### SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

### FORM 10-QSB

### [X]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

### OR

### [ ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

### Commission File Number 0-92402

### ON STAGE ENTERTAINMENT, INC.(Exact Name of Registration as Specified in Charter)

| | Nevada | 88-0214292
| | ------ | ----------
|

### 4625 W. Nevso Drive
Las Vegas, NV 89103
(702) 252-1333(Address of Principal Executive Offices and Telephone Number)

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

As
of May 11, 2001, On Stage had outstanding 11,307,930
shares of common stock, par value $0.01 per share and 1,200,000 series A convertible preferred stock, par value $0.01

---

### ON STAGE ENTERTAINMENT, INC. AND SUBSIDIARIES

|                                                                                                                                                                                 |  | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|
|Part I        Financial Information                                                                                                                                             
|Item 1.      Balance Sheets.........................................................................1                                                                           
|Statements of Operations.........................................................2                                                                                              
|Statements of Cash Flows........................................................3                                                                                               
|Statements of Stockohlders' Equity...........................................4                                                                                                  
|Notes to Financial Statements..................................................5-8                                                                                              
|Item 2.    Management's Discussion and Analysis of Financial Condition and           Results of Operations.............................................
 ......................9
|Part II         Other Information                                                                                                                                               
|Item 2. Changes in Securities.....................................................................13                                                                            
|Item 4. Submission of Matters to a Vote of Security Holders......................13                                                                                             
|Item 6. Reports on Form 8-K....................................................................13                                                                               

---

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 our 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.

---

`Item 1.  Consolidated Financial Statements

                                                                     On Stage Entertainment, Inc. and Subsidiaries
                                                                              Consolidated Balance Sheets

                                                                                   December 31,       March 31,
                                                                                      2000              2001
                                                                                 ---------------    -------------
Assets
Current assets
   Cash and cash equivalents                                                     $      517,353    $   3,543,203
   Accounts receivable, net                                                             561,239          516,007
   Inventory                                                                             89,996          102,086
   Deposits                                                                             166,092          233,383
   Prepaid and other assets                                                             291,652          356,631
   Note receivable from officer                                                               -           15,000
                                                                                 ---------------    -------------
Total current assets                                                                  1,626,332        4,766,310
                                                                                 ---------------    -------------
Property, equipment and leasehold improvements                                        6,185,424        6,261,778
Less:  Accumulated depreciation and amortization                                     (5,346,133)      (5,575,084)
                                                                                 ---------------    -------------
Property, equipment and leasehold improvements, net                                     839,291          686,694
                                                                                 ---------------    -------------
Direct acquisition costs                                                                100,000                -
 Show rights, net of accumulated amortization of $20,910                                      -        3,742,821
                                                                                 ---------------    -------------
                                                                                 $    2,565,623    $   9,195,825
                                                                                 ---------------    -------------
Liabilities and Stockholders' Deficit

Current liabilities
    Accounts payable                                                             $    1,625,040    $   1,163,651
    Accrued payroll and other liabilities                                             1,316,329        1,446,267
   Convertible debentures, net of beneficial conversion of $76,978                      700,000        1,273,022
    Short-term note                                                                           -        2,800,000
   Current maturities of long-term debt                                                 600,000          600,000
                                                                                 ---------------    -------------
Total current liabilities                                                             4,241,369        7,282,940
Long-term debt, less current maturities                                                 551,798          400,298
                                                                                 ---------------    -------------
Total liabilities                                                                     4,793,167        7,683,238
                                                                                 ---------------    -------------
Commitments and contingencies
Series A Convertible Preferred Stock, par value $.01 per share, 10,000,000
   shares authorized; 1,200,000 issued and outstanding                                        -        4,700,000

Stockholders' equity (deficit)
    Common stock; par value $0.01 per share; authorized 100,000,000 shares;
    and 11,307,930 shares issued and outstanding                                        113,079          113,079

   Additional paid-in capital                                                        12,652,111       15,552,886

