     Total current liabilities.........   1,850,703             5,131,476
                                        ------------          ------------


                                       3


<PAGE>




Long-term debt, less current
maturities (Note 5)....................     550,332            14,569,999
                                        ------------          ------------
     Total liabilities.................   2,401,035            19,701,475
                                        ------------          ------------ 
Stockholder's equity
  Preferred Stock, par value $1 per
  share, 1,000,000 shares authorized;
  none
  issued and outstanding...............          --                    --
     Common Stock, par value $0.01
     per share; authorized 25,000,000
     shares; 6,595,500 and 7,597,350
     shares issued and outstanding.....      65,955                73,973
     Additional paid-in capital........   7,340,013            11,200,307
     Accumulated deficit...............  (3,329,740)           (4,148,582)
                                        ------------          ------------
     Total stockholder's equity........   4,076,228             7,125,698
                                        ------------          ------------
                                        $ 6,477,263          $ 26,827,173
                                        ============         =============


                  On Stage Entertainment, Inc. and Subsidiaries
                      Consolidated Statements of Operations


                                                 Three months ended
                                                    September 30,
                                              1997              1998
                                        -----------------------------------
                                           (Unaudited)      (Unaudited)
Net revenues ........................    $  5,070,727     $   8,059,669
 Cost of revenues....................       3,470,812         6,051,417
                                        --------------    -------------- 
Gross profit ........................       1,599,915         2,008,252 
Selling, general and administrative..       1,375,325         1,271,355 
Depreciation and amortization........         282,707           690,557
                                        --------------    -------------- 
Operating income loss................         (58,117)           46,340 
Interest expense, net ...............         681,084           314,693 
Other income.........................              --            (1,383) 
Net loss before income taxes ........        (739,201)         (266,970) 
Income taxes.........................           3,644            10,058
                                        --------------   --------------- 
Net loss ............................    $   (742,845)    $    (277,028)
                                        ==============   =============== 
Basic loss per share ................    $      (0.13)    $       (0.04) 
Diluted net loss per share ..........           (0.13)            (0.04) 
Basic average number of common
  shares outstanding ................    $   5,675,235    $   7,397,350
                                        ==============   =============== 
Diluted average number of
  common shares outstanding..........    $   5,675,235    $   7,397,350
                                        ==============   ===============

                                       4


<PAGE>


                 On Stage Entertainment, Inc. and Subsidiaries
                      Consolidated Statements of Operations


                                                  Nine months ended
                                                    September 30,
                                                1997            1998
                                        ----------------------------------
                                          (Unaudited)        (Unaudited)

Net revenues ........................   $   11,769,189    $   22,509,621 
Cost of revenues ....................        7,943,564        16,973,103
                                        ---------------    -------------- 
Gross profit.........................        3,825,625         5,536,518 
Selling, general and administrative..        3,322,328         4,092,430 
Depreciation and amortization........          601,816         1,209,117
                                        --------------     --------------
Operating income (loss)..............          (98,519)          234,971 
Interest expense, net................          855,095           760,174 
Other income.........................               --           (84,190) 
Subsidiary income for period
  not owned .........................               --           366,516 
Net loss before income taxes.........         (953,614)         (807,529)
Income taxes.........................            5,963            11,313
                                        --------------      -------------
Net loss.............................   $     (959,577)   $     (818,842)
                                        ==============     ==============

Basic loss per share ................   $        (0.20)   $        (0.12) 
Diluted net loss per share ..........   $        (0.20)   $        (0.12)
Basic average number of common
 shares outstanding..................   $    4,807,972    $    7,100,870
                                        ==============     ==============
Diluted average number of common
 shares outstanding .................   $    4,807,972    $    7,100,870
                                        ==============     =============


                                       5


<PAGE>





                      Consolidated Statements of Cash Flows
                Increase (Decrease) in Cash and Cash Equivalents


                                                Nine months ended
                                                  September 30,
                                             1997              1998
                                          (Unaudited)       (Unaudited)
                                          ------------------------------

   
Cash flows from operating activities
  Net loss............................    $  (959,577)      $   (818,842)
                                          ------------       ------------ 
Adjustments to reconcile net loss
 to net cash provided by (used in)
 operating activities:
   Depreciation and amortization .....        511,990            773,203 
Interest paid in Common Stock ........        194,228                 -- 
Issuance of Common Stock to CFO.......        162,129                 --
     Non-cash interest ...............        444,000                 --
     Forgiveness of note receivable
     from stockholder ................        221,521                 --
     Increase (decrease) from changes
     in operating assets and
     liabilities......................             --                 --
     Accounts receivable .............       (184,334)          (738,911)
     Inventory .......................        (23,008)            11,053
     Deposits ........................       (231,078)          (113,152)
     Pre-opening costs ...............       (452,131)        (1,071,557)
     Prepaid and other assets.........       (296,728)           (29,832)
     Accounts payable and accrued
       expenses.......................        182,329             89,692
     Accrued Payroll and other
       liabilities ...................         21,726            940,183
     Litigation settlement accrual....       (100,000)                --
                                         -------------       ------------
   Total adjustments .................        450,644           (139,231)
                                         -------------       ------------ 
Net cash  used in operating
  activities..........................       (508,933)          (958,173)
                                         -------------       ------------ 
Cash  investing activities
  Advances on note receivable from
  stockholder.........................       (221,521)            82,582
  Capital expenditures ...............       (506,235)          (886,424)
  Direct acquisition costs ...........             --            678,844
  Payment for acquisitions, less cash
   received ..........................             --        (14,602,829)
                                         -------------      ------------- 
Net cash  used in investing
 activities ..........................       (727,756)       (14,727,827)
                                         -------------      -------------
    

                                       6


<PAGE>




Cash used in financing activities:
  Borrowing  under line of credit.....             --          1,000,000 
Proceeds from long-term borrowing.....             --         13,727,237
  Repayments on long-term borrowing...       (750,000)          (581,426)
   Proceeds from bridge notes ........        875,000                 --
     Payments of bridge notes ........       (875,000)                --
     Net proceeds from sale of
     common stock and warrants .......      5,289,215                 --
                                         -------------     -------------- 
Net cash provided by financing
  activities .........................      4,539,215         14,145,811
                                         -------------     --------------
Net increase in cash and cash
  equivalents.........................      3,302,526         (1,540,189)
                                         -------------     --------------
Cash and cash equivalents at
  beginning of period.................        290,751          2,323,559
                                         ------------      -------------- 
Cash and cash equivalents at end
  of period ..........................      3,593,277            783,370
                                         ============      ==============

Supplemental  disclosure  of cash flow  information  Cash paid during the period
for:

  Interest ...........................   $    218,879       $    675,984
  Taxes ..............................   $      5,963       $     11,313
                                         ============      =============

Supplemental  schedule of non-cash investing and financing activities During the
nine months ended September 30, 1997 and 1998,  $704,000 and $1,082,236 of lease
assets and other obligations,  principally  pre-opening costs, were capitalized,
respectively.

