U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   FORM 10-QSB

(Mark One)
[X] Quarterly report under Section 13 or 15 (d) of the Securities Exchange Act 
of 1934

For the quarterly period ended June 30, 1997
                                               
[] 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)                  (ZIP CODE)

                                 (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) filed all reports required to be filed by
Section 13 or 15 (d) of the  Exchange Act during the past 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

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

            Class                              Outstanding at September 2, 1997
 Common Stock, $0.01 par value                           6,584,480

<PAGE>



                  ON STAGE ENTERTAINMENT, INC. AND SUBSIDIARIES
                                TABLE OF CONTENTS


                                                                        PAGE NO.


Part I. Financial Information


       Item 1. Consolidated Financial Statements

                   Balance Sheets.........................................
                   Statements of Operations...............................
                   Statements of Cash Flow................................
                   Notes to Financial Statements..........................

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


Part II. Other Information


       Item 1. Legal Proceedings..........................................
       Item 2. Changes in Securities......................................
       Item 3. Defaults upon Senior Securities............................
       Item 4. Submission of Matters to a vote
                   Of Security Holders....................................
       Item 5. Other Information..........................................
       Item 6. Exhibits and Reports on Form 8-K...........................


Signatures................................................................








<PAGE>




                          PART I. FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements

                  On Stage Entertainment, Inc. and Subsidiaries
                           Consolidated Balance Sheets

<TABLE>
                                                                                            June 30,
                                                                           December 31,       1997   
                                                                               1996        (Unaudited)
                                                                           ------------    -----------
<S>                                                                         <C>             <C>
Assets
Current assets
      Cash and cash equivalents                                             $   290,751     $    79,844
      Accounts receivable                                                       490,465         400,795
      Inventory                                                                  67,853          79,074
      Deposits                                                                  231,601         437,524
      Prepaid and other assets                                                  236,295         532,077
      Prepaid issue costs                                                             -          97,300
      Pre-opening costs, net                                                    129,180         583,425
                                                                            -----------      ----------
               Total current assets                                           1,446,145       2,210,039
                                                                            -----------      ----------

Property, equipment and leasehold improvements                                3,725,941       4,379,389
Less:  Accumulated depreciation and amortization                             (1,937,718)     (2,212,427)
                                                                            -----------      ----------
Property, equipment and leasehold improvements, net                           2,166,962       1,788,223
                                                                            -----------      ----------

Cost in excess of net assets acquired, net of accumulated amortization           62,123          58,964
    of $1,053 and $3,159
Offering costs                                                                  657,801       1,107,133
Note receivable from stockholder                                                      -         183,046
                                                                             ----------      ----------
                                                                             $3,954,292      $5,726,144
                                                                             ==========      ==========

Liabilities and Stockholder's Equity (Deficit)
Current liabilities
    Accounts payable and accrued expenses                                       599,045       1,145,340         
    Accrued payroll and other liabilities                                       621,986         455,846
    Litigation settlement accrual                                               100,000               -
    Current maturities of long-term debt                                        228,510         347,844
    Bridge Notes                                                                      -         556,000
                                                                             ----------      ----------
                 Total current liabilities                                    1,549,541       2,505,030

DYDX LP Loan                                                                    750,000         750,000
Long-term debt, less current maturities                                       1,877,391       2,382,055

Commitments and contingencies

Stockholder's equity  (deficit)                                                       -               -
     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; 4,002,044 and 4,683,331 shares issued and outstanding          40,020          46,833
     Additional paid-in-capital                                                 121,024         642,640
     Accumulated deficit                                                       (383,684)       (600,414)
                                                                             ----------      ----------
          Total stockholder's equity  (deficit)                              $ (222,640)     $   89,059
                                                                             ----------      ----------
                                                                             $3,954,292      $5,726,144
                                                                             ==========      ==========
</TABLE>

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


                                                                                          Three months ended
                                                                                               June 30,
                                                                                    -----------------------------
                                                                                       1996              1997
                                                                                    (Unaudited)       (Unaudited)
                                                                                    -----------       -----------
<S>                                                                                 <C>               <C>  

Net revenues                                                                        $4,266,181        $3,979,685
Direct production costs                                                              1,791,916         1,841,621
Indirect production costs                                                              607,950           728,242
                                                                                    ----------        ----------
Gross profit                                                                         1,866,315         1,409,822
                                                                                    ----------        ----------

Operating expenses
        Selling, general and administrative                                            774,692           814,671
        Depreciation and amortization                                                  170,167           171,868
        Principal stockholder compensation                                              62,500            62,500
                                                                                    ----------        ----------
                   Total operating expenses                                          1,007,359         1,049,039
                                                                                    ----------        ----------

Operating income                                                                       858,956           360,783
Interest expense, net                                                                   52,395            60,141
                                                                                    ----------        ----------
Net income before income taxes                                                         806,561           300,642

Income taxes                                                                             4,019                 -
                                                                                    ----------        ----------
Net income                                                                          $  802,542        $  300,642
                                                                                    ==========        ==========

Net income per share                                                                $     0.20        $     0.06
                                                                                    ==========        ==========

Weighted average number of common and common equivalent shares                       4,112,643         4,783,711
                                                                                    ==========        ==========
</TABLE>



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


                                                                                          Six months ended
                                                                                              June 30,
                                                                                   -----------------------------
                                                                                      1996              1997
                                                                                   (Unaudited)       (Unaudited)
                                                                                   -----------       -----------
<S>                                                                                 <C>              <C>  