   Accumulated deficit                                                              (14,992,734)     (18,853,378)
                                                                                 ---------------    -------------
Total stockholders' deficit                                                          (2,227,544)      (3,187,413)
                                                                                 ---------------    -------------
                                                                                 $    2,565,623      $  9,195,825
                                                                                 ---------------    -------------


                                                                    See notes to consolidated financial statements.`

---

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

                                                                                        Three months ended
                                                                                              March 31,
                                                                                   --------------------------------
                                                                                        2000               2001
                                                                                   --------------   ---------------
                                                                                    (Unaudited)        (Unaudited)

Net revenues                                                                       $    6,105,757     $   4,026,295
Costs of revenues                                                                       5,217,904         4,114,262
                                                                                    --------------   ---------------
Gross profit (loss)                                                                       887,853           (87,967)
                                                                                    --------------   ---------------
  Operating expenses
   Selling, general &administrative                                                   595,015           541,129
     Depreciation and amortization                                                        941,471           248,985
     Write down of assets held for sale and subject to foreclosure                      6,861,719                 -
                                                                                    --------------   ---------------
Total operating expenses                                                                8,398,205           790,114
                                                                                    --------------   ---------------
Operating loss                                                                         (7,510,352)         (878,081)
Interest expense, net                                                                     697,805           139,763
                                                                                    --------------   ---------------
Net loss                                                                            $  (8,208,157)   $   (1,017,844)
Deemed dividends accrued for preferred stock                                                    -        (2,812,800)
Dividends accrued for preferred stock                                                           -           (30,000)
                                                                                    --------------   ---------------
Net loss applicable to common shares                                                $  (8,208,157)   $   (3,860,644)
                                                                                    --------------   ---------------
Basic and diluted loss per common share                                             $       (1.14)   $        (0.34)
                                                                                    --------------   ---------------
Basic and diluted average number of common shares outstanding                           7,226,808        11,307,930
                                                                                    --------------   ---------------



                                                                    See notes to consolidated financial statements.`

---

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

                                                                       Increase (Decrease) in Cash and Cash Equivalents

                                                                                        Three months ended
                                                                                            March 31,
                                                                                   2000                    2001
                                                                            -------------------     ------------------
                                                                                (Unaudited)            (Unaudited)

Cash flows from operating activities
       Net loss                                                               $  (8,208,157)         $   (1,017,844)
       Adjustments to reconcile net loss to net cash used in operating
       activities:
               Depreciation and amortization                                        (36,112)                248,985
               Loss on write down of assets                                       7,235,914                       -
               Amortization of beneficial conversion                                      -                  10,997
               Loss on disposal of property plant and equipment
                   Accounts receivable                                               68,738                  45,232
                   Inventory                                                         19,157                 (12,090)
                   Deposits                                                        (204,161)                (31,021)
                   Prepaid and other assets                                         (63,756)                (64,979)
                   Accounts payable and accrued expenses                            247,826                (461,383)
                   Accrued payroll and other liabilities                            713,146                  99,931
                                                                            --------------------    -------------------
               Total adjustments                                                  7,980,752                (164,328)
                                                                            --------------------    -------------------
Net cash used in operating activities                                              (227,405)             (1,821,172)
Cash flows from investing activities
                   Advances on notes receivable from officer                       (108,981)                (15,000)
                   Acquisition of show rights                                       597,328                (250,000)
                   Capital expenditures                                             (57,325)                (75,478)
                                                                            --------------------    -------------------
 Net cash provided by (used in) investing activities                                431,022                (340,478)
                                                                            --------------------    -------------------

Cash used in financing activities
                   Payments under working capital line                             (162,820)                     -
                   Proceeds received from convertible debentures                          -                650,000
                   Proceeds of issuing Series A preferred stock                           -              4,700,000
                   Payment on long- term note                                        (4,411)              (151,500)
                   Payment on short-term borrowing                                        -               (650,000)
                   Cash received on notes payable from officer                       20,000                      -
                                                                            --------------------    -------------------
Net cash provided by (used in) financing activities                                (147,231)             4,548,500
                                                                            --------------------    -------------------
Net increase in cash and cash equivalents                                            56,386              3,025,850
Cash and cash equivalents at beginning of period                                    374,587                517,353
                                                                            --------------------    -------------------
Cash and cash equivalents at end of period                                    $     430,973           $  3,543,203
                                                                            --------------------    -------------------