In  connection  with mortgage  financing  related to the Gedco  Acquisition  (as
defined in Note 5 of Part I), the Company  issued  575,000  warrants to purchase
the Company's  Common Stock to the lender and an affiliate of the lender,  which
were valued at $500,000 and accounted for as an original issue discount.
                                       7


<PAGE>




                  On Stage Entertainment, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                               September 30, 1998


(1) Basis of Presentation

The  financial  statements  included  herein  include  the  accounts of On Stage
Entertainment,  Inc., a publicly  traded Nevada  corporation  (the  "Company" or
"OSE") and its  subsidiaries,  Legends in Concert,  Inc.,  a Nevada  corporation
("LIC"); On Stage Marketing, Inc., a Nevada corporation ("Marketing");  On Stage
Theaters, Inc., a Nevada corporation ("Theaters"); Wild Bill's California, Inc.,
a Nevada  corporation ("Wild Bills");  Fort Liberty,  Inc., a Nevada corporation
("Ft. Liberty");  Blazing Pianos, Inc., a Nevada corporation  ("Blazing");  King
Henry's Inc., a Nevada corporation ("King Henry's"); On Stage Merchandise, Inc.,
a  Nevada  corporation   ("Merchandise');   On  Stage  Events,  Inc.,  a  Nevada
corporation   ("Events");   On  Stage  Casino  Entertainment,   Inc.,  a  Nevada
corporation  ("Casino");  On  Stage  Productions,   Inc.,  a  Nevada  coporation
("Productions");   On  Stage  Theaters  North  Myrtle  Beach,   Inc.,  a  Nevada
corporation  ("North Myrtle");  On Stage Theaters Surfside Beach, Inc., a Nevada
corporation  ("Surfside");  and Interactive Events,  Inc., a Georgia corporation
(collectively, the "Subsidiaries").  In the opinion of the Company's management,
all adjustments  considered  necessary for fair presentation have been reflected
in the  financial  statements.  These  adjustments  are of a  normal,  recurring
nature.  Operating results for the nine months ended September 30, 1998, are not
necessarily indicative of those expected for the full year. Certain prior period
amounts  have  been  adjusted  and   reclassified  to  conform  to  this  period
presentation.

The accompanying  unaudited interim consolidated  financial statements have been
prepared in accordance  with the  instructions  to Form 10-QSB and the rules and
regulations  of the  Securities  and  Exchange  Commission.  These  consolidated
financial  statements have been prepared under the presumption that users of the
unaudited interim  consolidated  financial  information have either read or have
access to the Company's audited  financial  statements and footnotes thereto for
the year ended  December 31, 1997,  included in the  Company's  Form 10-KSB,  as
amended filed with the Securities and Exchange Commission. Accordingly, footnote
disclosures,  which would substantially  duplicate the disclosures  contained in
the Company's December 31, 1997 audited financial statements,  have been omitted
from these interim consolidated  financial  statements.  Certain information and
footnote  disclosures  normally  included in consolidated  financial  statements
prepared in accordance with generally accepted accounting principles,  have been
condensed or omitted pursuant to such instructions, rules and regulations. These
unaudited  interim   consolidated   financial   statements  should  be  read  in
conjunction with the audited consolidated financial statements and the footnotes
thereto for the year ended  December 31, 1997,  included in the  Company's  Form
10-KSB as amended.

                                       8


<PAGE>





(2) Subsquent Events


Additional ICCMIC Financing

On October  7, 1998,  the  Company's  first  mortgage  lender,  Imperial  Credit
Commercial Mortgage Investment Corp. ("ICCMIC") loaned the Company an additional
$550,000,  secured by a first deed of trust on the Company's  Legends in Concert
Theater in Surfside Beach,  South  Carolina.  In connection with this additional
financing,  the Company  modified  the Common  Stock  purchase  warrant that the
Company  issued  to ICCMIC on March  13,  1998  (and the  corresponding  warrant
agreement)  by  reducing  the  exercise  price of ICCMIC's  325,000  warrants to
purchase shares of the Company's  Common Stock from $4.44 per share to $1.00 per
share.

DY/DX Corp. Common Stock Purchase Agreement

On October 2, 1998,  the Company  entered into a stock  purchase  agreement with
DY/DX  Corp.,  an  Illinois  corporation,  to sell up to  500,000  shares of the
Company's  Common  Stock  at an  aggregate  purchase  price of  $500,000.  As of
November 4, 1998,  DY/DX Corp.  had  purchased  55,000  shares of the  Company's
Common Stock pursuant to this agreement.

Election of Board Members

On July 15, 1998, the Company's Board of Directors elected Mel Woods,  President
of Fox Family Worldwide, as a director on its board, to fill the vacancy created
by Nelson  Foster's  resignation  from his post as a director  of the Company on
June 26, 1998.

On  September 8, 1998,  the  Company's  underwriter,  Whale  Securities  Co., LP
("Whale")  exercised its right to appoint a designee to the  Company's  board of
directors.  In order to create a vacancy for Whale's  designee,  director  Jules
Haimovitz  resigned  his post as a director of the Company on September 8, 1998.
Whale named Matt Gohd as its designee, who was subsequently elected to the board
of directors on September 9, 1998

(3) Loss Per Share

On March 3, 1997, the FASB issued Statement of Financial Accounting Standard No.
128.  Earnings  per share (SFAS 128).  This  pronouncement  provides a different
method of  calculating  earnings per share than is currently  used in accordance
with APB 15, Earnings per Share.  SFAS 128 provides for the calculation of Basic
and Diluted  earnings per share.  Basic  earnings per share includes no dilution
and is computed by  dividing  income  available  to common  shareholders  by the
weighted  average number of common shares  outstanding  for the period.  Diluted
earnings per share  reflects the  potential  dilution of  securities  that could
share in the  earnings  of the entity,  similar to fully  diluted  earnings  per
share.  Except where the provisions of the Securities and Exchange  Commission's
Staff Accounting  Bulletin No. 98 are applicable,  potential dilutive securities
have been excluded in all years  presented in the Statements of Operations  when
the effect of their inclusion would be anti-dilutive.

For the nine months ended  September  30, 1997,  potential  dilutive  securities
representing 421,094 outstanding options and 2,077,000  outstanding warrants are
not  included,  since their effect would be  anti-dilutive.  For the nine months
ended September 30, 1998,  potential dilutive  securities  representing  773,853
outstanding stock options and 4,480,956  outstanding  warrants are not included,
since their effect would be anti-dilutive.

                                       9


<PAGE>




(4) Commitments and Contingencies

The Company is a party to various legal proceedings in which the adverse parties
are seeking  damages from the Company.  While there can be no assurance that any
of the instituted or threatened  lawsuits will be settled or decided in favor of
the Company, the management of the Company does not believe the final resolution
of these  matters  will  have a  material  adverse  effect  upon  the  Company's
financial  condition and results of operations.  (5) Business  Acquisition Gedco
USA, Inc. Acquisition

On March 13, 1998, the Company  completed its acquisition of certain assets from
Gedco  USA,  Inc.  and its  affiliates  for a  purchase  price  of  $14,000,000,
consisting of  $11,500,000  in cash and 595,238 shares of Common Stock valued at
$2,500,000 (the "Gedco Acquisition").

