**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,DC 20549**

** **

**AMENDMENT NO. 1**

**FORM 10-QSB/A**

 

**(Mark One)**

 

| **ý**                                                 |   | **Quarterly report under Section 13 or 15 (d) of the Securities  Exchange Act of 1934** |
|------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|
|                                                       |   |                                                                                         |
| **For the quarterly period ended March 31, 2000**          |
|                                                       |   |                                                                                         |
| **o**                                                      |   | **Transition report under Section 13 or 15 (d) of the Exchange Act**                         |
|                                                       |   |                                                                                         |
| **For the Transition period from ________ to  __________** |
|                                                       |   |                                                                                         |
| **Commission  file number 0-29402**                        |

 

**ON STAGE ENTERTAINMENT, INC.**

(Exact Name of SmallBusiness Registrant as Specified in Its Charter)

 

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

 

 

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

 

 

**(702)253-1333**

Registrant’s TelephoneNumber, Including Area Code

 

 

(Former Name, FormerAddress and Former Fiscal Year, if

Changed Since LastReport)

 

Indicate by check whether the issuer: (1) has filed all reportsrequired to be filed by Section 13 or 15 (d) of the  Exchange  Act during thepast 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 ý   No o

 

 

                APPLICABLE ONLY TOCORPORATE ISSUERS

 

State the number of shares outstanding of each of the registrant’sclasses of common equity, as of the latest practicable date.

 

| **Class**                      |   | **Outstanding  at May 15, 2000** |
|--------------------------------|--------|----------------------------------|
| Common Stock, $0.01 par  value |   | 7,226,808                        |

 

 

ON STAGE ENTERTAINMENT,INC. AND SUBSIDIARIES

 

 

TABLE OF CONTENTS

 

 
| Part I. Financial  Information |                                                                                                 |   |
|--------------------------------|------------------------------------------------------------------------------------------------------|--------|
|                           |                                                                                                 |   |
|                           | Item 1.  Consolidated Financial Statements                                                           |   |
|                           |                                                                                                 |   |
|                           | Balance sheets                                                                                       |   |
|                           | Statements of  operations                                                                            |   |
|                           | Statements of  cash flows                                                                            |   |
|                           | Notes to  financial statements                                                                       |   |
|                           |                                                                                                 |   |
|                           | Item  2. Management’s Discussion and Analysis Of Financial Condition and Results of  Operations |   |
|                           |                                                                                                 |   |
|                           |                                                                                                 |   |
| Part II. Other Information     |                                                                                                 |   |
|                           |                                                                                                 |   |
|                           | Item 1.  Exhibits and Reports on Form 8-K                                                            |   |
|                           |                                                                                                 |   |
|                           | Signatures                                                                                           |   |
|                           |                                                                                                 |   |
|                           | Index of Exhibit                                                                                     |   |
|                                |                                                                                                      |        |  |  |

 

PART I. FINANCIAL INFORMATION

 

This document contains certain forward-looking statements that aresubject to risks and uncertainties. Forward-looking statements include certain information relating topotential new show openings, the potential markets for On Stage’s productions,the expansion of existing and potential gaming and tourist markets, ourexposure to various trends in the gaming industry, our restructuring plans andthe benefits we anticipate from restructuring, our business strategy, ouroutstanding litigation matters and the defenses available to us, theseasonality of our business, and liquidity issues, as well as informationcontained elsewhere in this report where current statements are preceded by,followed by or include the words “believes,” “expects,” “anticipates” orsimilar expressions.  For thesestatements, On Stage claims the protection of the safe harbor for forward-lookingstatements contained in the Private Securities Litigation Reform Act of1995.  The forward-looking statements inthis document are subject to risks and uncertainties that could cause theassumptions underlying the forward-looking statements and the actual results todiffer materially from those expressed in or implied by the statements.

 

Item 1. Consolidated Financial Statements

 

On Stage Entertainment,Inc. and Subsidiaries

Consolidated Balance Sheets

 

 
|                                                                    |   | **December 31,** |       | **March 31,** |    |
|-------------------------------------------------------------------------|--------|------------------|------------|---------------|---------|
|                                                                    |   | **1999**         |       | **2000**      |    |
| Assets                                                                  |   |             |       | (Unaudited)   |    |
| Current assets                                                          |   |             |       |          |    |
| Cash and cash  equivalents                                              |   | $                | 374,587    |          | 430,973 |   |
| Accounts  receivable, net                                               |   | 1,249,619        |       | 1,180,881     |    |
| Inventory                                                               |   | 234,579          |       | 215,422       |    |
| Deposits                                                                |   | 198,523          |       | 402,684       |    |
| Prepaid and  other assets                                               |   | 238,274          |       | 302,030       |    |
| Notes receivable  from officers                                         |   | 117,906          |       | 226,887       |    |
|                                                                    |   |             |       |          |    |
| Total current assets                                                    |   | 2,413,488        |       | 2,758,877     |    |
|                                                                    |   |             |       |          |    |
| Property,  equipment and leasehold improvements                         |   | 23,720,804       |       | 16,542,215    |    |
| Less:  Accumulated depreciation and amortization                   |   | (5,176,244       | )          | (5,112,133    | )       |
|                                                                    |   |             |       |          |    |
| Property,  equipment and leasehold improvements, net                    |   | 18,544,560       |       | 11,430,082    |    |
| Direct  acquisition costs                                               |   | 597,328          |       | -             |    |
| Deferred  financing costs, net of amortization of $108,813 and $214,976 |   | 927,190          |       | 899,191       |    |
|                                                                    |   | $                | 22,472,566 |          | $       | 15,088,150 |   |
|                                                                         |        |                  |            |               |         |  |  |

 

See notes to consolidatedfinancial statements

 