Supplemental disclosure of cash flow information
  Cash paid during the period for:
         Interest                                                             $       7,299           $     70,879
                                                                            --------------------    -------------------
         Income Tax                                                           $           -           $     34,692
                                                                            --------------------    -------------------

                           See notes to consolidated financial statements.`

---

Supplemental Schedule of Non-Cash Investing and Financing Activities

The issuance of Series A Convertible Preferred Stock resulted in a deemed dividend of $2,812,800.

Accrued dividends of $30,000 on Series A Convertible Preferred Stock were recognized.

Issuance of convertible debentures resulted in a beneficial conversion of $87,975.

Issuance of short-term note of $3,800,000 to acquire intangible show rights.

`On Stage Entertainment, Inc. and Subsidiaries
                                                               Consolidated Statements of Stockholders' Equity (Deficit)

                                                Common Stock         Additional
                                        -------------------    Paid in         Accumulated
                                           Shares        Amount       Capital           Deficit           Total
                                         -----------    ---------   ----------     --------------   --------------

Balance, December 31, 2000               $11,307,930   $  113,079  $ 12,652,111   $  (14,992,734)   $  (2,227,544)
Deemed dividends recognized
On Series A Convertible preferred stock            -            -     2,812,800       (2,812,800)               -
Accrued dividends on Convertible Series
  A preferred stock                                -            -             -          (30,000)         (30,000)
Beneficial conversion on convertible
  debentures                                       -            -        87,975                -            87,975
Net loss                                           -            -             -       (1,017,844)       (1,017,844)
                                         -----------   -----------   -----+-------   --------------   --------------
Balance March 31, 2001                   $11,307,930   $  113,079  $  15,552,886   $ (18,853,378)    $  (3,187,413)
                                         -----------   -----------   -------------   --------------   --------------


                            See notes to consolidated financial statements.`

---

On Stage Entertainment, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2001

Basis of Presentation

The financial statements included in this 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;  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; and On Stage Theaters Surfside Beach, Inc., a Nevada corporation.

In the opinion of the
management of On Stage Entertainment, Inc. and its subsidiaries, the accompanying
unaudited consolidated financial statements include all normal adjustments
considered necessary to present fairly the financial position as of March 31,
2001, and the results of operations and cash flows for the three months ended
March 31, 2001 and 2000. Interim results are not necessarily indicative of
results for full year. The consolidated financial statements and notes are
presented as permitted by form 10-QSB should be read in conjunction with Management's Discussion and Analysis and audited consolidated finanical statements and notes thereto included in our Form 10-KSB.  Certain reclassifications have been made for
consistent presentation.

(1) Private Placement

During late 2000 and early
2001, On Stage raised $700,000 and $650,000, respectively, from accredited
private investors to assist us with meeting our capital requirements,
paying for expenses associated with its restructuring and making deposits for
the acquisition of Country Tonite and the live licensing rights for
Ripleys. This private placement was issued in the form of convertible
debentures, which accrue interest at the rate of ten percent (10%) per annum and
feature a conversion rate of $0.79. The market price of the stock in relation
to the conversion price of these convertible debentures created a beneficial
conversion amount of $87,975, which is amortized over 2 years. The maturity
dates for the $700,000 are November and December 2001, and the maturity dates
for the $650,000 are January and February 2003.

(2) Acquisition of Country Tonite

In February 2001, On Stage
acquired substantially all the assets of CRC of Branson, Inc. and Country Tonite
Enterprises, Inc. which assets primarily consisted of all their rights and title in and to
Country Tonite for a purchase price of $3,800,000. Country Tonite is an
award-winning theatrical production, which has been presented in Las Vegas,
Nevada, Branson, Missouri and Pigeon Forge, Tennessee.