Included in the Gedco Acquisition were substantially all of the income producing
assets and  associated  real property of Orlando  Entertains  and LA Entertains,
consisting  of King Henry's  Feast,  Blazing  Pianos piano bar, the Fort Liberty
shopping  complex that includes a Wild Bill's Dinner  Theater,  each of which is
located in greater  Orlando,  Florida,  and a second Wild Bill's Dinner  Theater
located in Buena Park,  California.  Gerard  O'Riordan,  President of Gedco USA,
Inc.,  joined the Company as  President  of On Stage  Theaters,  Inc.,  a wholly
subsidiary  of the Company that manages the acquired  dinner  theaters and piano
bar as well as other selected theaters.

The Company funded the cash portion of the purchase price and  transaction  fees
and expenses  with $12.5  million of mortgage  financing  from  Imperial  Credit
Commercial Mortgage Investment Corp. ("ICCMIC"). ICCMIC has committed a total of
$20,000,000,  of which  $7,500,000 is remaining to finance the Company's  future
real estate related acquisitions.  In connection with the loan agreement entered
into  between the  Company and ICCMIC on March 13, 1998 (the "Loan  Agreement"),
the  Company  granted  ICCMIC the right to  provide  the  Company  with up to an
additional $30 million of similar  mortgage  financing.  In connection  with the
financing,  the  Company  issued  ICCMIC  and  Imperial  Capital  Group  LLC (an
affiliate of ICCMIC), an aggregate of 575,000 warrants  immediately  exercisable
into  shares of Common  Stock at an  exercise  price of $4.44,  which  price was
adjusted on October 7, 1998. See "Additional  ICCMIC Financing" in Note 2 above.
In addition,  concurrently with the ICCMIC financing, Mark Karlan, the President
of ICCMIC,  was named a member of the Company's  Board of  Directors,  filling a
vacancy created by the resignation of Kenneth Berg.

The  components  of the  purchase  price and its  allocation  to the  assets and
liabilities are as follows:

Purchase Price:
Liabilities assumed .....................................    $   986,044 
Issuance of 595,238 restricted shares of common stock....      2,500,000
                                                            ------------
                                                               3,486,044 
Cost of acquisition incurred.............................      1,645,874 
Cash paid................................................     11,500,000
                                                            ------------
                                                             $16,631,918
                                                            ============
                                       10


<PAGE>





Cash paid for the  purchase  of Gedco,  USA,  Inc.  Net of cash  received  is as
follows:

Cash paid to sellers ....................................    $11,500,000 
Acquisition costs........................................      1,645,874
                                                            -------------
                                                              13,145,874 
Less cash received.......................................       (383,444)
                                                            -------------
                                                             $12,762,430
                                                            =============

The costs of acquisition  increased primarily relates to the lenders origination
fee of $750,000, legal fees of $240,000,  financing fees of $100,000,  recording
fees of $100,000, and accounting fees of $125,000.

The  acquisition  was accounted  for as a purchase and the assets  acquired were
recorded  at  a  fair  market  value.  The  building  and  equipment  are  being
depreciated over twenty and three years,  respectively,  under the straight-line
method.  The costs of  acquisition  incurred  primarily  relates to the  lenders
origination fee of $750,000, legal fees of $240,000, financing fees of $100,000,
recording fees of $100,000,  and accounting fees of $125,000.  The allocation of
the purchase price was as follows:


Cash....................................................    $   383,444
Inventory...............................................        120,084 
Prepaid Expenses........................................        157,516 
Land....................................................     11,275,507 
Building................................................      3,214,740 
Equipment...............................................        730,627 
Deferred financing acquisition expenses.................        750,000
                                                            ------------ 
Deferred financing acquisition expenses ................    $16,631,918
                                                            ============

The assets  acquired  and  liabilities  assumed were  transferred  to either the
Company's wholly-owned  subsidiary,  On Stage Theaters,  Inc., or a wholly owned
subsidiary of On Stage  Theaters,  Inc.,  concurrent with the  acquisition.  The
Company has elected to consolidate  the operations of the assets acquired in the
Gedco   Acquisition   retroactively   to  January  1,   1998.   Therefore,   the
pre-acquisition gain of $366,516 has been added to the consolidated statement of
operations  for the nine months ended  September  30,  1998.  The effect of this
consolidation of operations prior to acquisition was an increase in net sales of
approximately $3,099,071.

                                       11


<PAGE>




Calvin Gilmore Productions, Inc.

On June 30, 19998, the Company  completed its acquisition of certain assets from
Calvin Gilmore Productions,  Inc. ("CGP"), an affiliate of Fox Family Worldwide,
for a purchasep  rice of $1,000,000  in cash and 206,612  shares of Common Stock
valued at $723, 142 (the "Fox Acquistion").

Included in the Fox Acquisition were substantially all of CGP's income producing
assets and  associated  real and personal  property in the greater Myrtle Beach,
South Carolina area, consisting of the fee simple purchase of the Surfside Beach
Theater,  which the  Company  has leased  from CGP for its  presentation  of its
flagship Legends in Concert  production since 1995, and a leasehold  interest in
The Eddie Miles Theater. In connection with the Fox Acquisition,  Mel Woods, the
Chief Operating Officer of Fox Family Worldwide,  was subsequently  elected as a
member of the  Company's  Board of Directors,  filling a vacancy  created by the
resignation of Nelson Foster.

The Company funded the cash portion of the purchase price and  transaction  fees
and expenses with $1,100,000 million of mortgage financing from ICCMIC.
                                       12


<PAGE>




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

This document  contains certain  forward-looking  statements that are subject to
risks and uncertainties.  Forward-looking statements include certain information
relating to its outstanding litigation matters and the defenses available to the
Company,  the  seasonality of the Company's  business,  and liquidity as well as
information contained elsewhere in this report where statements are preceded by,
followed by or include the words "believes," "expects," "anticipates" or similar
expressions. Such statements use forward-looking terminology such as "believes",
"expects",  "may",  "will",  "should",  "seeks",  "pro  forma",   "anticipates",
"intends",  or the  negative of any therof,  or of other  variations  thereon or
comparable  terminology,  or by discussion of strategy or  intentions.  For such
statements,   the  Company   claims  the  protection  of  the  safe  harbor  for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.  The  forward-looking  statements  in this  document are subject to
risks and  uncertainties  that  could  cause  the  assumptions  underlying  such
forward-looking  statements  and the actual  results to differ  materially  from
those expressed in or implied by the statements.

