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 March 31, 1999

[  ] 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               (I.R.S. Employer Identification No.)
of Incorporation or Organization)

                  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) 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 May 14, 1999
   -----------------------------                ---------------------------
   Common Stock, $0.01 par value                         7,572,046


<PAGE>


                  ON STAGE ENTERTAINMENT, INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS
                      
                                                             PAGE NO.

Part I. Financial Information


Item 1. Consolidated Financial Statements

     Balance sheets........................................     1
     Statements of operations..............................     2
     Statements of cash flows..............................     3-4
     Notes to financial statements.........................     5-12

Item 2. Management's Discussion and Analysis
        Of Financial Condition and Results of Operations...     13-18

Part II. Other Information

     Item 1.  Legal Proceedings............................     19
     Item 2.  Changes in Securities........................     19
     Item 3.  Defaults Upon Senior Securities..............     19
     Item 4.  Submission of Matters of a Vote of 
              Security Holders.............................     19
     Item 5.  Other Information............................     20
     Item 6.  Exhibits and Reports on Form 8-K.............     20


Signatures.................................................     21




<PAGE>



                          PART I. FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements
<TABLE>
<CAPTION>          On Stage Entertainment, Inc. and Subsidiaries
                           Consolidated Balance Sheets

                                                      December 31,            March 31,
                                                         1998                   1999
                                                     -------------          ------------
<S>                                                      <C>                    <C>    
                        Assets                                              (Unaudited)
Current assets
      Cash and cash equivalents.................... $  1,009,768            $  281,256
      Accounts receivable, net.....................    1,264,526             1,107,669
      Inventory....................................      243,413               231,663
      Deposits.....................................      125,784               323,742
      Prepaid and other assets.....................      594,777               658,374
    Notes receivable from officers (Note 2)........       77,330                76,853
                                                       ---------             ---------
     Total current assets..........................    3,315,598             2,679,557
                                                       ---------             ---------

Property, equipment and leasehold improvements.....   24,130,663            24,126,707
Less:  Accumulated depreciation and amortization...   (4,396,229)           (4,754,474)
                                                       ---------            ----------
Property, equipment and leasehold improvements,net.   19,734,434            19,372,233
                                                       ---------            ----------

Deferred financing costs, net of amortization 
 of  $80,813 and $108,813..........................    1,039,187             1,011,187
                                                       ---------            ----------
                                                    $ 24,089,219          $ 23,062,977
                                                     ===========          ============
</TABLE>
<TABLE>

<CAPTION>           Liabilities and Stockholders' Equity
<S>                                                        <C>                  <C>

Current liabilities
    (Note 2) Working capital line.................  $   999,679           $   999,679
    Accounts payable and accrued expenses.........    2,533,232             1,758,532
    Accrued payroll and other liabilities.........    1,891,924             2,283,499
    Current maturities of long-term debt..........   14,682,246            14,677,709
    Note payable to officer (Note 2)..............            -               100,000
                                                     ----------            ----------
    Total current liabilities.....................   20,107,081            19,819,419
                                                     ----------            ----------

Long-term debt, less current maturities...........      786,468               664,769
                                                     ----------            ----------
           Total liabilities and long-term debt...   20,893,549            20,484,188
                                                     ----------            ----------
Commitment and contingencies (Note 5)
Stockholders' 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; 7,452,350 and
    7,602,350 shares issued and outstanding........      74,523                76,023
    Additional paid-in-capital.....................  11,254,587            11,353,137
     Treasury Stock................................           -               (30,121)
     Currency Exchange  Adjustment.................      67,289               264,043
     Accumulated deficit...........................  (8,200,729)           (9,084,293)
                                                     ----------            ----------
          Total stockholders' equity...............   3,195,670             2,578,789
                                                     ----------            ----------
                                                   $ 24,089,219          $ 23,062,977
                                                    ===========           ===========
</TABLE>



                                       1
<PAGE>
                  On Stage Entertainment, Inc. and Subsidiaries
                      Consolidated Statements of Operations
<TABLE>
<CAPTION>                                            Three months ended

                                                 December 31,         March 31,
                                                    1998                1999
                                                 (Unaudited)         (Unaudited)
<S>                                                   <C>                <C>

Net revenues................................     $ 3,724,486          $ 6,272,239

Costs of revenues...........................       2,664,305            5,450,509
                                                 -----------          -----------

Gross profit................................       1,060,181              821,730

Selling, general & administrative...........       1,380,447            1,045,916

Depreciation and amortization...............         139,129              250,067 
                                                  -----------         -----------

Operating loss..............................        (459,395)            (474,253)

Interest expense, net.......................          69,331              409,311
                                                  ------------        -----------
Net loss....................................      $ (528,726)         $  (883,564)
                                                  ===========         ===========

Basic and diluted loss per share............       $   (0.08)         $     (0.12)
                                                  ===========         ===========
Basic and diluted average number of common 
 shares outstanding.........................       7,565,683            6,714,548
                                                  ===========         ===========
</TABLE>


                                       2
<PAGE>

                  On Stage Entertainment, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>       Increase (Decrease) in Cash and Cash Equivalents

                                                            Three months ended
                                                                 March 31,
                                                        -----------------------------   
                                                          1998                1999
                                                       (Unaudited)         (Unaudited)
                                                       -----------         -----------
<S>                                                        <C>                <C>

Cash flows from operating activities
  Net loss......................................     $   (528,726)        $  (883,564)
                                                      ------------         -----------
  Adjustments to reconcile net loss to net cash 
  used in operating activities:
    Depreciation and amortization...............          160,180             387,552
    Increase (decrease) from changes in 
    operating assets and liabilities Accounts 
    receivable..................................         (508,655)            145,544
  Inventory.....................................         ( 60,987)             11,750
  Deposits......................................         (123,289)           (201,399)                                              
  Pre-opening costs.............................         (804,410)                  -
  Prepaid and other assets......................           75,382             (63,597)
  Accounts payable and accrued expenses.........          241,735            (774,700)
  Accrued payroll and other liabilities.........          531,993             391,575
                                                      -----------           ----------
  Total adjustments.............................         (488,051)           (103,275)
                                                      -----------           ----------
Net cash used in operating activities...........       (1,016,777)           (986,839)
                                                      -----------           ----------