The terms of the agreement
call for initial payments of; $100,000 on November 21, 2000, $250,000 on
January 29, 2001, $150,000 on February 15, 2001 and $500,000 on March 15, 2001,
with the balance of $2,800,000 plus interest due on July 31, 2001. The show
opened under On Stages management and control on about March 7, 2001. On Stage also acquired the right to oversee the Country Tonite production in
Pigeon Forge, Tennessee for quality control purposes. However, the rights to
present the Pigeon Forge show were previously licensed to an unrelated third
party and were not included in this acquisition.

The acquisition has been
accounted for as a purchase and, accordingly, the operating results of Country
Tonite have been included in our consolidated financial statements since the
date of acquisition. The show rights acquired were valued at $3,764,000 and are being
amortized.

---

The following unaudited pro forma consolidated results of operations for the quarters ended March 31, 2000 and 2001
assume the acquisition occurred as of January 01, 2000 and 2001, respectively, (in thousands, except per share data):

`Three Months Ended
                                    March 31, 2001         March 31, 2000
--------------------------------------------------------------------------------
Net revenues                          $4,026,295           $6,866,785
Net loss                              (1,146,031)            (348,985)
Loss per common share:
       Basic and diluted                   (0.35)               (0.05)
--------------------------------------------------------------------------------`

Country Tonite had no revenue for the months of January 2000 and 2001, as the show was closed during the off-season months.

The assets acquired were
transferred to Country Tonite Branson, LLC, a wholly-owned subsidiary of On
Stage Entertainment, Inc.

(3)  Convertible Preferred Stock

On February 28, 2001, On Stage entered into an agreement with McCown De Leeuw
& Co., Inc., a private equity investment firm (MDC), pursuant to which MDC agreed to invest
up to $20,000,000 in On Stage in the form of convertible preferred
securities. The transaction was completed on March 13, 2001. According to
the terms of the MDC investment, MDC will have an opportunity to stage its
funding in four separate investments of $6.0 million, $4.0 million, $5.0 million, and $5.0 million,
respectively. Each of the investments will bear interest at the rate of twelve
percent (12%) per annum (10% in cash plus 2% paid in kind) and are convertible
into the common stock of On Stage at a conversion price of $0.50 or $0.75 per
share, depending on certain factors redeemable at the option of the holder. The first $6,000,000 investment was made on
March 13, 2001 with the issuance of 1,200,000 shares of Series A
Convertible Preferred Stock with a face value of $6,000,000 granted at 5%
discount to the face value. Additionally, the agreement called for a $500,000
transaction fee and a $500,000 topping fee to reimburse MDC for expenses incurred
with the transaction. These costs were applied to the face values, producing proceeds from the
net Convertible Preferred Stock of $4,700,000. The market price of our common stock on
the day of the transaction in relation to the conversion price of the preferred
stock resulted in a deemed dividend of $2,812,800.

(4) Ripleys LiveBelieve It or Not!®

On March 27, 2001, On Stage announced that it entered into a multiple year lease with Jimmy Osmond, of
OFT, LTD, to open Ripleys LiveBelieve It or Not!® in
Branson, Missouri at the Osmond Family Theater in May 2001. The lease term
is for period of thirty-three (33) months, commencing on
April 2001 and continuing through December 31, 2003.

(5) Loss per share

Statement of Financial Accounting Standard No. 128, Earnings per Share 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.

For the three months ended
March 31, 2000, 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. For the three months ended March 31, 2001,
potential dilutive securities representing 1,464,850 outstanding stock options
and 4,410,155 outstanding warrants and 1,200,000 shares of preferred stock are not included, since their effect would be
anti-dilutive.

---

(6)  Commitments and Contingencies

We are a party to various legal proceedings 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, our management does not believe the final resolution of these matters will have a material
adverse effect upon the our financial condition and results of operations.

(7) Segment Information

The following information is presented in accordance with SFAS No. 131.