The most  important  factors that could  prevent the Company from  achieving its
goals and cause the assumptions  underlying the  forward-looking  statements and
the actual results of the Company to differ  materially  from those expressed in
or implied by those forward-looking  statements include, but are not limited to,
those identified in pages _____ of Amendment No. 5 to the Company's Registration
Statement on Form SB-2 filed with the Commission on June 12, 1998  (Registration
No.  333-56785),  as  amended  as  well  as the  following:  (i)  the  Company's
dependence on its flagship  productions  Legends in Concert,  Wild Bill's Dinner
Extravaganza,  Blazing Pianos,  King Henry's Feast and its principal  production
venues;  (ii) the ability of the Company to successfully  produce and market new
productions and to manage the growth  associated  with the any new  productions;
(iii) risks associated with the Company's  acquisition  strategy,  including the
Company's  ability to successfully  identify,  complete and integrate  strategic
acquisitions;  (iv) the Company's  ability to obtain  financing on  commercially
reasonable   terms;  (v)  the  Company's  ability  to  service  its  substantial
indebtedness;  (vi) the  competitive  nature of the  leisure  and  entertainment
industry and the ability of the Company to continue to distinguish its services;
(vii) fluctuations in quarterly operating results and the highly seasonal nature
of the  Company's  business;  (viii) the ability of the Company to reproduce the
performance, likeness and voice of various celebrities without infringing on the
publicity  rights of such celebrities or their estates as well as its ability to
protect its  intellectual  property  rights;  (ix) the ability of the Company to
successfully  manage  the  litigation  pending  against  it and to avoid  future
litigation;  and (x) the results of operations  which depend on numerous factors
including, but not limited to, the commencement and expiration of contracts, the
timing  and amount of new  business  generated  by the  Company,  the  Company's
revenue  mix,  the  timing  and  level  of  additional   selling,   general  and
administrative expense and the general competitive conditions in the leisure and
entertainment industry as well as the overall economy.

                                       13


<PAGE>





Year 2000

The Year 2000 issue is the result of computer  programs  being written using two
digits rather than four to define the applicable  year.  The Company's  computer
equipment   and  software  and  devices  with  embedded   technology   that  are
time-sensitive  may recognize a date using "00" as the year 1900 rather than the
year 2000.  This could  result in a system  failure or  miscalculations  causing
disruptions of operations,  including, among other things, a temporary inability
to process accounting,  payroll,  database,  network, and software transactions,
possible disruption of environmental,  lighting, and security controls, possible
disruption  of copier  and fax  capabilities,  and loss of  telephone  voicemail
messages,  in addition to other similar normal business activities.  The Company
has  undertaken  various  initiatives  intended  to  ensure  that  its  computer
equipment and software will function  properly with respect to dates in the Year
2000  and  thereafter.  For  this  purpose,  the term  "computer  equipment  and
software"   includes  systems  that  are  commonly  thought  of  as  Information
Technology  ("IT")  systems,   including   accounting,   data  processing,   and
telephone/PBX  systems and other miscellaneous  systems, as well as systems that
are not commonly thought of as IT systems,  such as alarm systems, fax machines,
air conditioning  units,  internally  developed software and other miscellaneous
systems.  Both IT and non-IT  systems may  contain  embedded  technology,  which
complicates the Company's Year 2000 identification, assessment, remediation, and
testing efforts.  Based upon its  identification and assessment efforts to date,
the Company  believes  that  certain of the computer  equipment  and software it
currently uses may require  replacement  or  modification.  In addition,  in the
ordinary  course of  replacing  computer  equipment  and  software,  the Company
attempts to obtain  replacements  that are Year 2000  compliant.  Utilizing both
internal  and  external  resources  to  identify  and  assess  needed  Year 2000
remediation,   the   Company   currently   anticipates   that  its   Year   2000
identification,  assessment,  remediation  and testing  efforts,  which began in
February 1998, will be completed by June 30, 1999. The Company estimates that as
of September  30, 1998, it had completed  approximately  25% of the  initiatives
that it believes will be necessary to fully address  potential  Year 2000 issues
relating to its computer  equipment and software.  The projects  comprising  the
remaining 75% of the  initiatives are in process and expected to be completed on
or about June 30, 1999.  Additionally,  the Company has recently  commenced  its
initiatives  relating to the non-IT  systems.  The following table describes the
Year 2000  initiatives  as well as the  Company's  progress and the  anticipated
completion dates as of September 30, 1998:

Time Percent Year 2000 Initiatives Table Complete
Initial IT system identification........................... 2/98 - 10/98 100% 
Initial IT system assessment............................... 2/98 - 11/98 95% 
Remediation and testing regarding central system issues.... 2/98 - 6/99  15%
                                       14


<PAGE>




Identification, assessment, remediation and testing
 regarding desktop and individual system issues............ 2/98 - 6/99  35% 
Identification regarding non-IT system issues.............. 2/98 - 10/98 100% 
Assessment regarding non-IT system issues.................. 2/98 - 11/98 65% 
Remediation and testing regarding non-IT system issues..... 2/98 - 6/99  35%

The Company is in the process of communicating with its significant  vendors and
service  providers  and  strategic  partners  to  determine  the extent to which
interfaces  with such  entities are  vulnerable  to Year  entities are Year 2000
compliant.  This  process is expected to be  completed  in  December  1998.  The
Company  believes  that the cost of its Year 2000  assessment,  remediation  and
testing  efforts,  as well as those  costs  related to Year 2000 issues of third
parties,  are expected to  approximate  $250,000.  As of September 30, 1998, the
Company  had  not  incurred  any  external   costs  related  to  its  Year  2000
identification, assessment, remediation and testing efforts. Other non-Year 2000
IT  efforts  have  not  been  materially   delayed  or  impacted  by  Year  2000
initiatives.  The Company  presently  believes that the Year 2000 issue will not
pose  significant  operational  problems for the Company.  However,  if all Year
2000issues are not properly identified,  or assessment,  remediation and testing
are not effected  timely with respect to Year 2000 problems that are identified,
there can be no assurance that the Year 2000 issue will not materially adversely
impact the Company's  results of  operations  or adversely  affect the Company's
relationships with vendors, or others.  Additionally,  there can be no assurance
that the Year 2000  issues of other  entities  will not have a material  adverse
impact on the Company's results of operations.