Cash flows from investing activities
  Advances on notes receivable from officers....          (55,000)              (1,531)
  Payments received on notes receivable from 
   officers.....................................           32,626                2,008
  Capital expenditures..........................         (134,363)             (12,718)
  Direct acquisition costs .....................         (488,298)                   -
  Payment for purchase of Gedco, USA, 
   net of cash received (Note 6)................      (12,116,556)                   -
                                                     ------------           ----------
Net cash used in investing activities...........      (12,761,591)             (12,241)
                                                     ------------           ----------
Cash used in financing activities
  Borrowings/repayments under working 
   capital line.................................          250,000                     -     
  Proceeds from long-term borrowing.............       12,500,000                     -
  Repayment on long-term borrowing..............         (100,004)            (126,236)
  Cash received on note payable from officer....                -              100,000
  Issuance of common stock......................                -              100,050
                                                     ------------           ----------  
Net cash provided by financing activities.......       12,649,996               73,814
                                                     ------------           ----------

Effect of exchange rate changes on cash and 
  cash equivalents..............................               -               196,754
                                                     -----------            ----------
Net decrease in cash and cash equivalents.......      (1,128,372)             (728,512)
Cash and cash equivalents at beginning of period       2,323,559             1,009,768
                                                     -----------            ----------

Cash and cash equivalents at end of period......    $  1,195,187            $  281,256
                                                    ============          ============

Supplemental  disclosure  of cash flow  information  
 Cash paid during the period for:
   Interest.....................................    $     22,923            $   53,895
                                                    ============          ============
</TABLE>


                                       3
<PAGE>

Supplemental schedule of non-cash investing and financing activities

         On February 23,  1999,  On Stage  entered into a Common Stock  Purchase
Agreement  with Richard S. Kanfer to re-convey the November 1996  acquisition of
Interactive Events, Inc. Under this agreement,  we re-conveyed all of the assets
of Interactive Events, Inc. to Mr. Kanfer in consideration for the re-conveyance
by Mr.  Kanfer of the 30,304  shares of common stock valued at $1.125 per share.
Net assets  totaling  $30,121 were  written-off  with a  corresponding  entry to
treasury stock.


                                       4
<PAGE>


                  ON STAGE ENTERTAINMENT, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                 March 31, 1998


Basis of Presentation

     The financial  statements in this annual report  include the accounts of On
Stage  Entertainment,  Inc.,  a  publicly  traded  Nevada  corporation  and  its
subsidiaries:   Legends  in  Concert,  Inc.,  a  Nevada  corporation;  On  Stage
Marketing,  Inc.,  a Nevada  corporation;  On  Stage  Theaters,  Inc.,  a Nevada
corporation; Wild Bill's California, Inc., a Nevada corporation; Blazing Pianos,
Inc., a Nevada corporation;  King Henry's Inc., a Nevada  corporation;  On Stage
Merchandise,  Inc.,  a Nevada  corporation;  On  Stage  Events,  Inc.,  a Nevada
corporation; On Stage Casino Entertainment, Inc., a Nevada corporation; On Stage
Productions,  Inc., a Nevada corporation;  On Stage Theaters North Myrtle Beach,
Inc., a Nevada  corporation;  On Stage Theaters  Surfside Beach,  Inc., a Nevada
corporation; and Interactive Events, Inc., a Georgia corporation.

On Stage derives net revenues from four reportable segments:

o    Casinos. The casinos segments primarily sells live theatrical  productions 
     to casinos and commercial clients, worldwide  for a fixed fee. In addition,
     this  segment operates our Legends show at the Imperial Palace hotel and 
     casino in Las Vegas, Nevada, and our corporate sales events.
o    Production  Services.  The  production  services  segment  sells  technical
     equipment  and services to  commercial  clients,  however,  this  segment's
     primary focus is to technically support all of the other segments.
o    Theaters.  The  theaters  segment  owns or rents live  theaters  and dinner
     theaters  in urban and resort  tourist  locations  primarily  in the United
     States. This segment derives revenues from the sale of tickets, merchandise
     and souvenir photography, and food and beverage  to  patrons  who attend  
     live  theatrical  performances  at these venues.
o    The On Stage entertainment  segment is responsible for the corporate  
     management of all our segments.

(2)  Subsequent Events

Downsizing and Restructuring

     On April 30, 1999, the board of directors adopted a restructuring plan. The
restructuring plan focuses on four key areas:

o        overhead reduction;
o        debt restructuring;
o        accounts payable rescheduling; and
o        overall cost containment.

We have already  implemented the initial phase of the plan by reducing  overhead
by  approximately  $707,000  on an  annualized  basis.  We also  expect the cost
containment  measures  implemented  to  yield  another  $100,000  of  annualized
savings,  for a total  savings  of  $807,000  for the two  measures.  Subsequent
overhead  reductions  are planned and  scheduled to be  implemented  by June 30,
1999. In addition to these measures, we are also in the process of attempting to
restructure our debt and rescheduling  payments of our accounts payable in order
to maximize cash flow.

                                       5
<PAGE>

Existing Defaults Under Credit Facilities

     On April 29, 1999, we received a notice of default under our line of credit
with First  Security Bank of Nevada.  In the notice of default,  First  Security
requested that we make a repayment proposal and provide  additional  information
on or before May 19, 1999.  While we are attempting to negotiate an extension or
restructuring  of this  line of  credit,  there  can be no  assurance  that  our
attempts to negotiate an extension or  restructuring of this line of credit will
be successful or that First Security will not take additional  action to collect
this debt.

Delisting Inquiry

     On April 20,  1999,  On Stage  received a letter of inquiry from The Nasdaq
Stock Market,  Inc.  requesting that we submit a detailed letter  describing our
plans  to  address  the  specific  items  that led to the  issuance  of a "going
concern" opinion from our independent  auditors.  The letter further requested a
discussion  from us as to why we believe  we will be able to sustain  compliance
with the  continued  listing  standards of The Nasdaq  SmallCap  Market.  We are
required  to provide a  responsive  answer by June 4, 1999.  If we are unable to
develop a responsive  answer in a timely  manner or in the event Nasdaq does not
find our answer  acceptable,  our common  stock may be delisted  from The Nasdaq
SmallCap Market under Nasdaq's rules.