On Stage Entertainment,Inc. and SubsidiariesLiabilities and Stockholders’ Equity
|                                                                                                             |   |        |       |        |    |
|------------------------------------------------------------------------------------------------------------------|--------|-------------|------------|-------------|---------|
| Current  liabilities                                                                                             |   |        |       |        |    |
| Working capital  line                                                                                            |   | $           | 459,162    |        | 296,326 |   |
| Accounts payable  and accrued expenses                                                                           |   | 1,444,878   |       | 1,692,706   |    |
| Accrued payroll  and other liabilities                                                                           |   | 3,937,935   |       | 4,651,097   |    |
| Current  maturities of long-term debt                                                                            |   | 15,398,282  |       | 15,398,282  |    |
| Note payable to  employee                                                                                        |   | -           |       | 20,0000     |    |
|                                                                                                             |   |        |       |        |    |
| Total current  liabilities                                                                                       |   | $           | 21,240,257 |        | $       | 22,058,411 |   |
|                                                                                                             |   |        |       |        |    |   |   |
| Long-term debt,  less current maturities                                                                         |   | 30,773      |       | 26,360      |    |
|                                                                                                             |   |        |       |        |    |
| Total  liabilities and long-term debt                                                                            |   | 21,271,030  |       | 22,084,771  |    |
|                                                                                                             |   |        |       |        |    |
| Commitments and  contingencies                                                                                   |   |        |       |        |    |
|                                                                                                             |   |        |       |        |    |
| Stockholders’  equity (deficiency)                                                                          |   |        |       |        |    |
| 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; 7,226,808 shares  issued and outstanding |   | 72,268      |       | 72,268      |    |
| Additional  paid-in-capital                                                                                      |   | 11,430,336  |       | 11,430,336  |    |
| Accumulated deficit                                                                                              |   | (10,291,068 | )          | (18,499,225 | )       |
|                                                                                                             |   |        |       |        |    |
| Total  stockholders’ equity (deficiency)                                                                    |   | 1,211,536   |       | (6,996,621  | )       |
|                                                                                                             |   | $           | 22,482,566 |        | $       | 15,088,150 |   |

 

See notes to consolidatedfinancial statements

 

On Stage Entertainment,Inc. and Subsidiaries

Consolidated Statementsof Operations

 
|                                                         |   | **Three months ended** |      |
|--------------------------------------------------------------|--------|------------------------|-----------|
|                                                         |   | **March 31,**          |      |
|                                                         |   | **1999**               |      | **2000** |   |
|                                                         |   | (Unaudited)            |      | (Unaudited) |   |
|                                                         |   |                   |      |   |   |
| Net revenues                                                 |   | $                      | 6,272,239 |   | $ | 6,105,757 |   |
| Costs of  revenues                                           |   | 5,450,509              |      | 5,217,904 |   |
|                                                         |   |                   |      |   |   |
| Gross profit                                                 |   | 821,730                |      | 887,853 |   |
| Selling, general  & administrative                       |   | 1,045,916              |      | 595,015 |   |
| Depreciation and  amortization                               |   | 250,067                |      | 941,471 |   |
|                                                         |   |                   |      |   |   |
| Operating loss                                               |   | (474,253               | )         | (648,633 | ) |
|                                                         |   |                   |      |   |   |
| Interest  expense, net                                       |   | 409,311                |      | 697,805 |   |
|                                                         |   |                   |      |   |   |
| Loss before  extraordinary item                              |   | $                      | (883,564  | ) | $ | (1,346,438 | ) |
|                                                         |   |                   |      |   |   |   |   |
| Extraordinary  item-trouble debt restructuring loss          |   | -                      |      | 6,861,719 |   |
| Net Loss                                                     |   | (883,564               | )         | (8,208,157 | ) |
|                                                         |   |                   |      |   |   |
| Basic and  diluted Loss per share from continuing operations |   | $                      | (0.12     | ) | $ | (.19 | ) |
| Basic and  diluted Loss per share from extraordinary Item    |   | $                      | -         |   | $ | (.95 | ) |
| Basic and  diluted loss per common share                     |   | (0.12                  | )         | (1.14 | ) |
|                                                         |   |                   |      |   |   |
| Basic average of  common shares outstanding                  |   | 7,565,683              |      | 7,226,808 |   |
|                                                         |   |                   |      |   |   |
| Diluted average  number of common shares outstanding         |   | 7,565,683              |      | 7,226,808 |   |

 

See notes to consolidatedfinancial statements

 

 

On Stage Entertainment,Inc. and Subsidiaries

Consolidated Statements of Cash Flows

 