                                       15


<PAGE>




Results of Operations

The following table sets forth, the results of operations by the Company for the
period indicated:


                     Three Months Ended September 30, 1997
          ----------------------------------------------------------
                         Casinos        Events     Merchandise    Theaters
-----------------      ----------      --------    -----------    ---------- 
Net revenues........   $1,736,111    $ 568,899    $  165,761     $2,599,956 
Cost of revenues....    1,073,185      284,816        43,008      2,028,898
                       ----------      --------    -----------    ---------- 
Gross profit........      662,926      284,083       122,753        571,058 
Selling, general
 & administrative...       86,391      142,448           665        127,524 
Depreciation &
 amortization.......       33,844          597            --        118,596
                       ----------     ---------    -----------    ---------- 
Operating income(loss)    542,691      141,038       122,088      1,130,755 
Interest expense(net)          --          (31)            --           (31)
                       ----------     ---------    -----------    ---------- 
Net income (loss)
 before income taxes.     542,691      141,069        122,088       324,938 
Income taxes.........          --        1,306             --            --
                       ==========     =========    ===========    ========== 
Net income (loss)       $ 542,691     $139,763     $  122,088    $  324,938



                     Three Months Ended September 30, 1997
          ----------------------------------------------------------
                       Sub-Total
                       Operating                                   Total
                      Corporations   Production        OSE        Consolidated 
-----------------     ------------   ----------    -----------    ------------ 
Net revenues........   $5,070,727    $      --    $        --     $5,070,727 
Cost of revenues....    3,429,907       40,905             --      3,470,812
                       ----------      --------    -----------    ---------- 
Gross profit........    1,640,820      (40,905)            --      1,599,915 
Selling, general
 & administrative...      357,028       15,751      1,002,546      1,375,325  
Depreciation &
 amortization.......      153,037           --        129,670        282,707
                       ----------     ---------    -----------    ---------- 
Operating income(loss)  1,130,755      (56,656)    (1,132,216)       (58,117) 
Interest expense(net)         (31)          --        681,115        681,084
                       ----------     ---------    -----------    ---------- 
Net income (loss)
 before income taxes.   1,130,755      (56,656)    (1,813,331)      (731,201) 
Income taxes.........       1,306           --          2,338          3,644
                       ==========     =========    ===========    ========== 
Net income (loss)      $1,129,480     $(56,656)   $(1,815,669)    $ (742,845)


                                       16


<PAGE>




                      Three Months Ended September 30, 1998
          ----------------------------------------------------------
                         Casinos        Events     Merchandise    Theaters 
-----------------      ----------      --------    -----------    ---------- 
Net revenues........   $1,355,908    $ 774,688    $  785,830     $5,143,243 
Cost of revenues....      908,706      529,616       467,911      4,095,460
                       ----------      --------    -----------    ---------- 
Gross profit........      447,202      245,072       317,919      1,047,783 
Selling, general
 & administrative...       40,506      216,655            --        327,932 
Depreciation &
 amortization.......       90,507       12,646         1,565        517,461
                       ----------     ---------    -----------    ---------- 
Operating income(loss)    316,189       15,771       316,354        202,930 
Interest expense(net)          --          (3)            75        255,655
                       ----------     ---------    -----------    ---------- 
Other
income.........                                                      (1,383) 
Net income (loss)
 before income taxes.     316,189       15,774       316,279        (51,882) 
Income taxes.........          --           --            --             --
                       ==========     =========    ===========    ========== 
Net income (loss)      $  316,189     $ 15,774     $ 316,279      $ (51,882)



                     Three Months Ended September 30, 1998
          ----------------------------------------------------------
                       Sub-Total
                       Operating                                   Total
                      Corporations   Production        OSE        Consolidated 
-----------------     ------------   ----------     ----------    ------------ 
Net revenues........   $8,059,669   $      --      $       --     $8,059,669 
Cost of revenues....    6,001,693       49,724             --      6,051,417
                       ----------      --------    -----------    ---------- 
Gross profit........    2,057,976      (49,724)            --      2,008,252 
Selling, general
 & administrative...      585,093      112,736        573,526      1,271,355  
Depreciation &
 amortization.......      662,179       22,265         46,113        690,557
                       ----------     ---------    -----------    ---------- 
Operating income(loss)    850,704     (184,725)      (619,639)        46,340 
Interest expense(net)     255,727           --         58,966        314,693
                       ----------     ---------    -----------    ---------- 
Other income.........     (1,383)                                     (1,383) 
Net income (loss)
 before income taxes.     596,360     (184,725)      (678,605)      (266,970) 
Income taxes.........          --           --         10,058         10,058
                       ==========     =========    ===========    ========== 
Net income (loss)      $ (596,360)   $(184,725)    $ (688,663)    $ (277,028)


                                       17


<PAGE>




Results of Operations

The following tables set forth, the results of operations by the Company for the
period indicated:



                      Nine Months Ended September 30, 1997
           ----------------------------------------------------------
                         Casinos        Events     Merchandise    Theaters 
-----------------      ----------     ----------   -----------    ---------- 
Net revenues........   $5,068,327     $1,707,262    $  319,672    $4,673,928 
Cost of revenues....    3,058,872      1,047,288        82,986     3,653,376
                       ----------     ----------   -----------    ---------- 
Gross profit........    2,009,455        659,974       236,686     1,020,552 
Selling, general
 & administrative...      228,681        447,893           665       226,379 
Depreciation &
 amortization.......      102,133            745            --       132,560
                       ----------     ----------    -----------    ---------- 
Operating income(loss)  1,678,641        211,336       236,021       661,613 
Interest expense(net)          --           (277)           --            --
                       ----------     ----------    -----------    ---------- 
Net income (loss)
 before income taxes.   1,678,641        211,613       236,021       661,613 
Income taxes.........          --          3,029            --            --
                       ==========     ==========    ===========    ========== 
Net income (loss)      $1,678,641     $  208,584    $  236,021     $ 661,613



                     Nine Months Ended September 30, 1997
          ----------------------------------------------------------
                       Sub-Total
                       Operating                                   Total
                      Corporations   Production        OSE        Consolidated 
-----------------     ------------   ----------    -----------    ------------ 
Net revenues........  $11,769,189    $      --     $       --    $11,769,189 
Cost of revenues....    7,842,522      101,042             --      7,943,564
                       ----------      --------    -----------    ---------- 
Gross profit........    3,926,667     (101,042)            --      3,825,625 
Selling, general
 & administrative...      903,618       51,780      2,366,930      3,322,328 
Depreciation &
 amortization.......      235,438           --        366,378        601,816
                       ----------     ---------    -----------    ---------- 
Operating income(loss)  2,787,611     (152,822)    (2,733,308)       (98,519) 
Interest expense(net)        (277)          --        855,372        855,095
                       ----------     ---------    -----------    ---------- 
Net income (loss)
 before income taxes.   2,787,888     (152,822)    (2,733,308)      (953,614) 
Income taxes.........       3,029           --          2,934          5,963
                       ==========     =========    ===========    ========== 
Net income (loss)      $2,784,859    $(152,822)   $(3,591,614)    $ (959,577)


                                       18


<PAGE>





                      Nine Months Ended September 30, 1998
          ----------------------------------------------------------
                         Casinos        Events     Merchandise    Theaters 
-----------------      ----------     ----------   -----------    ---------- 
Net revenues........   $4,415,580     $2,184,450   $ 1,001,519   $14,908,072 
Cost of revenues....    2,913,506      1,434,141       541,171    11,908,301
                       ----------     ----------   -----------    ---------- 
Gross profit........    1,502,074        750,309       460,348     2,999,771 
Selling, general
 & administrative...      138,336        633,795         4,702     1,370,436 
Depreciation &
 amortization.......      172,174         27,027         3,809       772,355
                       ----------     ----------    -----------    ---------- 
Operating income(loss)  1,191,564         89,487       451,837       856,980 
Interest expense(net)          --           (36)            75       594,826
                       ----------     ----------    -----------    ---------- 
Other income.........
Subsidiary operations
 for period not owned.                                               366,516 
Net income (loss)
 before income taxes.   1,191,564         89,523       451,762      (104,362) 
Income taxes.........          --             --            --            --
                       ==========     ==========    ===========    ========== 
Net income (loss)      $1,191,564     $   89,523    $  451,762     $(104,362)