Net revenues                                                                        $6,612,935       $6,698,462
Direct production costs                                                              2,946,873        3,304,526
Indirect production costs                                                            1,066,980        1,168,225
                                                                                    ----------       ----------
Gross profit                                                                         2,599,082        2,225,711
                                                                                    ----------       ----------
Operating expenses
        Selling, general and administrative                                          1,308,277        1,822,003
        Depreciation and amortization                                                  293,868          319,109
        Principal stockholder compensation                                             125,000          125,000
                                                                                    ----------       ----------
                   Total operating expenses                                          1,727,145        2,266,112
                                                                                    ----------       ----------

Operating income  (loss)                                                               871,937          (40,401)
Interest expense, net                                                                  133,692          174,010
                                                                                    ----------       ----------
Net income (loss) before income taxes                                                  738,245         (214,411)
Income taxes                                                                             4,019            2,319
                                                                                    ----------       ----------
Net income (loss)                                                                   $  734,226       $ (216,730)
                                                                                    ==========       ==========
Net income (loss) per share                                                               0.18            (0.05)
                                                                                    ==========       ==========
Weighted average number of common and common equivalent shares                       4,112,643        4,367,154
                                                                                    ==========       ==========
</TABLE>
<PAGE>

                 On Stage Entertainment, Inc. and Subsidiaries
                     Consolidated Statements of Cash Flows

                Increase (Decrease) in Cash and Cash Equivalents
<TABLE>


                                                                                            Six months ended
                                                                                                June 30,
                                                                                      -----------------------------
                                                                                          1996             1997
                                                                                      (Unaudited)       (Unaudited)
                                                                                      -----------       -----------
<S>                                                                                   <C>               <C>   
Cash flows from operating activities
       Net income (loss)                                                               $ 734,226        $(216,730)
                                                                                       ---------        ---------
       Adjustments  to  reconcile  net loss to net cash  provided  by (used  in)
            operating activities:
             Depreciation and amortization                                               293,868          319,109
             Issuance of Common Stock to CFO                                                   -          162,129
             Increase (decrease) from changes in operating assets and
                   Liabilities

                           Accounts receivable                                          (134,581)          89,670
                           Inventory                                                     (52,014)         (11,221)
                           Offering costs                                               (156,752)        (449,332)
                           Deposits                                                      (76,423)        (205,923)
                           Pre-opening costs                                              (9,225)        (454,245)
                           Prepaid and other assets                                     (181,422)        (393,082)
                           Accounts payable and accrued expenses                          17,283          546,295
                           Accrued payroll and other liabilities                         222,708         (166,140)
                           Litigation settlement accrual                                       -         (100,000)
                                                                                        ---------       ---------
         Total adjustments                                                               (76,558)        (662,740)
                                                                                        ---------       ---------
Net cash provided by (used in) operating activities                                       657,668        (879,470)
                                                                                        ---------       ---------
                                                                                         

Cash used in investing activities
                         Advances on note receivable from stockholder                   (281,000)       (183,046)
                         Capital expenditures                                           (504,894)       (653,448)
                                                                                       ---------       ---------  
Net cash used in investing activities                                                   (785,894)      (836,494)
                                                                                       ---------       ---------  

Cash used in financing activities
        Repayments under line of credit                                                 (200,000)              -
        Proceeds from line of credit                                                           -         122,000
        Proceeds from long-term borrowing                                              1,135,883         627,391
        Repayments on short-term borrowings                                           ( 114,349)        (119,334)
        Proceeds from Bridge Notes                                                             -         875,000
                                                                                       ---------       ---------  
Net cash provided by financing activities                                                821,534       1,505,057
                                                                                       ---------       ---------
                                                                                        

Net increase (decrease) in cash and cash equivalents                                     693,308        (210,907)
                                                                                        
Cash and cash equivalents at beginning of  period
                                                                                          20,098         290,751
                                                                                       ---------       ---------
Cash and cash equivalents at end of  period                                            $ 713,359       $  79,844
                                                                                       =========       =========

Supplemental  disclosure  of cash flow  information  Cash paid during the period
for:
        Interest                                                                       $ 137,297       $ 177,008
        Taxes                                                                          $   4,019       $   2,319
</TABLE>

<PAGE>



Supplemental schedule of non-cash investing and financing activities

During fiscal year 1996 and for the six months ended June 30, 1997, $259,855 and
$531,319 of lease assets and obligations were capitalized, respectively.

During the six months ended June 30,1997,  the Company  borrowed an aggregate of
$1,000,000 from 21 private investors,  in return for which the Company issued to
such investors unsecured non-negotiable notes payable, which accrued interest at
an annual  rate of 9% and which  matured  upon the  consummation  of an  initial
public  offering  (the "Bridge  Notes"),  Common Stock and warrants (the "Bridge
Financing"). The Common Stock issued in connection with the Bridge Financing was
valued at $440,000.  As no  consideration  was paid for the Common  Stock,  this
amount is considered an original  issue  discount and amortized over the term of
the Bridge Notes.

During the six months  ended June  30,1997,  the  Company  exchanged  all of its
outstanding  warrants for 440,755 shares of Common Stock, which had no effect on
the Company's earnings.