Toronto Closing

     Our Legends in Concert  production  opened at the Sheraton  Centre  Toronto
Hotel in May 1997. For reasons discussed below, this Legends  production did not
prove to be successful and was  discontinued  in April 1999 after  generating an
operating loss of $717,000 for the year ended December 31, 1998 and $264,000 for
the  four-month  period  ended April 30, 1999.  At December 31, 1998,  we had an
impairment of net assets  associated  with the Toronto Show and we wrote off net
assets of $409,000.

     We believe that the operating performance of Legends at the Sheraton Centre
Toronto Hotel in 1998 suffered from inadequate sales and marketing  resulting in
less than  optimal  ticket sales in the start-up  phase of the  production.  The
lower than anticipated  revenue levels,  combined with high indirect  production
costs associated with the "four wall" cost structure resulted in the losses.

Note Payable to Principal Stockholder

     On March 4, 1999, we borrowed  $100,000 from John M. Stuart,  our chairman,
chief executive officer and principal  stockholder.  This loan is evidenced by a
one-year  promissory  note bearing an interest rate of twelve  percent (12%) per
annum,  due on March 3, 2000. In  consideration  for this loan, we issued to Mr.
Stuart  warrants to purchase  100,000 shares of common stock at a price of $1.00
per share, the market price on the closing date of this loan.  Additionally,  we
agreed  to pay  legal  fees  incurred  by Mr.  Stuart  in  connection  with this
transaction,  as well as an  additional  $12,500  for  previous  legal bills Mr.
Stuart personally incurred for On Stage related matters.

     On April 5, 1999,  On Stage  entered  into an  agreement  with Mr.  Stuart,
pursuant to which On Stage agreed to accept a bridge loan from Mr.  Stuart in an
amount of up to $500,000 in return for a one- year  promissory  note bearing 12%
interest,  a 5%  origination  fee and a warrant to purchase  one share of common
stock for each $1.00  invested  provided  that On Stage did not repay Mr. Stuart
within thirty (30) days. As of April  20,1999,  we had accepted  $200,000 of the
potential $500,000 from Mr. Stuart.

                                       6
<PAGE>

Notes Receivable from Chief Financial Officer

     On April 13, 1999, On Stage loaned $63,213 to Kiran Sidhu,  our senior vice
president  and chief  financial  officer,  to assist Mr.  Sidhu with  satisfying
personal  income taxes  incurred as a result of the issuance of 40,532 shares of
common stock in accordance  with the terms of Mr. Sidhu's  employment  agreement
with On Stage. The note, which recently matured on April 12, 1999, is secured by
Mr. Sidhu's 40,532 shares of common stock. We agreed to extend the maturity date
of the note through to December 31, 1999,  due primarily to the fact that he did
not have the  money to repay  the note,  coupled  with the fact that the  market
value of the common stock which  secured the repayment of the note is not enough
to satisfy the  outstanding  debt since the common  stock has  declined in value
from $5.00 per share when  issued,  to  approximately  $1.00 per share as of the
maturity date.

     On April 16, 1999, Mr. Sidhu sold Mr. Stuart 40,532 shares of common stock.
In exchange, Mr. Stuart agreed to assume Mr. Sidhu's $60,875 note in favor of On
Stage,  with recourse only to the 40,532 shares of common stock  purchased  from
Mr. Sidhu.  Mr. Sidhu executed a new promissory note in favor of On Stage in the
principal  amount of  $7,472,  which was  subsequently  forgiven  as part of Mr.
Sidhu's employment restructuring discussed below.

Chief Financial Officer Employment Restructuring

     On April 16, 1999, Mr. Sidhu agreed to restructure  his current  employment
agreement with On Stage in an attempt to assist On Stage with  facilitating  our
restructuring plan. Under the terms of his employment  restructuring,  Mr. Sidhu
agreed  to  forego  any   rights  he  had  to  his   employment,   option,   and
confidentiality agreements, in return for the following:

o    a new agreement which he will be an "at-will"  consultant at a flat rate of
     $50.00 per hour;
o    a new option  agreement  which  affords him the right to purchase  140,000
     shares of common  stock at a strike price of $1.50 per share;
o    a reimbursement of $25,000 for unpaid insurance,  car allowances and 
     expenses;
o    $17,887 for all accrued,  but unused  vacation  pay; o all earned,  but 
     unpaid salary under his old  employment  agreement;  and o forgiveness  of 
     a promissory note in the amount of $7,472 held by On Stage.

Additionally,  On Stage agreed to pay Mr. Sidhu $25,000  within ninety (90) days
of this  restructuring,  in  consideration  for Mr.  Sidhu's  execution of a new
confidentiality and non-competition agreement.

(3)  New Accounting Pronouncements

     Statement  of  Financial  Accounting  Standards  No.  129,  "Disclosure  of
information  about  Capital  Structure"  ("SFAS No.  129") issued by the FASB is
effective  for  financial  statements  ending after  December 15, 1997.  The new
standard  reinstates various securities  disclosure  requirements  previously in
effect under Account  Principles Board Opinion No. 15, which has been superseded
by SFAS No. 129. We adopted SFAS No. 129 as of January 1, 1998 and had no effect
on our financial position or results of operations.

     Statement   of  Financial   Accounting   Standards   No.  130,   "Reporting
Comprehensive  Income"  ("SFAS No.  130")  issued by the FASB is  effective  for
financial  statements  with fiscal  years  beginning  after  December  15, 1997.
Earlier  application  is  permitted.  SFAS No.  130  establishes  standards  for
reporting and display of  Comprehensive  income and its components in a full set
of  general-purpose  financial  statements.  On Stage adopted SFAS No. 130 as of
January  1, 1998 and it had no effect on our  financial  position  or results of
operations.

                                       7
<PAGE>

     Statement of Financial  Accounting  Standards No. 131,  "Disclosures  about
Segments of an Enterprise  and Related  Information"  ("SFAS No. 131") issued by
the FASB is effective for financial statements with fiscal years beginning after
December 15, 1997. Earlier application is permitted.  SFAS No. 131 requires that
the public  companies  report  certain  information  about  operating  segments,
products,  services and geographical areas in which they operate and their major
customers. On Stage adopted SFAS No. 131 on January 1, 1998 and it had no effect
on our financial  position or results of  operations;  however,  disclosures  on
certain of these items were expanded.

     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. We do not expect the adoption of SOP 98-5 to have a material
impact, if any, on our financial position or results of operations.