                     Nine Months Ended September 30, 1998
          ----------------------------------------------------------
                       Sub-Total
                       Operating                                   Total
                      Corporations   Production        OSE        Consolidated 
-----------------     ------------   ----------     ----------    ------------ 
Net revenues........  $22,509,621   $        --    $       --     $ 22,509,621 
Cost of revenues....   16,797,119       175,984            --       16,973,103
                       ----------      --------    -----------    ------------ 
Gross profit........    5,712,502      (175,984)            --       5,536,518 
Selling, general
 & administrative...    2,147,269      121,144      1,824,017        4,092,430 
Depreciation &
 amortization.......      975,365       22,324        211,428        1,209,117
                       ----------     ---------    -----------    ------------ 
Operating income(loss)  2,589,868     (319,452)    (2,035,445)         234,971 
Interest expense(net)     594,865           --         81,119          675,984
                       ----------     ---------    -----------    ------------ 
Other income.........
Subsidiary operations
 for period not owned.    366,516                                      366,516 
Net income (loss)
 before income taxes.   1,628,487      (319,452)    (2,116,564)       (807,529) 
Income taxes.........          --           --          11,313          11,313
                       ==========     =========    ===========     =========== 
Net income (loss)      $1,628,487    $ (319,452)   $(2,127,877)    $  (818,842)

                                       19


<PAGE>




Three Months Ended  September  30, 1997 versus Three Months Ended  September 30,
1998

Net Revenues.  Revenues  increased by 58.9% to  $8,060,000  for the three months
ended  September  30, 1998  compared to  $5,071,000  for the three  months ended
September  30,  1997.  The  Company's  revenue  is derived  from four  principal
operating corporations: Casinos, Events, Merchandise and Theaters.

Casinos  revenues  were  approximately  $1,356,000  for the three  months  ended
September 30, 1998 compared to $1,736,000  for the three months ended  September
30,  1997,  a  decrease  of  $380,000,  or 21.9%.  The  decrease  was  primarily
attributable to decrease in revenue  generated from limited run casino shows and
the Legends' show at the Imperial Palace Hotel and Casino.

Events  revenues  were  $775,000 for the three months ended  September  30, 1998
compared to $569,000 for the three months ended  September 30, 1997, an increase
of $206,000  or 36.2%.  This  increase  was mainly  attributable  to increase in
business.

Merchandise  revenues  were  approximately  $786,000  for the three months ended
September 30, 1998 compared to $166,000 for the three months ended September 30,
1997, an increase of $621,000 or 374.1% . This increase was mainly  attributable
to an increase in photo sales and the inclusion of Gedco Acquisition properties.
Theaters  revenues  were  approximately  $5,143,000  for the three  months ended
September 30, 1998 compared to $2,600,000  for the three months ended  September
30, 1997,  an increase of  $2,543,000,  or 97.8%.  This increase in revenues was
primarily  attributed  to new show openings in Branson,  Missouri,  and Toronto,
Canada and the inclusion of Gedco Acquisition properties.

Costs of Revenues.  Total costs of revenues were $6,051,000 for the three months
ended  September  30, 1998  compared to $ 3,471,000  for the three  months ended
September  30,  1997,  an increase of  $2,580,000,  or 74.4%.  Costs of revenues
increased to 75.1% of net revenues  for the three  months  ended  September  30,
1998, as compared to 68.4% for the three months ended  September 30, 1997.  This
increase in cost of revenues as a % of net revenues was  primarily  attributable
to a change in the mix of the Company's revenues from primarily theater shows to
theater and dinner theater shows.

Selling,  General and Administrative.  Selling, general and administrative costs
were  approximately  $1,271,000 for the three months ended September 30, 1998 as
compared to $1,375,000 for the three months ended September 30, 1997, a decrease
of $104,000,  or 7.6%.  Selling,  general and administrative  costs decreased to
15.8% of net revenues for the three months ended September 30, 1998, as compared
to 27.1% for the three months ended  September  30,  1997,  which was  primarily
attributable to staff reductions.

                                       20


<PAGE>




Operating Income. The Company's  operating income was approximately  $46,000 for
the three months ended  September  30,  1998,  compared to an operating  loss of
$58,000 for the three months ended  September 30, 1997, an increase of $104,000.
Depreciation and  Amortization.  Depreciation and amortization were $576,000 for
the three months ended  September 30, 1998  increased by $408,000 or 144.3%,  as
compared to the three months ended  September 30, 1997, and increase of $293,000
or 103.6%. The increase was primarily due to capital additions to current shows,
new  shows,  and an  increase  in assets  as a result of the Gedco  Acquisition.
Interest Expense,  Net. Interest expense was $427,000 for the three months ended
September 30, 1998 decreased by $391,000,  or 55.4%, as compared to $681,000 for
the three months ended  September 30, 1997, a decrease of $279,00 or 39.4%.  The
decrease  was  primarily  due  to  one-time  interest  expense  related  to  the
conversion  of  debentures  and  the  original  issue  discount  of  the  bridge
financing, which was incurred in 1997, but not in 1998.

Three Months Ended  September  30, 1997 versus Three Months Ended  September 30,
1998

Other  Income.  Other income for the three months ended  September  30, 1998 was
attributable to a sign-on bonus received from a new supplier.

Income Taxes. The Company is a Nevada corporation with a substantial  portion of
revenue and income  derived in Nevada.  There are no state or local income taxes
in Nevada.  The Company accrued no federal income tax for the three months ended
September  30, 1998 three months  ended 1997.  Income taxes for the three months
ended  September  30, 1997 and 1998,  relate to income taxes due in those states
other than Nevada in which the Company conducts business.  At September 30, 1997
and  1998,  the  Company  had  federal  net  operating  loss   carryforwards  of
approximately $1,616,791 and $3,958,386,  respectively. Under Section 382 of the
Internal Revenue Code, certain significant changes in ownership that the Company
is currently  undertaking may restrict the future  utilization of these tax loss
carryforwards.  The net deferred tax assets have a 100% valuation allowance,  as
management  cannot determine if it is more likely than not that the deferred tax
assets will be realized.

Nine months Ended September 30, 1997 versus Nine months Ended September 30, 1998

Net Revenues.  Revenues  increased by 91.3% to  $22,510,000  for the nine months
ended  September  30, 1998  compared to  $11,769,000  for the nine months  ended
September 30, 1997.

Theaters revenues were approximately $14,908,000 for the nine months ended June,
1998  compared to  $4,674,000  for the nine months ended  September 30, 1997, an
increase  of  $10,234,000,  or 219.9%.  The  increase  was  attributable  to the
inclusion of Gedco USA acquisition.