Increase(Decrease) in Cash and Cash Equivalents

 
|                                                                         |   | **Three months ended** |     |
|------------------------------------------------------------------------------|--------|------------------------|----------|
|                                                                         |   | **March 31,**          |     |
|                                                                         |   | **1999**               |     | **2000** |   |
|                                                                         |   | (Unaudited)            |     | (Unaudited) |   |
|                                                                         |   |                   |     |   |   |
| Cash flows from  operating activities                                        |   |                   |     |   |   |
| Net loss                                                                     |   | $                      | (883,564 | ) | $ | (8,208,157 | ) |
|                                                                         |   |                   |     |   |   |
| Adjustments to  reconcile net loss to net cash used in operating activities: |   |                   |     |   |   |
| Depreciation and  amortization                                               |   | 387,552                |     | 941,471 |   |
| Trouble debt  restructuring loss                                             |   | -                      |     | 6,861,719 |   |
| Increase  (decrease) from changes in operating assets and liabilities        |   |                   |     |   |   |
| Accounts  receivable                                                         |   | 145,544                |     | 68,738 |   |
| Inventory                                                                    |   | 11,750                 |     | 19,157 |   |
| Deposits                                                                     |   | (201,399               | )        | (204,161 | ) |
| Prepaid and  other assets                                                    |   | (63,597                | )        | (63,756 | ) |
| Accounts payable  and accrued expenses                                       |   | (774,700               | )        | 247,828 |   |
| Accrued payroll  and other liabilities                                       |   | 391,575                |     | 713,162 |   |
|                                                                         |   |                   |     |   |   |
| Total  adjustments                                                           |   | (103,275               | )        | 8,584,158 |   |
|                                                                         |   |                   |     |   |   |
| Net cash  provided by (used in) operating activities                         |   | (986,839               | )        | 376,001 |   |
|                                                                         |   |                   |     |   |   |
| Cash flows from  investing activities                                        |   |                   |     |   |   |
| Advances on  notes receivable from officers                                  |   | (1,531                 | )        | (108,981 | ) |
| Payments  received on notes receivable from officers                         |   | 2,008                  |     | - |   |
| Capital  expenditures                                                        |   | (12,718                | )        | (63,387 | ) |
|                                                                         |   |                   |     |   |   |
| Net cash  provided by (used in) investing activities                         |   | (12,241                | )        | (172,368 | ) |
|                                                                         |   |                   |     |   |   |
| Cash used in  financing activities                                           |   |                   |     |   |   |
| Payments under  working capital line                                         |   | -                      |     | (162,836 | ) |
| Repayment on  long-term borrowing                                            |   | (126,236               | )        | (4,411 | ) |
| Cash received on  note payable from officer / employee                       |   | 100,000                |     | 20,000 |   |
| Issuance of  common stock                                                    |   | 100,050                |     | - |   |
|                                                                         |   |                   |     |   |   |
| Net cash  provided by (used in) financing activities                         |   | 73,814                 |     | (147,247 | ) |
|                                                                         |   |                   |     |   |   |
| Effect of  exchange rate changes on cash and cash Equivalents                |   | 196,754                |     | - |   |
|                                                                         |   |                   |     |   |   |
| Net increase in cash  and cash equivalents                                   |   | (728,512               | )        | 56,386 |   |
| Cash and cash  equivalents at beginning of period                            |   | 1,009,768              |     | 374,587 |   |
|                                                                         |   |                   |     |   |   |
| Cash and cash  equivalents at end of period                                  |   | $                      | 281,256  |   | $ | 430,973 |   |
|                                                                              |        |                        |          |  |  |  |  |  |  |

 

See notes to consolidatedfinancial statements

 

ON STAGE ENTERTAINMENT,INC. AND SUBSIDIARIES

Notes to ConsolidatedFinancial Statements

March 31, 2000

 

(1)  Basis of Presentation

 

The financial statements included in this report include the accountsof On Stage Entertainment, Inc., a publicly traded Nevada corporation and itssubsidiaries: Legends in Concert, Inc., a Nevada corporation; On StageMarketing, Inc., a Nevada corporation; On Stage Theaters, Inc., a Nevadacorporation; Wild Bill’s California, Inc., a Nevada corporation; BlazingPianos, Inc., a Nevada corporation; King Henry’s Inc., a Nevada corporation; OnStage Merchandise, Inc., a Nevada corporation; On Stage Events, Inc., a Nevadacorporation; On Stage Casino Entertainment, Inc., a Nevada corporation; OnStage Productions, Inc., a Nevada corporation; On Stage Theaters North MyrtleBeach, Inc., a Nevada corporation; and On Stage Theaters Surfside Beach, Inc.,a Nevada corporation.

 

In the opinion of the management of On Stage Entertainment, Inc.  and Subisidaries (the “Company”), theaccompanying unaudited consolidated financial statements include all normaladjustments considered necessary to present fairly the financial position as ofMarch 31, 2000, and the results of operations and cash flows for the threemonths ended March 31, 2000 and 1999. Interim results are not necessarily indicative of results for a fullyear.  The consolidated financialstatements and notes are presented as permitted by Form 10-QSB, and do notcontain certain information included in the Company’s audited consolidatedfinancial statements and notes for the fiscal year ended December 31, 1999.

 

(2) Going Concern

 

The accompanying consolidated financial statements have been preparedassuming that On Stage will continue as a going concern, which contemplates therealization of assets and the satisfaction of liabilities in the normal courseof business.  The carrying amounts ofassets and liabilities presented in the financial statements do not purport torepresent realizable or settlement values. However, On Stage has suffered recurring operating losses, has a workingcapital deficit of $19,299,534, and has defaulted on its long-term debt.  These factors raise substantial doubt aboutthe ability to continue as a going concern. The consolidated financial statements do not include any adjustmentsthat might result from the outcome of those uncertainties.

 

On Stage has historically met its working capital requirements througha combination of cash flow from operations, equity and debt offerings andtraditional bank financing.  On Stageanticipates, based on its proposed plans and assumptions relating to itsoperations, that the current cash, cash equivalent balances and anticipatedrevenue from operations are insufficient to fund its ongoing operations.

 

Management plans to manage short-term liquidity concerns through therenegotiation of its expired working capital line, capital leases and mortgagefacilities.  On Stage has either closedor restructured any business units that are not generating positive cashflow.  In addition, it has loweredselling, general and administrative costs as a percent of net revenues from16.7% for the quarter ended March 31, 1999 to 9.7% for the quarter ended March31, 2000 and continues to downsize and restructure its selling, general andadministrative functions.

 

In addition, On Stage is continuing its efforts to secure workingcapital for operations, expansion and possible acquisitions, mergers, jointventures, and/or other business combinations. However, there can be no assurance that On Stage will be able to secureadditional capital or that if such capital is available, whether the terms orconditions would be acceptable.  Whilewe are currently in settlement negotiations with ICCMIC and First SecurityBank, there can be no assurance that we will be successful with reaching asettlement with either party.