The Company derives its net revenues from five business units categorized by three reportable segments:

- Casinos.
The Casinos segment primarily sells live theatrical productions to casinos
worldwide for fixed fees. In addition, this Casinos segment also operates our
Legends show at the Imperial Palace in Las Vegas, Nevada 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. The Theaters
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 fixed fees. 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 merchandise 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 same as those described in the Summary
of Accounting Policies contained in our annual report on Form 10-KSB. On Stages management evaluates the performance of
its operating segments based upon the profit or loss from operations.

On Stage reportable
segments are strategic business units because each business unit services a
different market or performs a specialized function in support of a given
market.

---

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

`For the three months ended March 30, 2000
                                   ---------------- -------------- -------------- ----------------- ----------------
                                                                                                        Total
                                         Casino        Production      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)..........     $     670,012     $ (202,243)  $ (7,690,043)   $  (985,883)      $  (8,208,157)
Segment fixed assets...........     $   3,258,853     $  887,626   $ 10,538,841    $ 1,856,895       $  16,542,215
Additions to long-lived assets.     $      55,513     $      532   $        431    $       849       $      57,326`

`For the three months ended March 30, 2001
                                 ------------------ -------------- -------------- ---------------- -----------------
                                                                                                        Total
                                      Casino        Production       Theaters           OSE          Consolidated
                                 ------------------ -------------- -------------- ---------------- -----------------
Revenues from external customers.  $  1,818,024     $     4,145     $ 2,204,126     $        -       $   4,026,295
Interest expense.................  $        778     $         -     $    66,637     $   72,348       $     139,763
Depreciation and amortization....  $     99,978     $    28,212     $    71,366     $   49,429       $     248,985
Segment profit (loss)............  $    496,018     $  (228,876)    $  (686,385)    $ (598,601)      $  (1,017,844)
Segment fixed assets.............  $  2,997,373     $   856,598     $ 1,317,807     $1,090,000       $   6,265,778
Additions to long-lived assets...  $     29,650     $       463     $    36,620     $    9,621       $      76,354`

(8) Subsequent Events

On March 30, 2001, our
Board of Directors authorized On Stage to make an advance of $150,000 to John
W. Stuart, our Chairman and founder which is to be repaid within two (2) years,
bears interest at the rate of twelve percent (12%) per annum and is evidenced by
a promissory note in favor of On Stage. In consideration for this loan, Mr.
Stuart agreed to use the funds to regain certain shares of his stock in On Stage, which he previously pledged in connection with a margin loan. Once the
shares were regained, they were delivered to On Stage as additional security
for the repayment of the advance. In further consideration for the advance, Mr.
Stuart entered into a post-employment non-competition agreement in favor of On Stage.

On March 30, 2001, the
compensation committee recommended that the stockholders approve a 2,500,000
increase to the option pool, which option shall be issued at the discretion of
our Board of Directors as an incentive to our
management, employees and Board members. This recommendation will be submitted
to our stockholders for their approval at our
Annual Meeting.

On May 1, 2001, we hired Margaret Ann Freman to serve as our chief financial officer, effective May
21, 2001. Mrs. Freman is a Certified Public Accountant and previuosly served as the chief
financial officer and vice president of Houlihan Lokey Howard & Zukin, a
$100,000,000 investment banking firm with 8 U.S. offices and 4 international
offices. Mrs. Freman previously worked for KPMG Peat Marwick, Swett
& Crawford and Price Waterhouse.

---

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, 2000, as well as the following:

- The dependence on our flagship Legends in Concert production and our principal production venues;
- The ability to
successfully produce and market new productions and to manage the growth
associated with the any new productions;
- Risks associated with our acquisition
strategy, including our ability to successfully identify, complete and integrate
strategic acquisitions;
- The ability to meet our commitments, obtain
alternative and additional financing on commercially reasonable terms;
- The
competitive nature of the leisure and entertainment industry and the ability to
continue to distinguish our services;
- Fluctuations in quarterly operating
results and the highly seasonal nature of our business;
- 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;
- The ability to successfully manage the litigation pending against us and to avoid future litigation; and
- 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.