<PAGE>




                  ON STAGE ENTERTAINMENT, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                  June 30,1997

(1)  Basis of  Presentation

The  financial  statements  included  herein  include  the  accounts of On Stage
Entertainment,  Inc. (the "Company"),  and its subsidiaries,  Legends in Concert
Inc., a Nevada corporation; On Stage Marketing, Inc., a Nevada corporation;  and
Interactive Events, Inc., a Georgia corporation. 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 three and six months ended June 30,
1997 are not necessarily indicative of those expected for the full year. Certain
prior year amounts have been  adjusted and  reclassified  to conform to the 1997
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
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,  1996,  included  in  Amendment  No.  5  to  the  Company's
Registration  Statement on Form SB-2 (Registration No. 333-24681) filed with the
Securities  and Exchange  Commission  on August 13, 1997,  ("Amendment  No. 5").
Accordingly,  footnote  disclosures,  which would  substantially  duplicate  the
disclosures  contained in the  Company's  December  31, 1996  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. Although the Company believes that the disclosures are adequate to
make the  information  presented  not  misleading,  it is  suggested  that these
unaudited interim consolidated  financial statements be read in conjunction with
the audited consolidated financial statements and the notes thereto for the year
ended December 31,1996, included in Amendment No. 5.

(2)  Subsequent Events

On August 13,  1997,  the  Company  completed  an  initial  public  offering  of
1,400,000  shares of Common Stock at $5.00 per share and redeemable  warrants to
purchase  1,610,000  shares of  Common  Stock at $.10 per  Warrant  ("Redeemable
Warrrants"). The net proceeds to the Company of the offering, after underwriting
discounts  and  commissions,  was  approximately  $6,270,070  (the "Net Offering
Proceeds").

Certain of the Net  Offering  Proceeds  were used for new show  openings and the
repayment of indebtedness.  The Company intends to use the remaining  balance of
the Net  Offering  Proceeds  for  additional  new show  openings,  the hiring of
additional  administrative  and sales  personnel  and for  working  capital  and
general corporate purposes.

On August 13, 1997, the Company agreed to forgive a note  receivable of $221,521
(including  principal  and  interest  at the rate of 8% per  annum) due from the
Chief Executive Officer and principal stockholder of the Company.

On August 13,  1997,  the  Company  converted  $1,714,064  of  principal  amount
currently  outstanding  under the Company's 8% Amended and Restated  Convertible
Subordinated  Debentures  due in  January,  1999  (the  "Debentures"),  into  an
aggregate of 505,649 shares of Common Stock. The  aforementioned  conversion was
based  upon a ratio of 295  shares of Common  Stock  per each  $1,000  principal
amount  of  Debenture.  The  pending  conversion  will  result  in a  one  time,
non-recurring, interest expense charged in the third quarter of fiscal year 1997
in the  amount  of  $194,228  (based on an  imputed  value of $4.00 per share of
Common Stock).

On August 13,1997, the Company paid off, in full, all outstanding  principal and
accrued  interest,  $773,014,  pursuant to the terms of a $1,000,000 bridge loan
agreement,  as  extended,  which was entered into by and between the Company and
DYDX Legends Group, L.P. on February 29, 1996 ( "DYDX Loan" ).

On August 13,1997,  the Company paid off in full all  outstanding  principal and
accrued interest, $1,036,746, owed by the Company under the Bridge Notes.

(3) Commitments and Contingencies

As set forth in Part II of this Form  10-QSB,  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 that the final  resolution  of these
matters  will  have a  material  adverse  effect  upon the  Company's  financial
condition and results of operations.


<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 the Company's  utilization of tax benefits,  the seasonal  nature of
the Company's  business,  general  business  strategy,  the  introduction of new
theatrical   productions,   expansion  plans,   litigation  matters,   operating
performance and liquidity,  as well as information  contained  elsewhere in this
Quarterly  Report where  statements are preceded by,  followed by or include the
words "believes," "expects," "anticipates" or expressions of similar import. 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,  without  limitation and in addition to those discussed in
the various  documents  filed by the Company  with the  Securities  and Exchange
Commission,  the following: (i) The highly competitive nature of the leisure and
entertainment market, which includes the market for live theatrical productions,
in which the Company  competes  and the  ability of the Company to  successfully
compete in this market with other  production  companies for the most  desirable
commercial and tourist  venues;  (ii) The ability of the Company to successfully
implement its expansion strategy which contemplates the opening of approximately
nine additional "four wall" resident  productions over the next 24 months; (iii)
Future capital needs and the uncertainty of additional  funding (whether through
financial markets,  collaborative or other arrangements with strategic partners,
or from other  sources);  (iv) The  outcome  of  litigation  matters;  (v) Risks
associated  with  acquisition  strategy;  (vi)  The  Company's  working  capital
position  ; and  (vii) The  Company's  ability  to  reproduce  the  performance,
likeness and voice of various  celebrities  without  infringing on the publicity
rights of such celebrities or their estates.

Overview

The Company  derives the majority of its revenue from the sale of its theatrical
productions to audiences at venues in urban and resort tourist  locations and to
commercial clients, which include casinos, corporations,  theme parks and cruise
lines. In addition,  the Company generates revenue from the sale of merchandise,
food and beverages in certain of its venues,  and from to time, from the sale of
technical equipment,  services to commercial clients, and design and fabrication
of sets and props.