 

(3) Direct acquisition costs

 

On March 31, 2000, the Company wrote off direct acquisition coststotaling $597,238, which had no future value.

 

(4) Loss Per Share

 

Statement of Financial Accounting Standard No.  128 (“SFAS 128”) provides for thecalculation of Basic and Diluted earnings per share.  Basic earnings per share includes no dilution and is computed bydividing income available to common shareholders by the weighted average numberof common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securitiesthat could share in the earnings of the entity, similar to fully dilutedearnings per share.  SFAS 128 iseffective for fiscal years and interim periods after December 15, 1997.  On Stage adopted this pronouncement duringthe fiscal year ended December 31, 1997.

 

For the three months ended March 31, 1999, potential dilutivesecurities representing 896,550 outstanding stock options and 2,724,917 outstandingwarrants are not included, since their effect would be anti-dilutive.  For the three months ended March 31, 2000,potential dilutive securities representing 1,225,000 outstanding stock optionsand 2,724,917 outstanding warrants are not included, since their effect wouldbe anti-dilutive.

 

(5) Commitments and contingencies

 

On Stage is a party to various legal proceedings in the ordinary courseof business.  While there can be noassurance that any of the instituted or threatened lawsuits will be settled ordecided in favor of On Stage, our management does not believe the finalresolution of these matters will have a material adverse effect upon ourfinancial condition and results of operations.

 

(6) Debt restructuring

 

As of March 31, 2000, property, equipment and leasehold improvementsincluded $9 million of assets subject to foreclosure, stated at net realizablevalue.

 

As of  October 7, 1998,  we had borrowed an aggregate of $14,150,000from  our mortgage lender, ICCMIC.  On May 24, 1999, we received a notice ofdefault from ICCMIC.  On November 5,1999, we received a formal demand from ICCMIC to pay them the sum of$16,163,305 as a guarantor under the loan, which represented all of theindebtedness, including late charges and default interest, due on thatdate.  On November 12, 1999, ICCMICfiled a complaint against us in the District Court for Clark County, Nevada,alleging, among other things, that we had breached the guaranty.  On December 10, 1999, we agreed to allowICCMIC to obtain a judgment against us for the amount of the guaranty in returnfor a forbearance on the collection of the judgment until March 31, 2000.  ICCMIC later extended the date forcollection on the judgment until May 1, 2000.

 

On December 9, 1999, ICCMIC obtained judgment of foreclosure againstour subsidiaries, Fort Liberty, Inc. and King Henry's, Inc. for the sale of theFort Liberty Shopping Complex and Wild Bill's Dinner Theater in Kissimmee,Florida and the King Henry's Feast Theater in Orlando, Florida.

 

On January 5, 2000, ICCMIC obtained a foreclosure decree for theofficial sale of the Legends in Concert Family Theater in Surfside Beach, SouthCarolina.

 

During the period, we continued negotiating the terms of the creditfacilities to obtain extensions and to seek alternative additional financing.

 

On January 24, 2000, we reached an agreement with ICCMIC to extend theforeclosure sale date on the King Henry's Feast Theater from January 26, 2000to March 8, 2000.   On March 7, 2000, wereached an agreement with ICCMIC to extend the foreclosure sale date on theKing Henry's Feast Theater until April 5, 2000.  On March 30, 2000, ICCMIC agreed to extend the foreclosure saledate to May 3, 2000.

 

On January 25, 2000, we reached an agreement with ICCMIC to extend theforeclosure sale date on the Fort Liberty Shopping Complex and Wild Bill'sDinner Theater from January 25, 2000 until March 7, 2000.   On March 7, 2000, we reached an agreementwith ICCMIC to extend the foreclosure sale date until April 4, 2000.  On March 30, 2000, ICCMIC agreed to extendthe foreclosure sale date to May 2, 2000.

 

On February 1, 2000, we reached an agreement with ICCMIC to extend theforeclosure sale date on the Legends Family Theater from February 7, 2000 untilMarch 6, 2000.  On March 3, 2000, wereached an agreement with ICCMIC to extend the foreclosure sale date untilApril 3, 2000.  On March 30, 2000,ICCMIC agreed to extend the foreclosure sale date until May 2000.

 

On May 1, 2000, we entered into a partial settlement with ICCMIC underwhich we agreed not to prevent ICCMIC from foreclosing on the Fort Liberty,King Henry's and Legends in Concert Surfside Beach theater in exchange for anaggregate credit of $9 million.  Of thisamount, $3 million was allocated to Fort Liberty, $4 million was allocated toKing Henry's Feast and $2 million was allocated to Legends in Concert SurfsideBeach.  We also agreed to operate theKing Henry's and Fort Liberty Theaters until June 21, 2000, at which time thetheaters were closed.

 

In connection with the transfer of assets to ICCMIC, we incurred atroubled debt restructuring loss of approximately $6,918,309 (of which$6,861,418 had been accrued at March 31, 2000 based on a preliminary estimateand $56,591 was recorded on September 30, 2000 when we completed our analysisof the foreclosure), representing the difference between the estimated fairvalue of the assets transferred and the carrying value of the debt settled.

 

On September 15, 2000, the Company sold the assets of the Legends inConcert Theater Surfside Beach independently and used the proceeds to pay offits debt with ICCMIC.

 

On October 12, 2000, we restructured our remaining debt with ICCMIC andFirst Security Bank of Nevada ("First Security").   Under the terms of the agreement, ICCMICagreed to convert its outstanding loan and accrued interest of approximately$8.2 million in exchange for 4,061,122 shares of common stock with a marketvalue of  $1,218,336, which resulted ina troubled debt restructuring gain of $7,059,432.  As part of this transaction, Mr. Parrott purchased 2,630,000shares of our common stock, at market value, from ICCMIC for $1 million.