Events  revenues were  $2,184,000  for the nine months ended  September 30, 1998
compared to $1,707,000 for the nine months ended September 30, 1997, an increase
of $477,000 or 28.0%.  This increase was attributable to an increase in business
as a result of an increase in sales people.

                                       21


<PAGE>




Merchandise  revenues were  approximately  $1,002,000  for the nine months ended
September 30, 1998 compared to $320,000 for the nine months ended  September 30,
1997, an increase of $682,000 or 213.3%.  This increase was  attributable  to an
increase in business and the inclusion of the Gedco Acquisition. Casino revenues
were  approximately  $4,415,000  for the nine months  ended  September  30, 1998
compared to $6,068,000 for the nine months ended September 30, 1997, an decrease
of $663,000, or 12.9 % . The decrease was primarily  attributable to a reduction
in revenue generated from limited run casino shows.

Costs of Revenues.  Total costs of revenues were $16,973,000 for the nine months
ended  September  30, 1998  compared  to  $7,944,000  for the nine months  ended
September  30, 1997,  an increase of  $9,030,000,  or 113.7%.  Costs of revenues
increased to 75.4% of net revenues for the nine months ended September 30, 1998,
as compared to 67.5% for the nine months ended September 30, 1997. This increase
in cost of sales as  percentage  of revenues  was  primarily  attributable  to a
change in the mix of the  Company's  revenues  from  primarily  theater shows to
theater and dinner theater shows.

Selling,  General and Administrative.  Selling, general and administrative costs
were  approximately  $4,092,000 for the nine months ended  September 30, 1998 as
compared to $3,322,000 for the nine months ended September 30, 1997, an increase
of $770,000 or 23.2%.  Selling,  general and  administrative  costs decreased to
18.2% of net revenues for the nine months ended  September 30, 1998, as compared
to 28.2% for the nine months ended  September  30,  1997.  The decrease in total
cost is primarily the result of head cost reductions.

Operating Income. The Company's operating income was approximately  $235,000 for
the nine months  ended  September  30, 1998,  compared to an  operating  loss of
$98,000 for the nine months ended  September  30, 1997, an increase of $333,000.
Depreciation and Amortization. Depreciation and amortization for the nine months
ended  September 30, 1998 increased by $607,000,  or 100.9%,  as compared to the
nine months ended  September 30, 1997. The increase was primarily due to capital
additions to current shows,  new shows, and an increase in assets as a result of
the Gedco Acquisition.

Interest Expense,  Net. Interest expense for the nine months ended September 30,
1998  decreased  by  $120,000,  or 13.6%,  as compared to the nine months  ended
September 30, 1997. The decrease was primarily due to one-time  interest expense
related to the  conversion of debentures  and the original issue discount of the
bridge financing,  which was incurred in 1997, but not 1998. Other Income. Other
income for the nine  months  ended  September  30,  1998 was  attributable  to a
sign-on bonus received from a new supplier.

                                       22


<PAGE>




Income Taxes. The Company is a Nevada corporation with a substantial  portion of
revenue and income  derived in Nevada.  There are no state or local income taxes
in Nevada.  The Company  accrued no federal income tax for the nine months ended
September  30, 1998.  Income taxes for the nine months ended  September 30, 1997
and 1998,  relate to income taxes due in those states other than Nevada in which
the Company conducts  business.  At September 30, 1997 and 1998, the Company had
federal  net  operating  loss  carryforwards  of  approximately  $1,616,791  and
$3,958,386 respectively. Under Section 382 of the Internal Revenue Code, certain
significant  changes in ownership that the Company is currently  undertaking may
restrict  the  future  utilization  of  these  tax loss  carryforwards.  The net
deferred  tax assets  have a 100%  valuation  allowance,  as  management  cannot
determine  if it is more  likely than not that the  deferred  tax assets will be
realized.

Liquidity and Capital Resources

General

The Company has  historically  met its working  capital  requirements  through a
combination  of cash  flow  from  operations,  equity  and  debt  offerings  and
traditional bank financing. The Company anticipates, based on its proposed plans
and assumptions relating to its operations (including  assumptions regarding the
anticipated  timetable  of its  new  show  openings  and  the  costs  associated
therewith),   that  the  Company's  current  cash,  cash  equivalent   balances,
anticipated  revenue  from  operations  and its  working  capital  line  will be
sufficient to fund its current operations and contemplated  capital requirements
through December 31, 1998. However, the Company's acquisition strategy also will
require  additional  debt and/or  equity  financing.  In the event the Company's
plans or  assumptions  change,  prove to be  incorrect,  or if  balances  and/or
anticipated revenues otherwise prove to be insufficient,  the Company would need
to revise its expansion  strategy (which revision could include the curtailment,
delay or elimination of certain of its anticipated productions or the funding of
such productions through arrangements with third parties, which would require it
to  relinquish  rights to a  substantial  portion of its  revenues)  and/or seek
additional  financing prior to the end of such period.  The Company is currently
seeking private equity financing and has hired Imperial Capital, LLC.

For the nine months ended September 30, 1997, the Company had a net cash deficit
from operations of $509,000 in operations. As of September 30, 1997, the Company
had approximately  $3,593,000 in cash and cash equivalents.  For the nine months
ended  September 30, 1998, the Company had a net cash deficit from operations of
$958,000 in  operations.  As of September 30, 1998,  the Company had $784,000 in
cash and  cash  equivalents.  The  operating  deficits  for  both  periods  were
primarily  attributable to business  seasonality  and pre-opening  costs for new
shows.

The net cash used in investing  activities  for the nine months ended  September
30, 1997 of $728,000.  The net cash used in investing activities for the quarter
ended  September 30, 1998 of $14,728,000,  was primarily  attributable to direct
acquisition costs related to acquisitions.

Net cash provided by financing  activities  for the nine months ended  September
30, 1997 of  $4,539,000  was  primarily  attributable  to proceeds  from sale of
common  stock.  Net cash  provided by financing  activities  for the nine months
ended September 30, 1998 of $14,146,000,  was primarily attributable to ICCMIC's
funding of $12,500,000 for the Gedco Acquisition and $1,100,000  million for the
Fox Acquisition.

At  September  30,  1997,  the  Company  had  working  capital of  approximately
$4,127,000, primarily attributable from proceeds of the sale of common stock. At
September 30, 1998, the Company had a working capital  deficit of  approximately
$887,031, primarily attributable to the pre-opening costs of new shows.
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Working Capital Line

In May 1997, First Security Bank of Nevada ("First  Security")  issued a line of
credit to the Company for up to $250,000.  Borrowings  under such  facility bear
variable interest at 1.5% over the First Security Bank of Idaho's index (10% per
year as of the facility's  inception) and are due on demand.  On March 28, 1998,
First  Security  increased the line of credit from  $250,000 to  $1,000,000  and
extended the expiration  date of the line to March 25, 1999. As of September 30,
1998, the Company had drawn $1,000,000 on the line of credit. Mortgage Financing
Commitment

On March 13,  1998,  the Company  entered  into the Loan  Agreement  with ICCMIC
pursuant to which ICCMIC agreed to provide the Company with up to $20,000,000 of
mortgage  financing.  On March 28, 1998,  the Company used  $12,500,000  of said
facility to fund the cash  portion of the Gedco  Acquisition  and  related  fees
subsequently  used  $1,100,000  on June 30, 1998 to fund the cash portion of the
Fox  Acquisition  and  $550,000 on October 7, 1998 to help the Company with it's
working  capital  needs.  In  connection  with the Loan  Agreement,  the Company
provided  ICCMIC with the right to provide the Company with up to an  additional
$30,000,000  of mortgage  related  financing.  In addition  concurrent  with the
ICCMIC financing,  Mark Karlan,  the President of ICCMIC,  was named a member of
the Company's  Board of Directors,  filling a vacancy created by the resignation
of Kenneth Berg.