The Company  classifies  its  productions  (both its  resident  and  limited-run
engagements)  into two main  categories:  "at-risk" shows and "low-risk"  shows.
"At-risk"  shows are classified as any of the Company's  resident or longer term
limited-run  productions  where the amount of the  revenue to be obtained by the
Company in  connection  with the show is uncertain (as is typical in the case of
shows  produced by the Company at theaters  leased and or purchased  directly by
the Company in urban and resort  tourist  locations and of shows produced by the
Company  in  certain  casino  markets  like Las  Vegas).  "Low-risk"  shows  are
contracted  productions  in which the client  guarantees a fee (typical of shows
produced by the Company in certain smaller casino markets like Atlantic City and
for other  commercial  clients  such as  corporations,  theme  parks and  cruise
lines).


<PAGE>


Results of Operations

The  following  table sets forth certain  financial  data as a percentage of net
revenue of the Company for the periods presented:
<TABLE>

                                                  Three Months Ended    Six Months Ended
                                                  ------------------    ----------------
                                                       June 30,             June 30,
                                                     1996   1997           1996   1997
                                                     -----  -----         ------  -----
<S>                                                  <C>    <C>           <C>     <C>  

Net revenue                                          100.0% 100.0%        100.0%  100.0%

Direct production costs                               42.0   46.3          44.6    49.3
                                                     
Indirect production costs                            14.3   18.3           16.1    17.4
                                                     -----  -----         ------  ------
                                                     

Gross profit                                         43.7   35.4           39.3    33.3
                                                    

Operating expenses
       Selling, general and administrative           18.2   20.5           19.8    27.2
                                                     
       Depreciation and amortization                  3.9    4.3            4.4     4.8
                                                     
       Principal stockholder compensation             1.5    1.6           1.9      1.9
                                                     ----   ----          ----    -----

                      Total operating expenses       23.6   26.4           26.1    33.9
                                                     

Operating income (loss)                              20.1    9.0           13.2    (0.6)
                                                     

Interest, net                                         1.2    1.5            2.0     2.6
                                                     ----   ----          -----   -----
Net income (loss) before income taxes                18.9    7.5           11.2    (3.2)
                                                     

Income tax                                            0 .1   0.0           0.1      0.0
                                                     -----  ----          ----    -----

Net income (loss)                                     18.8%  7.5%         11.1%   (3.2)%
                                                     ====== =====         =====   ======

</TABLE>

Quarter Ended June 30,1996 versus Quarter Ended June 30,1997

Net  Revenues.  Net  revenue  consists  of  sales  of the  Company's  theatrical
productions,  concession  sales,  photo sales, and income from equipment rental.
Net revenue for the quarter ended June 30, 1997  decreased by 6.7%, or $286,000,
to $3,980,000  from  $4,266,000 as compared to the second quarter ended June 30,
1996.  Contributing  to this  decrease  were  decreases  of  approximately:  (i)
$598,000  attributable to the  discontinuation  of the Legends show at the Grand
Palace in Branson, Missouri and (ii) $388,000 attributable to a resident Legends
show in Myrtle Beach,  South Carolina.  These decreases were offset by increases
of approximately: (a) $320,000 attributable to limited engagements and corporate
events which includes limited  engagements of the Legends show at Empress Casino
in Joliet, Illinois and Trump's Taj Mahal Hotel and Casino in Atlantic City, New
Jersey,  which ran in 1997,  but not in 1996; (b) $233,000  attributable  to the
Legends show at the Osmond  Family  Theater in Branson,  Missouri,  which ran in
1997, but not in 1996; (c) $16,000  attributable to the resident Legends show at
the  Imperial  Palace in Las Vegas,  Nevada;  (d)  $18,000  attributable  to the
resident  Legends show at Bally's Park Place in Atlantic City,  New Jersey;  (e)
$5,000  attributable  to the Legends shows on Premier Cruise Lines;  (f) $12,000
attributable  to the new resident show in Daytona Beach,  Florida,  which ran in
1997,  but not in 1996;  (g) $ 58,000  attributable  to other  revenue;  and (h)
$38,000 attributable to management fees from the Legends show in Hawaii.

Direct   Production   Costs.   Direct  production  costs  include  salaries  for
impersonators,   stars,  singers,  dancers,   musicians,   technical  operators,
choreographers,   wardrobe   personnel,   production   managers  and  concession
personnel,  license fees, electronic supplies,  lighting, sound, wardrobe, sets,
props,  and the costs of goods for  merchandise  and food and  beverage.  Direct
production  costs for the quarter ended June 30, 1997  increased by $50,000,  or
3%, as compared to the quarter  ended June 30,  1996.  Direct  production  costs
increased to 46% of net revenue for the quarter ended June 30, 1997, as compared
to 42% for the  quarter  ended  June  30,  1996.  This  increase  was  primarily
attributable  to  costs  associated  with  increases  in  salaries,   electronic
supplies,  make-up and wardrobe. The increase was partially offset by a decrease
in costs associated with equipment rental, props and production supplies.

Indirect  Production  Costs.  Indirect  production  costs  include  salaries for
operations,  box  office,  finance  and  marketing  personnel,  advertising  and
promotion,   insurance,   rent,  utilities,   property  taxes,  housing,  legal,
accounting and travel.  Indirect production costs for the quarter ended June 30,
1997  increased by $120,000,  or 20%, as compared to the quarter  ended June 30,
1996.  Indirect production costs increased to 18% of net revenue for the quarter
ended June 30, 1997, as compared to 14% for the quarter ended June 30, 1996. The
increase was  primarily  attributable  to a higher  level of indirect  salaries,
advertising, promotion and rent.