 

As a result of the debt restructuring, we recorded a net troubled debtrestructuring gain of $141,122 in the following quarters:

 
| **Quarter Ended**   |   | **Gain (loss)** |       |
|---------------------|--------|-----------------|------------|
|                |   |            |       |
| March 31, 2000      |   | $               | (6,861,719 | ) |
| June 30, 2000       |   | -               |       |
| September 30,  2000 |   | (56,591         | )          |
| December 31,  2000  |   | 7,059,432       |       |
| **Total**           |   | $               | 141,122    |   |

 

We also restructured our remaining debt of approximately $1.2 millionwith First Security.  Under the terms ofthe agreement with First Security, effective August 1, 2000,  we pay $50,000 per month.  The loan matures on September 1, 2002 andaccrues interest at the annual rate of prime plus 2%, which was 9.5% atDecember 31, 2000.

 

(7) Segment Information

 

The Company derives its net revenues from five reportable segments:

 
| • |   | Casinos.  The  Casinos segment primarily sells live theatrical productions to casinos  worldwide for a fixed fee.  In  addition, this segment operates our *Legends in Concert* show at the Imperial  Palace in Las Vegas, Nevada and Biloxi, Mississippi and at Bally’s Park Place  in Atlantic City, New Jersey. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • |   | Theaters.   The Theaters segment owns and /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 along with food and beverages to patrons who attend  our live theatrical productions.            |
| • |   | Events.  The  Events segment sells live theatrical productions to commercial clients, which  include corporations, theme and amusement parks and cruise lines, for a fixed  fee.  Revenues generated from the  Events segment are included in the Casinos segment.                                                      |
| • |   | Merchandise.   The Merchandise segment sells merchandise and souvenir photography  products to patrons who attend our Casinos, Theaters, and Events  productions.  Revenues generated from  the Merchandising segment are included in the Theaters segment.                                                             |
| • |   | Production Services.  The Production Services segment sells technical equipment and  services to commercial clients.   However, the Production Services segment’s primary focus is to provide  technical support for all of the Casinos, Theaters, Events and Merchandise  segments.                               |

 

The accounting policies of the reportable operating segments are the sameas those described in the Summary of Accounting Policies.  The Company’s management evaluates theperformance of its operating segments based upon the profit or loss fromoperations.

 

The Company’s reportable segments are strategic business units becauseeach business unit services a different market or performs a specializedfunction in support of a given market.

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Resultsof Operation

 

The following table sets forth the segment profit/(loss) and assetinformation:

 

For the period endedMarch 31, 1999

 
|                              |   |       |      | **Production** |   |         |   |    |       | **Total**        |   |
|-----------------------------------|--------|------------|-----------|----------------|--------|--------------|--------|---------|------------|------------------|--------|
|                              |   | **Casino** |      | **Services**   |   | **Theaters** |   | **OSE** |       | **Consolidated** |   |
|                              |   |       |      |           |   |         |   |    |       |             |   |
| 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 |   |

 

 

For the period endedMarch 31, 2000

 
|                                             |   |       |      | **Production** |   |         |   |    |       | **Total**        |   |
|--------------------------------------------------|--------|------------|-----------|----------------|--------|--------------|--------|---------|------------|------------------|--------|
|                                             |   | **Casino** |      | **Services**   |   | **Theaters** |   | **OSE** |       | **Consolidated** |   |
|                                             |   |       |      |           |   |         |   |    |       |             |   |
| Revenues from  external customers                |   | $          | 2,512,437 |           | $      | 10,670       |   | $       | 3,582,650  |             | $      | - |   | $ | 6,105,757 |   |
|                                             |   |       |      |           |   |         |   |    |       |             |   |
| Interest expense                                 |   | $          | 1,964     |           | $      | -            |   | $       | 669,032    |             | $      | 26,809 |   | $ | 697,805 |   |
|                                             |   |       |      |           |   |         |   |    |       |             |   |
| Depreciation and  amortization                   |   | $          | 100,085   |           | $      | 27,010       |   | $       | 157,169    |             | $      | 657,207 |   | $ | 941,471 |   |
|                                             |   |       |      |           |   |         |   |    |       |             |   |
| Segment profit  (loss) before extraordinary item |   | $          | 670,012   |           | $      | (202,243     | )      | $       | (828,324   | )                | $      | (985,883 | ) | $ | (1,346,438 | ) |
|                                             |   |       |      |           |   |         |   |    |       |             |   |
| Segment assets                                   |   | $          | 3,258,853 |           | $      | 887,626      |   | $       | 10,539,141 |             | $      | 1,856,895 |   | $ | 16,542,215 |   |
|                                             |   |       |      |           |   |         |   |    |       |             |   |
| Additions to  long-lived assets                  |   | $          | 61,575    |           | $      | 532          |   | $       | 431        |             | $      | 849 |   | $ | 63,387 |   |

 

Item 2. Management’s  Discussion and Analysis of FinancialCondition and Results of Operation

 

Results of Operations

 

The  following  tables sets forth,  the results of  operationsby operating divisions for the period indicated:

 

For the quarter endedMarch 31, 1999

 
|                                   |   |       |      |           |   |         |   | **Sub-Total** |      |    |   |             |   |
|----------------------------------------|--------|------------|-----------|----------------|--------|--------------|--------|---------------|-----------|---------|--------|------------------|--------|
|                                   |   |       |      | **Production** |   |         |   | **Operating** |      |    |   | **Total**        |   |
|                                   |   | **Casino** |      | **Services**   |   | **Theaters** |   | **Divisions** |      | **OSE** |   | **Consolidated** |   |
|                                   |   |       |      |           |   |         |   |          |      |    |   |             |   |
| 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 | ) |

 

 