---

Results of Operations

The following tables set forth, the results of operations for the reportable segments indicated:

`For the quarter ended March 31, 2000
                        --------------- -------------- --------------- --------------- ------------- --------------------
                                                                          Sub-Total
                                                                          Operating
             Casino       Production       Theaters        Divisions        OSE       Total Consolidated
                        --------------- -------------- --------------- --------------- ------------- --------------------
Net revenue               $  2,512,437   $    10,670    $  3,582,650   $   6,105,757    $      -       $   6,105,757
Cost of revenues             1,579,317       185,903       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
Loss on write down of
assets                               -              -      6,861,719       6,861,719           -           6,861,719
                        --------------- -------------- --------------- --------------- ------------- --------------------

Operating income (loss)        671,976       (202,243)    (7,021,011)     (6,551,278)   (959,074)         (7,510,352)
Interest expense, net            1,964              -        667,032         668,996      28,809             697,805
                        --------------- -------------- --------------- --------------- ------------- --------------------
Net income (loss)          $   670,012   $   (202,243)   $ (7688,043)  $  (7,220,274) $ (987,883)      $  (8,208,157)
                        --------------- -------------- --------------- --------------- ------------- --------------------`

`For the quarter ended March 31, 2001
                        --------------- -------------- --------------- --------------- --------------- ------------------
                                                                         Sub-Total
                                                                         Operating                           Total
                            Casino       Production       Theaters        Segments          OSE          Consolidated
                        --------------- -------------- --------------- --------------- --------------- ------------------
Net revenues             $ 1,818,024     $   4,145      $  2,204,126   $ 4,026,295      $       -       $  4,026,295
Cost of revenues         $ 1,186,697     $ 204,819      $  2,722,746   $ 4,114,262      $       -       $  4,114,262
                        --------------- -------------- --------------- --------------- --------------- ------------------
Gross profit (loss)      $   631,327     $(200,674)     $   (518,620)  $   (87,967)     $       -       $    (87,967)
Selling, general&
administrative           $    34,553     $       -      $     29,752   $    64,305      $  476,824      $    541,129
Depreciation &
amortization             $    99,978     $  28,202      $     71,376   $   199,556      $   49,429      $    248,985
                        --------------- -------------- --------------- --------------- --------------- ------------------
Operating income (loss)  $   496,796     $(228,876)     $   (619,748)  $  (351,828)     $ (526,253)     $   (878,081)
                        --------------- -------------- --------------- --------------- --------------- ------------------
Interest expense, net    $       778     $       -      $     66,637   $    67,415      $   72,348      $    139,763
                        --------------- -------------- --------------- --------------- --------------- ------------------
Net Income (loss)        $   496,018     $(228,876)     $   (686,385)  $  (419,243)     $ (598,601)     $ (1,017,844)
                        --------------- -------------- --------------- --------------- --------------- ------------------`

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Quarter Ended March 31, 2000 versus Quarter Ended March 31, 2001

Net
Revenues. Revenues were approximately $4,026,000 for the quarter
ended March 31, 2001 compared to $6,106,000 for the quarter ended March 31,
2000, a decrease of $2,080,000, or 34.1%. Our revenue is derived from five
principal operating segments: Casinos, Events, Merchandise, Production Services,
and Theaters. Revenues from Events are included in the Casino segment. Revenues
from Merchandise are included in the Theaters segment.

Casinos revenues were
approximately $1,818,000 for the quarter ended March 31, 2001 compared to
$2,512,000 for the quarter ended March 31, 2000, a decrease of $694,000, or
27.6%. This decrease was primarily attributable to a decrease in limited
engagements and corporate events.

Production Services
revenues were approximately $4,000 for the quarter ended March 31, 2001 compared
to $11,000 for the quarter ended March 31, 2000, a decrease of $7,000, or 63.6%.
The decrease was primarily attributable to a reduction in equipment rental
revenues.