     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  standard for the  recognition  and measurement of
derivatives  and hedging  activities and requires all derivatives to be recorded
on the balance  sheet at fair value.  We do not expect the  adoption of SFAS No.
133 to have a material impact,  if any, on our results of operations,  financial
position or cash flows.

(4)  Loss Per Share

     Statement  of  Financial  Accounting  Standard  No. 128  ("SFAS  No.  128")
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 reflect the potential dilution of securities
that  could  share in the  earnings  of the  entity,  similar  to fully  diluted
earnings per share.  SFAS 128 is effective for fiscal years and interim  periods
after  December 15, 1997.  On Stage has adopted  this  pronouncement  during the
fiscal year ended December 31, 1997.

     For the three-months ended March 31, 1998,  potential  dilutive  securities
representing  563,953  outstanding  stock  options  and  2,802,000   outstanding
warrants are not included,  since their effect would be  anti-dilutive.  For the
three-months ended March 31, 1999,  potential dilutive  securities  representing
896,550  outstanding  stock options and 2,724,917  outstanding  warrants are not
included, since their effect would be anti-dilutive.

(5)  Commitments and Contingencies

     On Stage is party to various legal  proceedings  in the ordinary  course of
business in which the adverse  parties are seeking  damages from us. While there
can be no assurance  that any of the  instituted or threatened  lawsuits will be
settled or decided in favor of us, the  management  does not  believe  the final
resolution  of these  matters  will  have a  material  adverse  effect  upon our
financial condition and results of operations.

                                       8
<PAGE>

(6) Business Acquisition

Interactive Events, Inc. Acquisition and Disposition

     On  November  1,  1996,  On  Stage  entered  into a Common  Stock  Purchase
Agreements with Interactive  Events,  Inc., a Georgia  corporation  owned by Mr.
Richard S. Kanfer. Interactive Events created and implemented interactive events
for parties and conventions. Mr. Kanfer joined On Stage as our vice president of
sale. We issued 19,284 and 11,020 shares of common stock on November 1, 1996 and
November 1, 1997,  respectively,  as payment. We recorded $129,180 as the excess
of the purchase price over the net assets  acquired,  which was being  amortized
over ten years.  At December 31, 1998, we determined  there was an impairment in
the value of the excess of the  purchase  price over the net assets  acquired in
connection with the purchase and we wrote off the remaining  unamortized balance
of $102,131.

     On February 23, 1999,  we entered  into a Common Stock  Purchase  Agreement
with Mr. Kanfer,  pursuant to which the parties agreed to re-convey the November
1996 acquisition by us of Interactive Events.  Under the terms of the Agreement,
On Stage  reconveyed all of the assets of Interactive  Events to Mr. Kanfer,  in
consideration  for the reconveyance by Mr. Kanfer of 30,304 shares of On Stage's
common stock valued at $1.125 per share,  a non-plan  option to purchase  15,000
shares of common stock and incentive  stock options to purchase 19,835 shares of
common stock at a price of $5.00 per share.  In addition,  the parties agreed to
release  one  another  from  any  liability  arising  out of the  November  1996
acquisition of Interactive  Events by us and any claim relating to Mr.  Kanfer's
subsequent  employment  with On Stage. On Stage and Mr. Kanfer also entered into
an exclusive right of representation  agreement in February 1999, under which we
granted  to Mr.  Kanfer  the  right  to  represent  our  Legends  production  in
designated areas in consideration for a portion of the gross proceeds  generated
thereby.

Gedco USA, Inc. Acquisition

     On March 13, 1998,  we completed  our  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.  Included in the transaction  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 us as president of On Stage  Theaters,  Inc., a wholly-owned
subsidiary  that manages the acquired  dinner  theaters and piano bar as well as
other selected theaters.

     On Stage funded the cash portion of the purchase price and transaction fees
and  expenses  with  $12,500,000  of mortgage  financing  from  Imperial  Credit
Commercial  Mortgage  Investment Corp.  Imperial Credit had committed a total of
$20,000,000, of which $7,500,000 was remaining to finance our future real estate
related  acquisitions.  In connection  with the loan  agreement  entered into on
March 13, 1998, we granted Imperial Credit the right to provide us with up to an
additional $30 million of similar  mortgage  financing.  In connection  with the
financing,  we  issued  Imperial  Credit  and  Imperial  Capital  Group  LLC (an
affiliate of Imperial  Credit),  an aggregate  of 575,000  warrants  immediately
exercisable  into  common  stock at an  exercise  price of $4.44.  In  addition,
concurrent with the Imperial  Credit  financing,  Mark Karlan,  the President of
Imperial Credit, was named a member of our board of directors, filling a vacancy
created by the  resignation  of Kenneth  Berg. We have made January and February
1999 payments under this loan after the due date for those payments. As a result
of those  delinquencies,  we have  incurred  late charges and default  interest,
which we have not paid. We are in default under the Imperial Credit facility and
we are unable to borrow additional funds under the facility. As of

                                       9
<PAGE>

May 17,  1999,  we had made our  payments to Imperial  Credit due March 1, 1999,
April 1, 1999 or May 1, 1999. We are currently  negotiating with Imperial Credit
to extend some of the repayment  terms under this facility and to obtain waivers
or amendments  with respect to other  defaults  under the facility,  including a
breach of debt  service  coverage  ratio  warranties.  Mr.  Karlan  subsequently
resigned as a director on April 16, 1999.

     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
     Costs of acquisition incurred..............................     1,645,874
       Cash paid................................................    11,500,000
                                                                 --------------
                                                                   $16,631,918
                                                                 ==============

     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 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
                                                                 ==============
                                                                  $16,631,918
                                                                 ==============

     The assets acquired and liabilities  assumed were transferred to either our
wholly owned subsidiary,  On Stage Theaters,  Inc., or a wholly owned subsidiary
of On Stage Theaters, Inc., concurrent with the acquisition.

         The unaudited pro forma results of operations  presented  below reflect
our  operations  as though the  acquisition  had taken place at the beginning of
each period presented.  The pro forma results have been prepared for comparative
purposes only, and are not  necessarily  indicative of what the actual result of
operations  would have been had such  acquisitions  occurred at the beginning of
the periods presented, or what results of operations will be in the future.