For the quarter endedMarch 31, 2000

 
|                                                               |   |       |      |           |   |         |   | **Sub-Total** |       |    |   |             |   |
|--------------------------------------------------------------------|--------|------------|-----------|----------------|--------|--------------|--------|---------------|------------|---------|--------|------------------|--------|
|                                                               |   |       |      | **Production** |   |         |   | **Operating** |       |    |   | **Total**        |   |
|                                                               |   | **Casino** |      | **Services**   |   | **Theaters** |   | **Divisions** |       | **OSE** |   | **Consolidated** |   |
|                                                               |   |       |      |           |   |         |   |          |       |    |   |             |   |
| Net revenues                                                       |   | $          | 2,512,437 |           | $      | 10,670       |   | $             | 3,582,650  |    | $      | 6,105,757        |   | $ | - |   | $ | 6,105,757 |   |
|                                                               |   |       |      |           |   |         |   |          |       |    |   |             |   |
| Cost of revenues                                                   |   | $          | 1,579,317 |           | $      | 186,903      |   | $             | 3,452,684  |    | $      | 5,217,904        |   | $ | - |   | $ | 5,217,904 |   |
|                                                               |   |       |      |           |   |         |   |          |       |    |   |             |   |
| Gross profit  (loss)                                               |   | $          | 933,120   |           | $      | (175,233     | )      | $             | 129,966    |    | $      | 887,853          |   | $ | - |   | $ | 887,853 |   |
|                                                               |   |       |      |           |   |         |   |          |       |    |   |             |   |
| Selling, general  & Administrative                             |   | $          | 161,059   |           | $      | -            |   | $             | 132,089    |    | $      | 293,148          |   | $ | 301,867 |   | $ | 595,015 |   |
|                                                               |   |       |      |           |   |         |   |          |       |    |   |             |   |
| Depreciation  & Amortization                                   |   | $          | 100,085   |           | $      | 27,010       |   | $             | 157,169    |    | $      | 284,264          |   | $ | 657,207 |   | $ | 941,471 |   |
|                                                               |   |       |      |           |   |         |   |          |       |    |   |             |   |
| Operating income  (loss)                                           |   | $          | 671,976   |           | $      | (202,243     | )      | $             | (159,292   | )       | $      | 310,441          |   | $ | (959,074 | ) | $ | (648,633 | ) |
|                                                               |   |       |      |           |   |         |   |          |       |    |   |             |   |
| Interest  expense, net                                             |   | $          | 1964      |           | $      | -            |   | $             | 669,032    |    | $      | 670,996          |   | $ | 28,809 |   | $ | 697,805 |   |
|                                                               |   |       |      |           |   |         |   |          |       |    |   |             |   |
| Net income  (loss) before extraordinary item                       |   | $          | 670,012   |           | $      | (202,243     | )      | $             | (828,324   | )       | $      | (360,555         | )      | $ | (985,883 | ) | $ | (1,346,438 | ) |
|                                                               |   |       |      |           |   |         |   |          |       |    |   |             |   |
| Extraordinary  item – troubled debt  restructuring  loss |   | $          | -         |           | $      | -            |   | $             | 6,861,719  |    | $      | 6,861,719        |   | $ | - |   | $ | 6,861,719 |   |
| Net Loss                                                           |   | $          | 670,012   |           | $      | (202,243     | )      | $             | (7,690,043 | )       | $      | (7,222,274       | )      | $ | (985,883 | ) | $ | (8,208,157 | ) |

 

Quarter Ended March 31, 1999 versus Quarter Ended March 31, 2000

 

Net Revenues.  Revenuesdecreased by $166,000, or 2.7%, to $6,106,000 for the quarter ended March 31,2000 compared to $6,272,000 for the quarter ended March 31, 1999.  Our revenue is derived from five principaloperating segments: Casinos, Events, Merchandise, Productions and Theaters.  Revenues from Events are included in theCasinos segment and revenues from Merchandise are included in the Theatersegment.

 

Casino Entertainment revenues were approximately $2,512,000 for thequarter ended March 31, 2000 compared to $2,590,000 for the quarter ended March31, 1999, an increase of $78,000, or 3.1%. Contributing to this increase was the addition of a new show at theImperial Palace in Biloxi, Mississippi, partially offset by the discontinuationof the following shows: a variety ice show at the River Palms Resort and Casinoin Laughlin, Nevada, Taj Mahal Hotel and Casino and Hilton Hotel and Casino inAtlantic City.

 

Production revenues were approximately $11,000 for the quarter endedMarch 31, 2000 compared to $2,000 for the quarter ended March 31, 1999.  The increase was attributable to increasedequipment rentals.

 

Theaters revenues were approximately $3,583,000 for the quarter endedMarch 31, 2000 compared to $3,680,000 for the quarter ended March 31, 1999, adecrease of $97,000, or 2.7%.  This wasprimarily attributable to the discontinuation of the *Legends in Concert* show inToronto.

 

Costs of Revenues.  Total costsof revenues were $5,218,000 for the quarter ended March 31, 2000 compared to$5,451,000 the quarter ended March 31, 1999, a decrease of $233,000, or 4.3%.  Costs of revenues decreased to 85.5% of netrevenues for the quarter ended March 31, 2000, as compared to 86.9% for thequarter ended March 31, 1999.  Thisdecrease in cost of sales as a percentage of revenues was primarilyattributable to a change in the mix of our revenues.

 

Selling, General and Administrative. Selling, general and administrative costs were approximately $595,000for the quarter ended March 31, 2000 as compared to $1,046,000 for the quarterended March 31, 1999, a decrease of $451,000 or 43.1%.  Selling, general and administrative costsdecreased to 9.7% of net revenues for the quarter ended March 31, 1999, ascompared to 16.7% for the quarter ended March 31, 1999, which was primarilyattributable to the downsizing and restructuring plan adopted on April 30,1999.