Theaters revenues were
approximately $2,204,000 for the quarter ended March 31, 2001 compared to
$3,583,000 for the quarter ended March 31, 2000, a decrease of $1,379,000, or
38.5%. The decrease was primarily attributable to the discontinuation of our
shows in Orlando, Florida. This decrease was partially offset by inclusion of
the Country Tonite acquisition.

Costs of
Revenues. Total costs of revenues were $4,114,000 for the quarter
ended March 31, 2001 compared to $5,218,000 for the quarter ended March 31,
2000, a decrease of $1,104,000, or 21.2%. Costs of revenues increased to 102.2%
of net revenues for the quarter ended March 31, 2001, as compared to 85.5% for
the quarter ended March 31, 2000. This increase in costs of revenues, as a
percentage of revenues were primarily attributable to the seasonality of our business, the discontinuation of our
shows in Orlando, Florida (which ran in 2000, but not in 2001) and the inclusion of Country Tonite operations, that had no revenues for the month of February.

Selling, General and
AdministrativeSelling, general and administrative costs were
approximately $541,000 for the quarter ended March 31, 2001 as compared to
$595,000 for the quarter ended March 31, 2000, a decrease of $54,000, or 9.1%.
Selling, general and administrative costs increased to 13.4% of net revenues for
the quarter ended March 31, 2001, as compared to 9.7% for the quarter ended
March 31, 2000, which was primarily attributable to a decrease in sales.

Depreciation and
Amortization. Depreciation and amortization for the quarter ended
March 31, 2000 decreased by $692,000, or 73.6%, as compared to the quarter ended
March 31, 2000. The decrease was primarily due to the discontinuation of our
shows in Orlando, Florida and the related foreclosure of certain of our assets.

Operating Income
(Loss). Our operating loss was approximately $878,000 for the
quarter ended March 31, 2001 compared to an operating loss of $7,510,000 for the
quarter ended March 31, 2000, a decrease of $6,632,000, or 88.3%. The decrease
in operating loss was primarily attributable to the write off in March 2000 of assets
held for sale and subject to foreclosure.

Interest Expense,
Net. Interest expense for the quarter ended March 31, 2001
decreased by $558,000, or 80.0% as compared to the quarter ended March 31, 2000.
The decrease was primarily due to our restructuring of the ICCMIC and First
Security Bank debts.

---

Income Taxes. We have not accrued any federal income tax for the quarter
ended March 31, 2001. At March 31, 2001, we had federal net operating loss
carryforwards of approximately $15,589,000. Under Federal Tax Law IRC Section
382, certain significant changes in ownership that On Stage is currently
undertaking may restrict the future utilization of these tax loss carryforwards.
Because the Company cannot determined that it is more likely than not to
recognize the deferred tax assets, On stage has provided a full valuation
allowance on the deferred tax assets.

Seasonality and Quarterly Results

On Stages 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 following table sets forth On Stage's net revenue for each of the last five quarters ended March 31, 2001:

`March 31,             June 30,           September 30,       December 31,
                        ---------             --------           -------------       ------------
Fiscal 2000...           $ 6,106              $ 7,151                $ 6,393            $ 4,487
Fiscal 2001...           $ 4,026              $     -                $     -            $     -`

Liquidity and Capital Resources

General

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 revenue
from operations and our working capital line are sufficient to fund our ongoing
operations.

Cash Flow

For the three months ended
March 31, 2000, On Stage had net cash used by operations of approximately
$227,000. As of March 31, 2000, On Stage had approximately $431,000 in cash and
cash equivalents. The operating deficit for the quarter ending March 31, 2000
was primarily attributable to business seasonality. For the three months ended
March 31, 2001, On Stage had net cash used in operations of approximately
$1,182,000. As of March 31, 2001, On Stage had approximately $3,543,000 in cash
and cash equivalents. The operating deficit for the quarter ending March 31,
2001 was primarily attributable to a reduction in accounts payable.

The net cash provided by
investing activities for the three months ended March 31, 2000 of $431,000 was
primarily attributable to an advance on note receivable from stockholder, capital
expenditures and direct acquisition costs. The net cash used in investing
activities for the three months ended March 31, 2001 of $340,000, was primarily
attributable to an advance on note receivable from stockholder, capital
expenditures and direct acquisition costs.