<TABLE>
                                                            Three months ended March 31,
                                                        --------------------------------------
                                                              1998                 1999
                                                        --------------------------------------
<S>                                                            <C>                <C>

Revenues ..........................................       $  6,205,371      $   6,272,239
Operating income loss..............................           (182,794)          (474,253)
Net loss...........................................           (528,726)          (883,564)
Basic and diluted loss per share...................              (0.12)             (0.08)
Basic and diluted average number of common                                 
   shares outstanding..............................          6,714,548          7,565,683

</TABLE>

                                       10
<PAGE>
Calvin Gilmore Productions, Inc. Acquisition

     On June 30, 1998, On Stage completed our acquisition of certain assets from
Calvin Gilmore Productions, Inc., an affiliate of Fox Family Worldwide, Inc. for
a purchase price of $1,000,000 in cash and 206,612 shares of common stock valued
at $723,142.  Included in the transaction were  substantially  all of the income
producing assets and associated real and personal property in the greater Myrtle
Beach, South Carolina area,  consisting of a fee simple purchase of The Surfside
Beach Theater,  which we had leased for our presentation of our flagship Legends
in Concert  production  since 1995, and a leasehold  interest in The Eddie Miles
Theater.  We funded the cash portion of the purchase price and transaction  fees
and expenses with $1,100,000 million of mortgage financing from Imperial Credit.


     Upon  consummation  of the  transaction,  Fox Family  also  agreed to order
television  programming and production  services from On Stage, and to give us a
30-day right of negotiation to acquire specified live theatrical/stage rights in
projects  developed and owned by Fox Family over the next five years.  Also, Fox
Family  increased its stock ownership to a 5% equity stake in On Stage,  and Mel
Woods,  President and Chief Operating Officer of Fox Family,  was elected to our
board of directors.

(7) Going Concern

     The  accompanying  consolidated  financial  statements  have been  prepared
assuming  that we  will  continue  as a going  concern  which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of business.  The carrying  amounts of assets and  liabilities  presented in the
financial  statements  do not  purport to  represent  realizable  or  settlement
values.  However,  we have suffered recurring operating losses and has a working
capital  deficit that  impairs our ability to obtain  additional  financing.  On
Stage's auditors have included an explanatory  paragraph in their report for the
year  ended  December  31,  1998,  indicating  that there is  substantive  doubt
regarding  our  ability  to  continue  as  a  going  concern.  The  accompanying
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of any uncertainity.

     We have  historically  met  our  working  capital  requirements  through  a
combination  of cash  flow  from  operations,  equity  and  debt  offerings  and
traditional  bank  financing.  We  anticipate,  based on our proposed  plans and
assumptions  relating to our operations  that our current cash,  cash equivalent
balances,  anticipated  revenues from  operations are  insufficient  to fund our
ongoing operations.

     We  intend  to   manage   short-term   liquidity   concerns   through   the
renegotiations of our expired working capital line,  capital leases and mortgage
facilities.  We have either closed down or restructured  any business units that
are not  generating  positive cash flow. In addition,  we have lowered  selling,
general and  administrative  expenses as a percent of net revenues from 37.1% in
the quarter  ended March 31, 1999,  to 16.8% in the quarter ended March 31, 1998
and continue to downsize and restructure our selling, general and administrative
functions.

     In addition,  we are continuing  our efforts to secure working  capital for
operations, expansion and possible acquisitions, mergers, joint ventures, and/or
other business combinations.  However, there can be no assurance that we will be
able to secure additional capital or that if such capital is available,  whether
the terms or conditions would be acceptable to us.

(8)  Year 2000

     On Stage believes that our accounting and financial  reporting  systems are
Year 2000 ready or Year 2000 compliant.  We have invested in the latest hardware
and software and we have implemented standards that require Year 2000 compliance
from  all  vendors.  We do not  anticipate  any  problems  in  maintaining  this
compliance in the future.

                                       11
<PAGE>

     However, we are still continuing to assess Year 2000 preparedness,  through
actively  coordinating  with vendors,  creditors and financial  organizations to
prepare for possible  repercussions of  non-compliance.  We are also undertaking
exhaustive  surveys in each of our  geographic  locations  to further  determine
preparedness. We have hired Business Communications, Inc. to visit each site and
physically re-certify that each machine,  microprocessor and software program in
use  is  Year  2000  compliant.  We  have  allocated  $50,000  to  complete  our
certification program and we anticipate completion by June 30, 1999.

(9)  Segment Information

The following tables set forth the segment profit/loss and asset information.
<TABLE>
<CAPTION>                                                       For the period ended March 31, 1998
                                         -------------- -------------- -------------- ------------ ----------------
                                                                                        On Stage        Total
                                            Casino       Production      Theaters    Entertainment  Consolidated
                                         -------------- -------------- -------------- ------------ ----------------
<S>                                          <C>              <C>           <C>            <C>          <C>
Revenues from external customers.......   $  2,075,918  $        -      $  1,648,568   $        -   $   3,724,486
                                         -------------- -------------- -------------- ------------ ----------------
Interest expense.......................   $        (20) $        -      $     63,375   $    5,976   $      69,331
                                         -------------- -------------- -------------- ------------ ----------------
Depreciation and amortization..........   $      41,151 $        -      $     20,414   $   77,564   $     139,129
                                         -------------- -------------- -------------- ------------ ----------------
Segment profit (loss)..................   $     429,992 $     (74,653)  $    (89,403)  $ (794,662)  $    (528,726)
                                         -------------- -------------- -------------- ------------ ----------------
Segment assets ........................   $     267,970 $        -      $ 16,199,005   $6,834,308   $  23,301,283
                                         -------------- -------------- -------------- ------------ ----------------
Additions to long-lived assets.........   $     111,546 $      18,220   $    339,820   $    4,066   $     543,652
</TABLE>

<TABLE>
<CAPTION>                                                   For the period ended March 31, 1999