Selling,  General  and  Administrative.   Selling,  general  and  administrative
expenses include officers' salaries, finance, operations, development, marketing
and technical personnel  salaries,  office supplies,  rent,  utilities and legal
expenses.  Selling,  general and  administrative  expenses for the quarter ended
June 30, 1997 increased by $40,000, or 5%, as compared to the quarter ended June
30,  1996.  Selling,  general and  administrative  as a percent of net  revenues
increased to 20% for the quarter ended June 30, 1997, as compared to 18% for the
quarter  ended June 30, 1996.  The  insignificant  increase in total dollars was
primarily  due to  increases  in  salaries,  auto  expense,  rent,  commissions,
corporate  advertising and promotion.  These increases were partially  offset by
decreases in costs associated with travel, entertainment, and professional fees.

Depreciation  and  Amortization.  Depreciation  and amortization for the quarter
ended June  30,1997  increased  by $1,700,  or 100%,  as compared to the quarter
ended June 30,1996. The increase was primarily due to increases in depreciation,
and goodwill  amortization.  These increases were partially offset by a decrease
of developmental amortization.

Interest  Expense,  Net.  Interest  expense  is  currently  incurred  and/or was
incurred as a result of the following: (i) a term loan with First Security Bank,
approximately  $61,795 of which was  outstanding  as of June 30,  1997 and which
accrued interest at the annual rate of 11.5%; (ii) the DYDX Loan,  approximately
$750,000 which accrued  interest at the annual rate of 9.0%; (iii) $1,714,064 in
Convertible  Subordinate Debentures which accrued interest at the annual rate of
9.0%;  (iv)  $250,000  line of credit with First  Security  Bank,  which accrued
variable  interest at the rate 1.5% over the First  Security of Idaho Index (10%
per  year as of the  facility  inception)  and is due on  demand  (the  "Line of
Credit").  The Line of Credit is scheduled  to expire on May 19,  1998;  (v) the
Bridge Notes of $1,000,000 of unsecured  non-negotiable loan notes, Common Stock
and warrants.  Interest expense for the quarter ended June 30, 1997 increased by
$8,000, or 15%, as compared to the quarter ended June 30, 1996. The increase was
primarily the result of the Bridge Notes, which was closed on March 26, 1997.

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 quarter ended June
30,1997.

At December 31, 1996 and for the quarter  ended June 30,  1997,  the Company had
federal net operating loss carryforwards of $657,214 and $957,856, 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.

Six Months Ended June 30, 1996 versus Six Months Ended June 30, 1997

Net  Revenues.  Net revenue for the six months ended June 30, 1997  increased by
1.3%,  or $85,000,  from  $6,613,000 to $6,698,000 as compared to the six months
ended  June  30,  1996.   Contributing   to  this  increase  were  increases  of
approximately:  (i) $1,013,000 attributable to limited engagements and corporate
events which includes limited  engagements of the Legends show at Empress Casino
in Joliet, Illinois and Trump's Taj Mahal Hotel and Casino in Atlantic City, New
Jersey, which ran in 1997, but not in 1996; (ii) $12,000 attributable to the new
resident show in Daytona Beach, Florida, which ran in 1997, but not in 1996; and
(iii) $ 64,000  attributable to management fees from the Legends show in Hawaii.
These increases were partially offset by decreases of: (a) $609,000 attributable
to the  discontinuation  of the  Legends  show at the Grand  Palace in  Branson,
Missouri; (b) $105,000 attributable to the resident Legends show at the Imperial
Palace in Las Vegas,  Nevada;  (c) $18,000  attributable to the resident Legends
show  at  Bally's  Park  Place  in  Atlantic  City,  New  Jersey;  (d)  $266,000
attributable to the resident Legends show in Myrtle Beach,  South Carolina;  (e)
$2,000 attributable to the Legends shows on Premier Cruise Lines; and (f) $4,000
attributable to other lost revenue.

Direct   Production   Costs.   Direct  production  costs  include  salaries  for
impersonators,   stars,  singers,  dancers,   musicians,   technical  operators,
choreographers,   wardrobe   personnel,   production   managers  and  concession
personnel,  license fees, electronic supplies,  lighting, sound, wardrobe, sets,
props,  and the cost of goods  for  merchandise  and food and  beverage.  Direct
production  costs for the six months ended June 30, 1997  increased by $358,000,
or 12%, as compared to the first six months of fiscal  1996.  Direct  production
costs increased to 49% of net revenue for the six months ended June 30, 1997, as
compared  to 45% for the first  six  months of fiscal  1996.  The  increase  was
primarily   attributable  to  costs   associated  with  increases  in  salaries,
electronic supplies,  make-up, wardrobe, and operating supplies. These increases
were partially  offset by decreases in costs  associated with equipment  rental,
props and production supplies.

Indirect  Production  Costs.  Indirect  production  costs  include  salaries for
operations,  box office,  finance,  and  marketing  personnel,  advertising  and
promotion,   insurance,   rent,  utilities,   property  taxes,  housing,  legal,
accounting and travel.  Indirect  production costs for the six months ended June
30, 1997  increased by $101,000,  or 10%, as compared to the first six months of
fiscal 1996. Indirect  productions costs increased to 17% of net revenue for the
six months ended June 30,  1997,  as compared to 16% for the first six months of
fiscal  1996.  These  increases  were  primarily  attributable  to  increases in
salaries, rent and insurance. These increases were offset partially by decreases
in advertising, promotion, and travel.