New Accounting Pronouncements

Reporting on the Costs of Start-up Activities

Statement of Position  98-5,  "Reporting  on the Costs of Start-up  Activities,"
(SOP 98-5) issued by the American  Institute of Certified Public  Accountants is
effective for financial  statements  beginning after December 15, 1998. SOP 98-5
requires that the costs of start-up activities, including organization costs, be
expensed as incurred.  Start-up activities are defined broadly as those one-time
activities  related  to opening a new  facility,  introducing  a new  product or
service, conducting business in a new territory,  conducting business with a new
class of customers (excluding ongoing customer acquisition costs, such as policy
acquisition costs and loan origination  costs) or beneficiary,  initiating a new
process in an existing facility, or commencing some new operation.  The adoption
of SOP 98-5 will  require  the Company to expense  all  capitalized  pre-opening
costs. Such costs were $1,071,557 at September 30, 1998.

Diclosure About Segments of an Enterprise and Related Information
Statement of Financial  Accounting Standards No. 131, "Disclosure About Segments
Of An Enterprise and Related  Information," (SFAS No. 131) issued by the FASB is
effective for financial  statemetns  with fiscal years  beginning after December
15, 1997.  Earlier  application is permitted.  SFAS No. 131 requires that public
companies  report  certain  information  about  operating  segments,   products,
services and geographical areas in which they operate and their major customers.
The Company  adopted  SFAS 131 as of January 1, 1998 and it had no effect on its
financial position or results of operations.

Accounting for Derivative Instruments and Hedging Activities
In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments  and Hedging  Activities"  effective for financial  statements  with
fiscal  years   beginning   After  June  15,  1999.  SFAS  No.  133  provides  a
comprehensive  and consistent  standards for the  recognition and measurement of
derivatives  and hedging  activities and requires all derivatives to be recorded
on the balance sheet at fair value.  The Company does not expect the adoption of
SFAS No. 133 to have a material  impact,  if any, on its results of  operations,
financial position or cash flows.

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PART II .  OTHER INFORMATION

Item 1.  Legal Proceedings.


On May 28, 1998, Silver State Property Management,  a Nevada corporation,  Roger
A. Bergmann  Enterprises,  a Nevada  corporation,  and R.E. Lyle Corp., a Nevada
corporation filed a complaint in the Second Judicial District Court of the State
of Nevada in and for the County of Washoe  alleging,  among other  things,  that
John W. Stuart,  acting as an agent,  Chairman of the Board and Chief  Executive
Officer of On Stage  Entertainment,  Inc., breached an alleged oral agreement to
purchase  the  Plaintiff's  respective  interests  in  the  Legends  in  Concert
production in Hawaii for an aggregate purchase price of $1,000,000.  The Company
has filed an answer to this complaint.

This suit is currently in the discovery stage of litigation.
On August 20, 1998, a complaint  was filed against the Company by the trustee of
the United States  Bankruptcy Court for the District of Nevada,  alleging Breach
of  Contract,  Monies Due and Owing and  Turnover of the Property to the Estate.
The basis of the  complaint  stems from the purchase of certain  furniture by an
unauthorized  third party who purchased the furniture  while  purporting to be a
representative  of the Company.  The Company believes it has a valid defense for
this claim based upon fraud and  misrepresentation.  The  Company  has  recently
filed its Answer to this Complaint.

On September 25, 1998, the Company successfully defended all three counts of the
complaint filed in March 1997 by Benny R. Pittman, a shareholder of Grand Strand
Entertainment,  Inc.  This suit arose out of dispute as to whether  the  Company
wrongfully  terminated a licensing agreement with Mr. Pittman for the control of
the Company's  Legend in Concert  production in Surfside Beach,  South Carolina.
While the Company  prevailed  on all the counts  alleged in the  complaint,  the
Company stipulated to allow the arbitrator to resolve an equity claim of quantum
meruit,  so as to avoid the  possibility of the suit being re-filed  against the
Company alleging this cause of action, among others, which claim was resolved by
the  arbitrator  in the  favor  of the  plaintiff  for a  total  of  $15,400  in
consideration  for the  substantial  amount of work the  plaintiff  provided  on
behalf of the Company to open the Legends production.

Item 2.  Changes in Securities

Not applicable

                                       25


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Item 3.  Defaults upon Senior Securities

Not applicable

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

Not applicable

Item 5.  Other Information

Country Tonite Acquisition

(a) On September 21, 1998, the Company  signed an agreement to purchase  certain
assets from Casino Resource Corporation and its affiliates, for a purchase price
of  $13,800,000,  consisting of $12,500,000 in cash and a $1,300,000  promissory
note  (the  "Country  Tonite  Acquisition").  Included  in  the  Country  Tonite
Acquisition are all of the income  producing assets of the Country Tonite dinner
theater  business,  as well as the  Branson  Theater in Branson,  Missouri.  The
Country Tonite Acquisition is subject to the various  conditions,  including the
Company's   procurement  of  financing  and  the  approval  of  Casino  Resource
Corporation's stockholders.

(b) Please see Note 2 to consolidated financial statements regarding DXDX Common
Stock Purchase Agreement

(c) Letter of Agreement  with Imperial  Capital,  LLC On September 10, 1998, the
Company engaged Imperial Capital, LLC, a Beverly Hills based investment bank, to
advise the Company on  potential  strategic  financing  alternative.  On Stage's
board of directors has formed a special  committee to work with Imperial Capital
in this regard.

Item 6.  Exhibits & Reports on Form 8-K

(a)   Exhibits

(b) Reports on Form 8-K. The  Registrant was not required to file any reports on
Form 8-K for the three months ended September 30, 1998.


                                       26


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                                   SIGNATURES


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


                                        ON STAGE ENTERTAINMENT, INC.


Date: April 27, 1999                   /s/ John W. Stuart
                                       -----------------------------------------
                                       John W Stuart, Chairman and
                                       Chief Executive Officer




Date: April 27, 1999                  /s/ Kiranjit S. Sidhu
                                      ------------------------------------------
                                      Kiranjit S. Sidhu, Senior Vice President
                                      Finance and Administration, and Chief
                                      Financial Officer


                                       27


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