                                         -------------- -------------- ------------- ------------- ----------------
                                                                                      On Stage        Total
                                            Casino      Production       Theaters    Entertainment  Consolidated
                                         -------------- -------------- ------------- ------------- ----------------
<S>                                           <C>            <C>             <C>           <C>           <C>   
Revenues from external customers.......  $  2,589,886   $      1,877   $ 3,680,476   $          -  $    6,272,239
                                         -------------- -------------- ------------- ------------- ----------------
Interest expense.......................  $          -   $      1,124   $   356,890   $     51,297  $      409,311
                                         -------------- -------------- ------------- ------------- ----------------
Depreciation and amortization..........  $     99,379   $     21,894   $    80,673   $     48,121  $      250,067
                                         -------------- -------------- ------------- ------------- ----------------
Segment profit (loss)..................  $    654,332   $   (193,905)  $  (718,413)  $   (625,578) $     (883,564)
                                         -------------- -------------- ------------- ------------- ----------------
Segment assets.........................  $    961,971   $    554,348   $16,135,092   $  5,411,566  $   23,062,977
                                         -------------- -------------- ------------- ------------- ----------------
Additions to long-lived assets.........  $     38,831   $        653   $     1,388   $        316  $       41,188
</TABLE>


                                       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 potential new show openings,  the potential markets for
On Stage's  productions,  the  expansion  of existing and  potential  gaming and
tourist  markets,  our exposure to various  trends in the gaming  industry,  our
acquisition  plans and the benefits we anticipate from these  acquisitions,  our
business strategy, our outstanding litigation matters and the defenses available
to us,  the  seasonality  of our  business,  and  liquidity  issues,  as well as
information  contained  elsewhere in this report where  current  statements  are
preceded  by,   followed  by  or  include  the  words   "believes,"   "expects,"
"anticipates" or similar expressions.  For these statements, On Stage 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 the 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 On Stage from achieving our
goals--and cause the assumptions  underlying the forward-looking  statements and
the actual results to differ  materially  from those  expressed in or implied by
those  forward-looking  statements--include  the information  provided under the
heading "Description of Business-Risk Factors" in Item 1 of our Annual Report on
Form 10-KSB for the year ended December 31, 1999, as well as the following:

o     On Stage's dependence on our flagship Legends in Concert production and  
      our principal production venues;
o     The  ability to  successfully  produce  and  market new  productions  and 
      to manage  the  growth  associated  with the any new productions;
o     Risks associated with our acquisition  strategy,  including our ability to
      successfully identify, complete and integrate strategic acquisitions;
o     The ability to meet our commitments under our credit facilities, which are
      currently in default,  and to obtain alternative,  additional financing on
      commercially reasonable terms;
o     The ability to continue as an ongoing  concern;
o     The  competitive  nature  of the  leisure  and  entertainment  industry  
      and  the  ability  to  continue  to  distinguish  our services;
o     Fluctuations in quarterly operating results and the highly seasonal nature
      of our business;
o     The ability to reproduce  the  performance,  likeness and voice of various
      celebrities   without   infringing  on  the  publicity   rights  of  those
      celebrities  or their  estates,  as well as our  ability  to  protect  our
      intellectual property rights;
o     The ability to  successfully  manage the litigation  pending against us 
      and to avoid  future  litigation;  and 
o     The  results  of  operations which depend on numerous factors, including 
      the commencement and expiration of contracts, the timing and amount of new
      business  generated  by us, our 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>

Results of Operations

     The  following  tables sets forth,  the results of  operations by operating
divisions for the period indicated:
<TABLE>
<CAPTION>                                           For the quarter ended March 31, 1998
                             -------------- ------------- -------------- --------------- ------------------ ---------------
                                                                           Sub-Total
                                                                           Operating        On Stage              Total
                                Casino      Production      Theaters       Divisions      Entertainment       Consolidated
                             -------------- ------------- -------------- --------------- ------------------ ---------------
<S>                             <C>               <C>             <C>           <C>            <C>              <C>
Net revenues.................$   2,075,918  $          -  $   1,648,568  $    3,724,486   $              -   $   3,724,486

Cost of revenues.............$   1,320,774  $     31,549  $   1,311,982  $    2,664,305   $              -   $   2,664,305
                             -------------- ------------- -------------- --------------- ------------------ ---------------
Gross profit(loss)...........$     755,144  $    (31,549) $     336,586  $    1,060,181   $              -   $   1,060,181

Selling, general &
 administrative..............$     284,021  $     43,104  $     342,200  $      669,325   $        711,122   $   1,380,447

Depreciation &                                                                                               
amortization.................$      41,151  $          -  $      20,414  $       61,565   $         77,564   $     139,129
                             -------------- ------------- -------------- --------------- ------------------ ---------------

Operating income (loss)......$     429,972  $    (74,653) $     (26,028) $      329,291   $       (788,686)  $    (459,395)

Interest expense, net........$        (20)  $          -  $      63,375  $       63,355   $          5,976   $      69,331
                             -------------- ------------- -------------- --------------- ------------------ ---------------
Net income (loss)............$    429,992   $    (74,653) $     (89,403) $      265,936   $       (794,662)  $    (528,726)
                            =============== ============= ============== =============== ================== ===============
</TABLE>

<TABLE>
<CAPTION>                                  For the quarter ended March 31, 1999

                             -------------- ------------- -------------- --------------- ------------------- --------------
                                                                           Sub-Total
                                                                           Operating          On Stage          Total
                                Casino       Production     Theaters       Divisions        Entertainment    Consolidated
                             -------------- ------------- -------------- --------------- ------------------- --------------
<S>                              <C>              <C>         <C>              <C>            <C>               <C>
Net revenues.................$  2,589,886   $     1,877   $  3,680,476   $   6,272,239    $              -   $  6,272,239

Cost of revenues.............$  1,644,778   $    172,764  $  3,632,967   $   5,450,509    $              -   $  5,450,509
                             -------------- ------------- -------------- --------------- ------------------ --------------
Gross profit (loss)..........$    945,108   $   (170,887) $     47,509   $     821,730    $              -   $    821,730

Selling, general &                                                                                           
administrative...............$    191,397   $         -   $    328,359   $     519,756    $       526,160    $  1,045,916

Depreciation &                                                                                               
amortization.................$     99,379   $     21,894  $     80,673   $     201,946    $        48,121    $    250,067
                             -------------- ------------- -------------- --------------- ------------------ --------------
Operating income (loss)......$    654,332   $   (192,781) $   (361,523)  $     100,028    $      (574,281)   $   (474,253)

Interest expense, net........$           -  $      1,124  $    356,890   $     358,014    $        51,297    $    409,311  
                             -------------- ------------- -------------- --------------- ------------------ -------------- 
Net income (loss)............$    654,332   $   (193,905) $   (718,413)  $    (257,986)   $      (625,578)   $   (883,564)
                            =============== ============= ============== =============== ================== ==============
</TABLE>