Selling,  General  and  Administrative.   Selling,  general  and  administrative
expenses include officers' salaries, finance, operations, development, marketing
and technical personnel  salaries,  office supplies,  rent,  utilities and legal
expenses.  Selling, general and administrative expenses for the six months ended
June 30, 1997 increased by $514,000, or 39%, as compared to the first six months
of fiscal 1996. Selling, general and administrative expenses as a percent of net
revenues were 27% for the six months ended June 30,1997,  as compared to 20% for
the first six months of fiscal 1996. The increase was mainly due to increases in
costs  associated  with  salaries,  auto  expense,  freight,   shipping,  office
supplies, telephone, commissions,  advertising,  promotion, and bad debts. These
increases were partially offset by a decrease in costs associated with insurance
and legal services.

Depreciation and  Amortization.  Depreciation and amortization for the first six
months ended June 30, 1997 increased by $25,000, or 9%, as compared to the first
six  months of fiscal  1996.  The  increase  was due  primarily  to new  capital
additions in existing and new shows.

Interest  Expense,  Net.  Interest  expense  for the six  months of fiscal  1997
increased  by  $40,000,  or 30%,  as  compared to the first six months of fiscal
1996.  The increase in interest  expense  resulted from the Bridge Notes,  which
closed on March 26,1997.

Income  Taxes.  At December 31, 1996 and June 30, 1997,  the Company had federal
net operating loss carryforwards of $657,214 and $843,944,  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.

Seasonality and Quarterly Results

The Company's  business has been,  and is expected to remain,  highly  seasonal,
generating the majority of its revenues from April through October.  Part of the
Company's  business  strategy  is to  increase  sales in  tourist  markets  that
experience  their peak seasons from November to March.  The Company is exploring
opportunities  in  markets  such  as  Florida  and  Arizona,  domestically,  and
Australlia,  South Africa, China, Singapore, New Zealand, and Hong Kong, abroad.
The Company  believes that penetration of these markets could help mitigate this
seasonality.

The  following  table sets forth the  Company's net revenue for each of the last
ten quarters ended June 30, 1997:
                                  Net Revenues
                                ($ in thousands)
<TABLE>

                                     March 31,        June 30,         September 30,          December 31,
                                     ---------        --------         -------------          ------------
<S>                                  <C>              <C>              <C>                    <C>  

Fiscal 1995................           $2,319           $2,747             $4,388                $3,321
Fiscal 1996................           $2,347           $4,266             $4,591                $3,074
Fiscal 1997................           $2,719           $3,979
</TABLE>


Liquidity and Capital Resources

General

The Company has  historically  met its working capital and capital  expenditures
through  a  combination  of cash  flow  from  operations,  debt  offerings,  and
traditional  bank  financing.  The Company  anticipates,  based on its currently
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 and cash  equivalent
balances and anticipated revenues from operations will be sufficient to fund its
current  expansion  strategy and contemplated  capital  requirements  (including
those associated with the opening of nine resident "four-wall"  productions) for
the next 24 months.  In the event the Company's plans or assumptions  change, or
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.

For the six months  ended June 30,  1996,  the Company  generated  net cash from
operations  of  approximately  $658,000.  The cash  provided by  operations  was
primarily  attributable  to an increase in revenues and a decrease in direct and
indirect  production costs offset  partially by an increase in selling,  general
and  administrative  costs.  For the six months ended June 30, 1997, the Company
had a net cash deficit from operations of $879,000.  This operating  deficit was
primarily  attributable to business seasonality  increased selling,  general and
administrative expenses in anticipation of future growth and offering costs.

The net cash used in investing activities for the six months ended June 30, 1996
and June 30, 1997 of $786,000 and $836,000,  respectively,  was primarily due to
capital expenditures and advances (which were subsequently written off at August
13,1997) to Mr. Stuart, the Company's Chairman and Chief Executive Officer.

Net cash provided by financing activities for the six months ended June 30, 1996
of $ 821,000  was  attributable  to the DYDX Loan and bank  financing.  Net cash
provided  by  financing  activities  for the six months  ended  June  30,1997 of
$1,505,000 was primarily attributable to the Bridge Notes.

At June  30,1997,  the Company had a working  capital  deficit of  approximately
$295,000,  which  resulted,  primarily,  from  increases  in offering  costs and
capital  expenditures,  which were  partially  offset by proceeds from a line of
credit, long-term borrowings and the Bridge Notes.

As of June 30, 1997,  the Company had  outstanding:  (i) A bank term loan in the
principal outstanding amount of $61,795, which (a) accrues interest at a rate of
11.5% per annum and (b) becomes due on September 25, 1997; (ii) The DYDX Loan in
the principal  outstanding  amount of $750,000,  which (a) accrued interest at a
rate of 9% per annum and (b) was paid off in full on August 13, 1997;  and (iii)
the Bridge Notes in the principal  outstanding  amount of $1,000,000,  which (a)
accrued  interest  at a rate of 7% per  annum  and (b) were  paid off in full on
August 13, 1997.

On August 13,  1997,  the  Company  completed  an  initial  public  offering  of
1,400,000  shares of Common Stock at $5.00 per share and redeemable  warrants to
purchase 1,610,000 shares of Common Stock at $0.10 per Warrant. The net proceeds
to the Company of the offering,  after  underwriting  discounts and commissions,
was approximately $6,270,070.