 

Depreciation and Amortization. Depreciation and amortization for the quarter ended March 31, 2000increased by $691,000, or 276.5%, as compared to the quarter ended March 31,1999.  The increase was primarily due tothe write-off of direct acquisition costs.

 

Operating Loss.  Our operatingloss was approximately $648,633 for the quarter ended March 31, 2000, comparedto an operating loss of $474,000 for the quarter ended March 31, 1999, anincrease of $174,633, or 27%.

 

Interest Expense, Net.  Interestexpense for the quarter ended March 31, 2000 increased by $288,000, or 70.5%,as compared to the quarter ended March 31, 1999.  The increase was primarily due to interest on debt incurred fromthe Gedco Acquisition.

 

Income Taxes.  On Stage is aNevada corporation with a substantial portion of revenue and income derived inNevada.  There are no state or localincome taxes in Nevada.  On Stageaccrued no federal income tax for the quarter ended March 31, 2000.  At March 31, 1999 and 2000, On Stage hadfederal net operating loss carryforwards of approximately $7,185,000 and$16,613,689 respectively.  Under Section382 of the Internal Revenue Code, certain significant changes in ownership thatOn Stage is currently undertaking may restrict the future utilization of thesetax loss carryforwards.  The netdeferred tax assets have a 100% valuation allowance, as management cannotdetermine if it is more likely than not that the deferred tax assets will berealized.

 

Seasonality and Quarterly Results

 

On Stage’s business has been, and is expected to remain, highlyseasonal, with the majority of its revenue being generated during the months ofApril through October.  Part of OnStage’s business strategy is to increase sales in tourist markets thatexperience their peak seasons from November through March, so as to offset thisseasonality in revenues.  The GedcoAcquisition should also help to decrease the seasonality of On Stage’s businesssince Gedco’s revenue has historically been less seasonal.

 

The following table sets forth On Stage’s net revenue for each of thelast five quarters ended March 31, 2000:

 

Net Revenues ($ inthousands)

 
|        |   | **March 31,** |   | **June 30,** |   | **September 30,** |   | **December 31,** |   |
|-------------|--------|---------------|--------|--------------|--------|-------------------|--------|------------------|--------|
|        |   |          |   |         |   |              |   |             |   |
| Fiscal 1999 |   | $             | 6,272  |         | $      | 7,403             |   | $                | 8,059  |   | $ | 7,819 |   |
| Fiscal 2000 |   | $             | 6,106  |         |   |              |   |             |   |   |
|             |        |               |        |              |        |                   |        |                  |        |  |  |  |  |

 

Liquidity and Capital Resources

 

General

 

On Stage has historically met its working capital requirements througha combination of cash flow from operations, equity and debt offerings andtraditional bank financing.  On Stageanticipates, based on its proposed plans and assumptions relating to itsoperations (including assumptions regarding the anticipated timetable of itsnew show openings and the associated costs), that On Stage’s current cash, cashequivalent balances, anticipated revenue from operations and its workingcapital line will not be sufficient to fund its current operations andcontemplated capital requirements over the next 12 months.

 

Going Concern

 

On Stage has suffered recurring operating losses, has a working capitaldeficit of $19,299,534, and has defaulted on its long-term debt.  These factors raise substantial doubt aboutour ability to continue as a going concern. The consolidated finaciall statements do not include any adjustmentsthat might result from the outcome of those uncertainties.  The report of our independent certifiedpublic accountants for the year ended December 31, 1999 contains an explanatoryparagraph regarding the uncertainty of our ability to continue as a goingconcern.

 

Management plans to manage short-term liquidity concerns through therenegotiation of its expired working capital line, capital leases and mortgagefacilities.  We have either closed orrestructured any business units that are not generating positive cashflow.  In addition, we have loweredselling, general and administrative costs as a percent of net revenues from16.7% for the quarter ended March 31, 1999 to 9.7% for the quarter ended March31, 2000 and continue to downsize and restructure our selling, general andadministrative functions.

 

In addition, we are continuing our efforts to secure working capitalfor 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 secureadditional capital or that if such capital is available, whether the terms orconditions would be acceptable.  Whilewe are currently in settlement negotiations with ICCMIC and First SecurityBank, there can be no assurance that we will be successful with reaching asettlement with either party.

 

Cash Flows

 

For the quarter ended March 31, 1999, On Stage had net cash deficitused by operations of approximately $987,000. As of March 31, 1999, On Stage had approximately $281,000 in cash andcash equivalents.  The operating deficitwas primarily attributable to business seasonality.  For the quarter ended March 31, 2000, On Stage had net cashprovided by operations of approximately $376,000.  As of March 31, 2000, On Stage had approximately $431,000 in cashand cash equivalents.  The cash providedby operations was primarily attributable to the troubled debt restructuringloss.

 

The net cash used in investing activities for the quarter ended March31, 1999 of $12,000, was primarily attributable to capital expenditures.  The net cash used in investing activitiesfor the quarter ended March 31, 2000 of $172,000, was primarily attributable toadvances on a note receivable from a stockholder, capital expenditures and directacquisition costs.

 

Net cash provided by financing activities for the quarter ended March31, 1999 of $74,000, was primarily attributable to notes payable from anofficer, and the issuance of common stock. Net cash used in financing activities for the quarter ended March 31,2000 of $147,000, was primarily attributable to repayment of line of credit andlong-term debt.

 

Working Capital

 

At March 31, 1999, we had working capital deficit of approximately$19,827,000 which resulted primarily from an increase in the accrued expenses,accrued payroll and other liabilities, a note payable to an officer, and theclassification of the ICCMIC mortgage loan as a current liability.  At March 31, 2000, we had working capitaldeficit of approximately $19,299,000 which resulted primarily, from an increasein the accrued expenses, accrued payroll and other liabilities, a note payableto an officer, and the classification of the ICCMIC mortgage loan as a currentliability.