                                       14
<PAGE>

Quarter Ended March 31, 1998 versus Quarter Ended March 31, 1999

     Net Revenues.  Revenues increased by $2,547,000 or $68.4% to $6,272,000 for
the quarter ended March 31, 1999  compared to  $3,725,000  for the quarter ended
March 31,  1998.  On Stage's  revenue is derived from four  principal  operating
segments: Casinos, Productions, Theaters and Corporate Management. Revenues from
Events and Merchandise are included in the Casino and Theater segments.

o    Casinos revenues were approximately  $2,590,000 for the quarter ended March
     31, 1999  compared to  $2,076,000  for the quarter ended March 31, 1998, an
     increase  of  $514,000,  or  24.8%.  Contributing  to  this  increase  were
     increases in revenues at the Legends show at the Imperial  Palace Hotel and
     Casino in Las Vegas,  Nevada,  the  addition  of new shows at the Taj Mahal
     Hotel and Casino and Hilton Hotel and Casino,  both in Atlantic  City,  New
     Jersey,  as well as the  addition  of a variety ice show at the River Palms
     Resort and Casino in Laughlin, Nevada.

o    Production  revenues were approximately  $2,000 for the quarter ended March
     31, 1999  compared to $0 for the quarter  ended March 31, 1998. The 
     increase was attributable to equipment rentals.

o    Theaters revenues were approximately $3,680,000 for the quarter ended March
     31, 1999  compared to  $1,649,000  for the quarter ended March 31, 1998, an
     increase of $2,031,000,  or 123.2%. This was primarily  attributable to the
     inclusion of the Gedco asset acquisition.

     Costs of Revenues.  Total costs of revenues were $5,451,000 for the quarter
ended March 31, 1999 compared to $2,664,000 the quarter ended March 31, 1998, an
increase of $2,787,000,  or 104.6%.  Costs of revenues increased to 86.9% of net
revenues  for the  quarter  ended March 31,  1999,  as compared to 71.5% for the
quarter  ended March 31, 1998.  This  increase in cost of sales as percentage of
revenues was primarily  attributable  to a change in the mix of our revenues due
to the  inclusion  of the Gedco asset  acquisition  revenues,  which have higher
costs of revenues than our other business segments.

     Selling,  General and Administrative.  Selling,  general and administrative
expenses were  approximately  $1,046,000 for the quarter ended March 31, 1999 as
compared to  $1,381,000  for the quarter  ended  March 31,  1998,  a decrease of
$335,000,  or 24.3%. Selling,  general and administrative  expenses decreased to
16.7% of net revenues for the quarter ended March 31, 1999, as compared to 37.1%
for the quarter  ended March 31,  1998.  This is primarily  attributable  to our
reduction  of  overhead  associated  with  On  Stage's  discontinued  "roll-out"
strategy.

     Operating Loss. On Stage's  operating loss was  approximately  $474,000 for
the quarter ended March 31, 1999,  compared to an operating loss of $460,000 for
the quarter ended March 31, 1998, a decrease of $14,000, or 3.0%.

     Depreciation  and  Amortization.  Depreciation  and  amortization  for  the
quarter ended March 31, 1999 increased by $111,000,  or 79.9% as compared to the
quarter  ended  March 31,  1998.  The  increase  was  primarily  due to  capital
additions to current shows,  new shows, and an increase in assets as a result of
the Gedco asset acquisition.

                                       15
<PAGE>

     Interest  Expense,  Net.  Interest  expense for the quarter ended March 31,
1999 increased by $340,000, or 492.8% as compared to the quarter ended March 31,
1998.  The increase was primarily due to interest paid on the debt incurred from
the Gedco asset acquisition.

     Income Taxes. On Stage 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.  We have  accrued no federal  income tax for the quarter  ended
March 31, 1998. At March 31, 1998 and 1999,  we had federal net  operating  loss
carryforwards of  approximately  $3,025,000 and $7,185,000  respectively.  Under
Section  382 of the  Internal  Revenue  Code,  certain  significant  changes  in
ownership that we are 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.

Seasonality and Quarterly Results

     Our business has been, and is expected to remain, highly seasonal, with the
majority  of our  revenue  being  generated  during the months of April  through
October.  Part of our business  strategy is to increase sales in tourist markets
that experience  their peak seasons from November through March, so as to offset
this seasonality in revenues.  The Gedco asset  acquisition  should also help to
decrease the seasonality of our business since Gedco's revenue was  historically
less seasonal.  

     The  following  table sets forth our net  revenue for each of the last nine
quarters ended March 31, 1999:
<TABLE>
<CAPTION>                                Net Revenues ($ in thousands)
<S>                                <C>                   <C>                 <C>                  <C>

                                 March 31,             June 30,           September 30,       December 31,
Fiscal 1997..................     $ 2,719              $ 3,979               $ 5,071             $ 3,957
Fiscal 1998..................     $ 3,724              $ 8,245               $ 8,059             $ 7,819
Fiscal 1999..................     $ 6,272                 -                     -                   -
</TABLE>

Liquidity and Capital Resources

General

     On Stage has  historically met our working capital  requirements  through a
combination  of cash  flow  from  operations,  equity  and  debt  offerings  and
traditional  bank  financing.  We  anticipate,  based on our proposed  plans and
assumptions  relating to our operations,  that our current cash, cash equivalent
balances,  anticipated  revenue from operations and our working capital line are
insufficient to fund our ongoing operations.

     On Stage  intends  to manage  short-term  liquidity  concerns  through  the
renegotiations of our expired working capital line,  capital leases and mortgage
facilities.  We have either closed down or restructured  any business units that
were not generating  positive cash flow. In addition,  we have lowered  selling,
general and  administrative  expenses as a percentage of net revenues from 31.5%
in 1997 to 22.4% in 1998 and continues to downsize and  restructure our selling,
general and administrative functions.

     For the  quarter  ended March 31,  1998,  we had net cash  deficit  used by
operations  of  approximately   $1,017,000.   As  of  March  31,  1998,  we  had
approximately  $1,195,000  in cash and cash  equivalents.  For the quarter ended
March 31,  1999,  we had net cash deficit used by  operations  of  approximately
$987,000.  As of March 31, 1999, we had approximately  $281,000 in cash and cash
equivalents.   The  operating   deficits  for  both   quarters  were   primarily
attributable to business seasonality.