<PAGE>




PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

In May 1996, a former  performer in the Company's  Legends  production  aboard a
vessel owned and  operated by Premier  Cruise Lines filed a lawsuit in a Florida
Circuit Court against the Company  alleging  bodily injury,  pain and suffering,
disability,  disfigurement,  mental anguish and pain, loss of earnings,  loss of
ability to earn money, and  reimbursement for medical expenses and treatment and
care for any amount in excess of $15,000  as a result of an injury  suffered  in
the course of his  performance.  The case was  recently  dismissed  for improper
venue and has been  refiled  by the  plaintiffs  in  another  jurisdiction.  The
Company  has  filed an  answer  to the  plaintiff's  complaint.  The  matter  is
currently in the discovery stage of litigation.

In July 1996,  an  impersonator  of Hank  Williams,  Sr. who  performed  for the
Company,  filed suit against the Company in the Circuit  Court of Taney  County,
Missouri.  The plaintiff  asserts that during one of his  performances  with the
Company,  a  photograph  was taken of him by the  Company  while in costume  and
surrounded by dancers and that the picture has been  reproduced and published in
a Company scrapbook along with other photographs of the Company's impersonators.
The  plaintiff  alleges  that the Company  misappropriated  his name,  image and
likeness for  commercial  purposes by publishing and selling the booklets and is
claiming  damages in the amount of  $2,000,000.  The Company  believes  that the
plaintiff's  claim is without merit since the Company  utilized the  plaintiff's
photograph  in its booklets  for ten years with the  plaintiff's  knowledge  and
without our  objection.  The Company  intends to defend this action by asserting
that the appropriation was de minimize in that the picture is only approximately
2" x 4" in  size,  contains  two  of the  Company's  showgirls,  identifies  the
plaintiff  as an  impersonator  of  Hank  Williams,  Sr.  and  is  only  one  of
approximately 50 other  photographs  contained in the brochure.  The Company has
filed its answer to the  plaintiff's  complaint.  The matter is currently in the
discovery stage of litigation.

In  March  1997,  a  complaint  was  filed  by a  shareholder  of  Grand  Strand
Entertainment,  Inc. ("Grand Strand"), a South Carolina corporation in which Mr.
Stuart, the CEO of On Stage Entertainment Inc., is a majority  shareholder.  The
complaint  was filed  against  the  "Company",  John  Stuart  and Grand  Strand,
alleging misappropriation of corporate opportunity and breach of contract. Grand
Strand,  which was formed  solely  for the  purpose  of  establishing  a Legends
production in Myrtle Beach, South Carolina, was granted a license by the Company
to use the "Legends in Concert"  trademark in connection  with such  production.
The license was contingent upon Grand Strand raising  sufficient capital to fund
pre-production  costs associated with establishing the Legends  production which
was scheduled to take place at the Surfside  Theater in Myrtle  Beach.  However,
since  the  contingency  was not met in a  timely  manner  and the  Company  was
responsible for the lease of the property, the company rescinded the license and
funded and  operated  the  production  on its own. The  plaintiff  seeks:  (i) a
receiver to manage the Legends show produced by Grand Strand; (ii) an accounting
of all assets and profits of Grand  Strand;  (iii) the  Company to be  prevented
from diverting profits to itself or from diminishing the value of Grand Strand's
property or other  contractual  rights;  (iv) the Company to pay to Grand Strand
all sums found to be due from an  accounting  of the  profits  and the losses of
Grand Strand caused by the Company's actions; and (v) actual damages for loss of
earnings. The Company filed an answer to the plaintiff's complaint, as well as a
motion to stay and a motion to compel arbitration. On June 2, 1997, the Court of
Common Pleas for Horry County,  South Carolina granted such motions.  Mr. Stuart
has entered into an Indemnification  Agreement with the Company and Grand Strand
dated February 27, 1997,  whereby Mr. Stuart shall indemnify the Company against
any liability for any  judgments or settlement  payments,  expenses and or legal
fees in connection  with any proceeding  relating to the grant of the license to
Grand Strand.  Mr. Stuart has also entered into a Security and Pledge  Agreement
with the Company  dated  February  27, 1997 whereby he has pledged and granted a
security interest to the Company in 400,000 of his shares of Common Stock of the
Company to secure his obligations  and  performances  under the  Indemnification
Agreement.

Although the Company  believes that it has meritorious  defenses with respect to
all of the foregoing  matters which it will vigorously  pursue,  there can be no
assurance that the ultimate  outcome of such actions will be resolved  favorably
to the Company or that such  litigation  will not have an adverse  effect on the
Company's liquidity,  financial condition or results of operation. To the extent
that the Company is required to use the proceeds of this  offering in connection
with such litigation,  the Company will have less resources  available to it for
other purposes.

ITEM 2.  CHANGES IN SECURITIES.

Use of Proceeds from the Company's Initial Public Offering

The following  information is being provided in accordance  with Rule 463 of the
Securities  Act of 1933 (the  "Securities  Act") and Item 701 of Regulation  S-B
under the Securities  Act. On August 13, 1997, the Company  completed an initial
public offering of 1,400,000 shares of its Common Stock and Warrants to purchase
1,610,000 shares of its Common Stock (the "Offering").

The  effective  date of the Company's  Registration  Statement on Form SB-2
(Registration No. 333-24681) was August 13, 1997.

The  Offering  commenced  on August 13, 1997 and  terminated  on August 19,
1997, after all securities registered under the Offering were sold.

The managing underwriter of the Offering was Whale Securities Co., L.P.