 

Working Capital Line

 

In May 1997, First Security Bank of Nevada (“First Security”) issued usa line of credit for up to $250,000. Borrowings under such facility bear variable interest at 1.5% over theFirst Security Bank of Idaho’s index (10% per year as of the facility’sinception) and are due on demand.  JohnW.  Stuart has personally guaranteed theline of credit.

 

On March 28, 1998, First Security agreed to increase the line of creditfrom $250,000 to $1,000,000 and the expiration date was extended to March 25,1999.  As of December 31, 1998, we haddrawn $1,000,000 on the line of credit. As of March 31, 1999, we had failed to pay off any part of the line ofcredit and are in default under its terms. On April 29, 1999, we received a notice of default under the line ofcredit from First Security.  As of March31, 2000, amounts owed under the line of credit were $297,000.

 

Capital Equipment Financing Commitment

 

On September 29, 1997, First Security Leasing Company (“First SecurityLeasing”), a Utah corporation, approved a $1,000,000 lease line.  Advances under the lease line incur interestat a rate of 9.75% per annum.  The leaseline has been utilized in the following amounts: $389,290, $442,997 and$167,713, commencing in April 1998, April 1998 and May 1998, respectively, andterminating on October 2001, September 2001 and November 2001.  We also received a notice of default underthis line on April 29, 1999.  As ofMarch 31, 2000, amounts owed under the lease line were $1,800,000.

 

Mortgage Financing Commitment

 

As of October 7, 1998, we borrowed an aggregate of $14,150,000 from ImperialCredit Commercial Mortgage Investment Corp. (“ICCMIC”).  While we made ourJanuary, February and March 1999 payments under this loan after the due datefor those payments, no other payments under this loan have been made todate.  As a result of thesedelinquencies, we have incurred late charges and default interest, which wehave not paid.

 

On November 5, 1999, we received a formal demand from ICCMIC to paythem the sum of $16,163,305 as a guarantor under the loan, which representedall of the indebtedness due as of that date. On November 12, 1999, ICCMIC filed a complaint against us in theDistrict Court for Clark County, Nevada, alleging, among other things, that webreached the guaranty.  On December 10,1999, we agreed to allow them to obtain a judgment against us for the amount ofthe guaranty, in return for forbearance on the collection of this judgmentuntil March 31, 2000.  ICCMIC hasextended the date for collection on this judgment until June 1, 2000.

 

On May 1, 2000, we entered into a partial settlement with ICCMIC,pursuant to which we agreed not to take measures to prevent ICCMIC fromforeclosing upon the Fort Liberty and King Henry’s Feast theaters in exchangefor: (1) an aggregate credit of $9.0mm for its Fort Liberty ($3.0mm), King Henry’sFeast ($4.0mm) and Legends in Concert Surfside Beach ($2.0mm) theaters; and (2)a thirty (30) day extension of time during which ICCMIC has agreed: (i) toforego collection on its deficiency judgment in Nevada; and (ii) to extend theforeclosure date on the Legends in Concert Surfside Beach theater.  Additionally, we have orally agreed withICCMIC to temporarily operate the King Henry’s and Fort Liberty Theaters for anindefinite period of time and are currently engaged in active negotiations withICCMIC to resolve the issue of the deficiency judgment.

 

In the event that First Security Bank or ICCMIC enforces theirrespective rights upon our assets, all or a portion of our property and assetssecuring the credit facilities and mortgage financing extended by those lendersmay be sold to satisfy our commitments under the terms of thosefacilities.  While we are currently insettlement negotiations with ICCMIC and First Security Bank, there can be noassurance that we will be successful with reaching a settlement with eitherparty.

 

PART II.  OTHERINFORMATION

 

Item 1. Exhibits & Reports on Form 8-K

 

                (a) Exhibits

 

                                See Index ofExhibits.

 

                (b) Reports onForm 8-K

 

                                TheCompany filed a Current Report on Form 8-K on May 5, 2000 (Commission File No.000-29402).

 

SIGNATURES

 

In accordance with the requirements of the Securities Exchange Act of1934, the registrant caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 
|                    |   | ON STAGE ENTERTAINMENT, INC.                      |
|-------------------------|--------|---------------------------------------------------|
|                    |   |                                              |
| Date: November 30, 2001 |   | /s/ Timothy J. Parrott                            |
|                    |   | Timothy J. Parrott, President                     |
|                    |   | and Chief Executive Officer                       |
|                    |   |                                              |
|                    |   |                                              |
|                    |   |                                              |
|                    |   |                                              |
| Date: November 30, 2001 |   | /s/ Margaret Ann Freman                           |
|                    |   | Margaret Ann Freman,                              |
|                    |   | Senior Vice President and Chief Financial Officer |
|                    |   |                                              |

 

INDEX OF EXHIBITS

 

 
| Exhibit No. |   | Description                                                                                                                                                                                                       |
|-------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                              |
| 10.1        |   | Warrant Agreement between Imperial Credit Commercial  Mortgage Investment Corp., Imperial Capital Group LLC and the Registrant,  dated as of March 13,1998.[1]                                                    |
| 10.2        |   | Loan Agreement by and between Imperial Credit  Commercial Mortgage Investment Corp. and Wild Bill’s California, Inc., King  Henry’s, Inc. and Fort Liberty, Inc., dated as of March 13, 1998.  [1] |
| 10.3        |   | Guaranty Loan Agreement between Imperial Credit  Commercial Mortgage Investment Corp. and the Registrant, dated as of March  13, 1998.[1]                                                                         |

 

----

[1] Incorporated by reference to the Company’s Quarterly Report on Form10-QSB for the quarter ended March 31, 1998 filed May 15, 1998 (Commission FileNo.  333-24681).