                                       16
<PAGE>

     The net cash used in investing  activities  for the quarter ended March 31,
1998 of $12,762,000,  was primarily  attributable to direct acquisition expenses
related  to the  Gedco  asset  acquisition.  The  net  cash  used  in  investing
activities  for the  quarter  ended March 31,  1999 of  $12,000,  was  primarily
attributable to capital expenditures.

     Net cash provided by financing  activities  for the quarter ended March 31,
1998 of $12,650,000,  was primarily attributable to Imperial Credit's funding of
$12,500,000  for the Gedco asset  acquisition.  Net cash  provided by  financing
activities  for the  quarter  ended March 31,  1999 of  $74,000,  was  primarily
attributable to notes payable from officer, and the issuance of common stock.

Working Capital

     At March 31,  1998,  we had a working  capital  of  approximately  $298,000
primarily  attributable  to an increase in pre-paid  tickets and monies received
from the Gedco asset  acquisition.  At March 31,  1999,  we had working  capital
deficit of approximately  $17,139,000 which resulted primarily, from an increase
in the accrued expenses, accrued payroll and other liabilities,  note payable to
officer,  and the  reclassification  of the  Imperial  Credit  mortgage  loan to
current  liabilities.  Because of the  recurring  losses,  the  working  capital
deficit and the loan defaults,  our auditors have issued a going concern opinion
for the year ended December 31, 1998.

Working Capital Line

     In May 1997,  First  Security  Bank of Nevada issued a line of credit to us
for up to $250,000.  Borrowings  under this 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.  We had drawn  $1,000,000 on the
line of credit.  On April 29,  1999,  we received a notice of default  under the
line of credit from First  Security.  In the notice of default,  First  Security
asked On Stage to make a repayment proposal and provide  additional  information
on or before May 3, 1999.  While we are  attempting to negotiate an extension or
restructuring  of this  line of  credit,  there  can be no  assurance  that  our
attempts to negotiate an extension or  restructuring of this line of credit will
be successful or that First Security will not take additional  action to collect
this debt.

Capital Equipment Financing Commitment

     On September 29, 1997, First Security Leasing Company,  a Utah corporation,
approved us for a $1,000,000 lease line of credit. Advances under the lease line
incur interest at a rate of 9.75% per annum. The lease line has been utilized in
the following amounts: $389,290, $442,997 and $167,713, commencing in April 1998
and May 1998, respectively,  and terminating on October 2001, September 2001 and
November  2001.  We also  received a notice of default  under this lease line on
April  29,  1999.   While  we  are  attempting  to  negotiate  an  extension  or
restructuring of this lease line, there can be no assurance that our attempts to
negotiate an extension or restructuring of this lease line will be successful or
that First  Security  Leasing  will not take  additional  action to collect this
debt.

Mortgage Financing Commitment

     On  March  13,  1998,   Imperial  Credit  Commercial   Mortgage  Investment
Corporation  agreed to provide up to  $20,000,000  of mortgage  financing  to On
Stage.  On the same date, we used  $12,500,000 of said facility to fund the cash
portion of the Gedco asset  acquisition and related fees. We  subsequently  used
$1,100,000  on  June  30,  1998 to  fund  the  cash  portion  of the Fox  Family
acquisition  and  $550,000  on October 7, 1998 for our  working  capital  needs.



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<PAGE>

We have made January and February  1999  payments  under this loan after the due
date for those payments.  As a result of those  delinquencies,  we have incurred
late  charges and default  interest,  which we have not paid.  We are in default
under the Imperial Credit facility and we are unable to borrow  additional funds
under the  facility.  As of May 17,  1999,  we had made our payments to Imperial
Credit  due  March 1,  1999,  April 1,  1999 or May 1,  1999.  We are  currently
negotiating  with Imperial  Credit to extend some of the  repayment  terms under
this facility and to obtain waivers or amendments with respect to other defaults
under  the  facility,   including  a  breach  of  debt  service  coverage  ratio
warranties.

     In the event that First Security, First Security Leasing or Imperial Credit
initiates  foreclosure  action against us or our assets, all or a portion of our
property  and assets  securing  the credit  facilities  and  mortgage  financing
extended by those lenders may be sold to satisfy our commitments under the terms
of those  facilities.  We are attempting to renegotiate  the terms of our credit
facilities,  to obtain  extensions of the terms of those  facilities and to seek
alternative  additional  financing.  There can be no assurance  that our efforts
will be successful. Year 2000

Year 2000

     On Stage believes that our accounting and financial  reporting  systems are
Year 2000 ready or Year 2000 compliant.  We have invested in the latest hardware
and software and we have implemented standards that require Year 2000 compliance
from  all  vendors.  We do not  anticipate  any  problems  in  maintaining  this
compliance in the future.

     However, we are still continuing to assess Year 2000 preparedness,  through
actively  coordinating  with vendors,  creditors and financial  organizations to
prepare for possible  repercussions of  non-compliance.  We are also undertaking
exhaustive  surveys in each of our  geographic  locations  to further  determine
preparedness. We have hired Business Communications, Inc. to visit each site and
physically re-certify that each machine,  microprocessor and software program in
use  is  Year  2000  compliant.  We  have  allocated  $50,000  to  complete  our
certification program and we anticipate completion by June 30, 1999.



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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, 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,  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 case is currently in the discovery
stage of litigation and the matter has been set for trial on September 20, 1999.

Item 2.  Changes in Securities and Use of Proceeds.

None.

Item 3.  Defaults Upon Senior Securities.

None.

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

None.

Item 5.  Other Information.

None.

Item 6.  Exhibits & Reports on Form 8-K

(a) Exhibits

    None.

(b) Reports on Form 8-K

     The  registrant  was not  required  to file any reports on Form 8-K for the
three-months ended March 31, 1999.


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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: May 17, 1999                         /s/ John W. Stuart
                                           --------------------------------
                                           John W Stuart, Chairman and Chief 
                                           Executive Officer



Date: May 17, 1999                         /s/ Pedro Perez
                                           --------------------------------
                                           Pedro Perez
                                           Chief Accounting Officer






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