The  following  classes  of  securities  were  registered  pursuant  to the
Offering: (i) Common Stock, par value $0.01 per share and (ii) Warrants, each to
purchase  on share of  Common  Stock at a price of $5.50 at any time  commencing
August 13,  1998  through  and  including  August 13,  2002;  the  Warrants  are
redeemable by the Company upon (i) the consent of the managing  underwriter  and
(ii) the occurrence of certain other events.

All of the securities  registered in the Offering were sold for the account
of the company.  There were no selling shareholders in the Offering. The Company
registered  1,400,000 shares of Common Stock and Warrants to purchase  1,610,000
shares of Common Stock.  The aggregate  price of the 1,400,000  shares of Common
Stock,  before  underwriting  discounts and  commissions,  was  $7,000,000.  The
Company sold all 1,400,000 shares of Common Stock, before underwriting discounts
and commission,  was $161,000.  The Company sold all of the Warrants to purchase
1,610,000 shares of Common Stock.

Because the effective  date of the  Registration  Statement was after the
ending date for the  reporting  period,  the amount of expenses  incurred by the
company in  connection  with the  Offering  will be  provided  in the  Company's
Quarterly Report for the quarter ending September 30, 1997.

The net proceeds to the Company of the Offering were $6,270,070.

Because the effective  date of the  Registration  Statement was after the
ending date for the reporting period, the amount of the net proceeds used by the
Company for specific uses will be provided in the Company's Quarterly Report for
the quarter ending September 30, 1997.

ITEM 3.  DEFAULTS OF SENIOR SECURITIES.

NONE.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

NONE.

ITEM 5.  OTHER INFORMATION.

NONE.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     Exhibits

The following is a list of exhibits  filed as part of this  quarterly  report on
Form 10-QSB.  Where so indicated by  footnote,  exhibits  which were  previously
filed are incorporated by reference. Unless otherwise indicated, the location of
the exhibit in the previous filing is the same number as listed below.

<TABLE>

Exhibit
Number                                    Description
<S>                  <C>   

  3.1                Articles of Incorporation of the Registrant. (1)
  3.2                Bylaws of the Registrant. (4)
  4.1                Specimen stock certificate representing the Common Stock. (4)
  4.2                Specimen warrant certificate representing the Warrants. (4)
  4.3                Form of Public Warrant Agreement. (4)
  4.4                Form of Underwriter's Warrant Agreement. (4)
 10.1                Employment Agreement between the Registrant and John W. Stuart. (1)
 10.2                Employment Agreement between the Registrant and David Hope. (1)
 10.3                Employment Agreement between the Registrant and Kiranjit S. Sidhu. (1)
 10.4                Confidentiality and Non-Competition Agreement between the Registrant
                       and John W. Stuart. (1)
 10.5                Confidentiality and Non-Competition Agreement between the Registrant
                       and David Hope. (1)
 10.6                Confidentiality and Non-Competition Agreement between the Registrant
                         and Kiranjit S. Sidhu. (1)
 10.7                Amended and Restated 1996 Stock Option Plan. (1)
 10.8                Contribution agreement between the Registrant and John W. Stuart. (1)
 10.9                Security and Pledge Agreement between the Registrant and John W. Stuart
                         relating to contribution of LVHE share. (1)
 10.10               Security and Pledge Agreement between the Registrant and John W. Stuart
                         relating to LVHE litigation indemnity. (1)
 10.11               Indemnification Agreement between the Registrant, John W. Stuart and
                         Grand Strand Entertainment, Inc. (1)
 10.12               Security and Pledge Agreement between the Registrant and John W. Stuart
                         relating to Grand Strand Entertainment, Inc. litigation indemnity. (1)
 10.13               Lease between the Registrant and Great American Entertainment Company.(3)
 10.14               Entertainment Production Agreement between the Registrant, Imperial
                         Palace, Inc. and John W. Stuart dated December 8, 1995. (4)
 10.15               Agreement between the Registrant and Bally's Park Place, Inc. dated
                         September 1, 1994 and subsequent renewal letter. (4)
 10.16               Agreement between Registrant and Improv West, Inc. (2)
 10.17               Amended and Restated Loan agreement between Registrant and DYDX Legends
                         Group, L.P. (2)
 10.18               Common Stock Purchase Agreement between Registrant and Interactive
                         Events, Inc. (2)
 10.19               Show Production Agreement between the Registrant and Kurz Management.(4)
 10.20               Lease between the Registrant and Burgoyne Properties, Limited. (4)
 27.1                Financial Data Schedule. *
<FN>

*Filed herewith

     Filed as an exhibit to the Company's Registration Statement on Form SB-2 dated April 7, 1997 (Registration
No. 333-24681)

     Filed as an exhibit to Amendment No. 1 to the Company's Registration Statement on Form SB-2 dated June 3,
1997 (Registration No. 333-24681).

     Filed as an exhibit to Amendment No. 2 to the Company's Registration Statement on Form SB-2 dated June 30,
1997 (Registration No. 333-24681).

     Filed as an exhibit to Amendment No. 3 to the Company's Registration Statement on Form SB-2 dated August 6,
1997 (Registration No. 333-24681).
</FN>
</TABLE>
(b) Form 8-K - None

<PAGE>



                                   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: September 24, 1997                             /s/ John W. Stuart
      ------------------                             ------------------
                                                     John W Stuart, Chairman
                                                     and Chief Executive Officer









Date: September 24, 1997                            /s/ Kiranjit S. Sidhu
      ------------------                           ---------------------
                                                   Kiranjit S. Sidhu, Senior 
                                                   Vice President
                                                   Finance and Administration, 
                                                   and Chief Financial Officer