Net cash used in financing
activities for the three months ended March 31, 2000 of $147,000, was
attributable to repayment of line of credit and long-term debt. Net cash
provided by financing activities for the three months ended March 31, 2001 of
$4,549,000, was primarily attributable to the proceeds from convertible
debentures and proceeds from issuance Series A Convertible Preferred Stock,
partially offset by payment on long-term debt.

---

Working Capital

At March 31, 2000, we had a
working capital deficit of approximately $19,267,000, which resulted primarily,
from an increase in the accrued expenses, accrued payroll and other liabilities,
note payable to officer, and the reclassification of the ICCMIC mortgage loan to
current liabilities. At March 31, 2001 we had working capital deficit of
approximately $2,517,000, which resulted primarily, from an increase in
convertible debentures and short-term debt. This increase was partially offset
by an increase in cash and cash equivalent.

PART II. OTHER INFORMATION

Item 2. Changes in Securities

During the quarter ended March 31, 2001, On Stage made the following private placements of unregistered securities to accredited investors.

During early
2001, On Stage raised $650,000 from accredited
private investors to assist us with meeting our capital requirements,
paying for expenses associated with our restructuring and making deposits for
the acquisition of Country Tonite and the live licensing rights for
Ripleys. This private placement was issued in the form of convertible
debentures, which accrue interest at the rate of ten percent (10%) per annum and
feature a conversion rate of $0.79.  The maturity
dates for the $650,000 are January and February 2003.

On February 28, 2001, On Stage entered into an agreement with McCown De Leeuw
& Co., Inc., a private equity investment firm (MDC), pursuant to which MDC agreed to invest
up to $20,000,000 in On Stage in the form of convertible preferred
securities. The transaction was completed on March 13, 2001. According to
the terms of the MDC investment, MDC will have an opportunity to stage its
funding in four separate investments of $6.0 million, $4.0 million, $5.0 million, and $5.0 million,
respectively. Each of the investments will bear interest at the rate of twelve
percent (12%) per annum (10% in cash plus 2% paid in kind) and are convertible
into the common stock of On Stage at a conversion price of $0.50 or $0.75 per
share, depending on certain factors redeemable at teh option of the holder. The first $6,000,000 investment was made on
March 13, 2001 with the issuance of 1,200,000 shares of Series A
Convertible Preferred Stock with a face value of $6,000,000 were granted at 5%
discount of the face value. Additionally, the agreement called for a $500,000
transaction fee and a $500,000 topping fee to reimburse MDC for expenses incurred
with the transaction. These costs were applied to the face value producing proceeds from the
net Convertible Preferred Stock of $4,700,000. The market price of our common stock on
the day of the transaction in relation to the conversion price of the preferred
stock resulted in a deemed dividend of $2,812,800.

The sales of the above securities were considered to be exempt from regulations under  the Securities Act of 1933, as amended, in reliance on Section 4(2) and Regulation D promulgated thereunder as transactions by an issuer not involving a public
offering.

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

On March 12, 2001, On Stage held a Special Meeting of Stockholders at which our stockholders approved the amendment to On Stage's Articles of Incorporation to:

- increase the number of authorized shares of common stock from 25,000,000 to 100,000,000;
- increase the number of authorized shares of preferred stock from 1,000,000 to 10,000,000; and
- amend the par value of the preferred stock from $1.00 per share to $0.01 per share.

FOR 7,638,266, AGAINST 0, ABSTAIN 0, BROKER NON-VOTE 3,669,664

Item 6. Exhibits & Report on Form 8-K

None.

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`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 11, 2001                                        By:      /s/ Timothy J. Parrott
                                             --------------------------------------------
                                                                    Timothy J. Parrott
                                                                    President and Chief Executive Officer




Date: May 11, 2001                                         By:     /s/ Pedro Perez
                                         -------------------------------------------
                                                                    Pedro Perez
                                                                    Treasurer and Chief Accounting Officer`