<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               AMENDMENT NO. 1 ON
                                  FORM 10-QSB/A

(Mark One)

[X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED August 31, 1998

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

For the transition period from                  to
                               - - - - - - - -     - - - - - - - -

                             Commission File Number:
                                                    - - - - - - - - 

                             MDI Entertainment, Inc.
              - - - - - - - - - - - - - - - - - - - - - - - - - - -
             (Exact name of Registrant as specified in its Charter)

          Delaware                                 73-1515699
          - - - - -                                - - - - - - 
(State or other jurisdiction of        (I.R.S. Employer Identification No.)
incorporation or organization)

                                 201 Ann Street
                           Hartford, Connecticut 06103
                     - - - - - - - - - - - - - - - - - - - -
                    (Address of principal executive offices)

                                 (860) 527-5359
                          - - - - - - - - - - - - - - -
                         (Registrant's telephone number)
    - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 
   (Former Name, Former Address and Former Fiscal Year, if changed since last
                                    Report)

Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. 
Yes       No   X
    -----    -----

As of October 12, 1998, 7,776,500 shares of the issuer's common stock were
outstanding.

Transitional Small Business Disclosure Format (check one): Yes       No   X
                                                               -----    -----

The Registrant hereby amends Part I, Item 1 (Financial Statements) to amend 
the line amounts for August 31, 1998 and May 31, 1998 in the item captioned 
"Total liabilities and stockholders' equity" contained in the Consolidated 
Balance Sheets.

<PAGE>



                                     PART I
                              FINANCIAL INFORMATION

Item 1.   Financial Statements

MDI Entertainment, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>

                                            August 31,                May 31,
                                               1998                    1998
                                            ----------              ----------
                                            (unaudited)
<S>                                        <C>                     <C>
ASSETS

Cash and cash equivalents                     $334,474                $960,398
Accounts receivable                            608,175                 317,598
Inventory                                      449,695                 417,651
Prepaid expenses                               139,379                  30,203
                                            ----------              ----------
        Total current assets                 1,531,723               1,725,850

Property and equipment, net                    101,044                 107,852

Marketing costs, net                           175,328                 213,077
Other                                           73,811                  52,643
                                            ----------              ----------
        Total other assets                     249,139                 265,720

        Total assets                        $1,881,906              $2,099,422
                                            ----------              ----------
                                            ----------              ----------


</TABLE>


   The accompanying notes are an integral part of these consolidated financial
                                  statements.




                                        2


<PAGE>




MDI Entertainment, Inc. and Subsidiaries
Consolidated Balance Sheets (Continued)
<TABLE>
<CAPTION>

                                                       August 31,                May 31,
                                                          1998                    1998
                                                      ------------            ------------
                                                       (unaudited)
<S>                                                   <C>                     <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable                                          $355,024                $346,491
Accrued liabilities                                      1,269,156               1,320,165
Short-term borrowings                                       50,000                 123,754
Deferred revenue (Note 2)                                2,339,827               2,906,047
                                                      ------------            ------------
        Total current liabilities                       $4,014,007              $4,696,457

Long-term debt                                              27,000                  27,000
Minority interest                                           35,029                  35,268
                                                      ------------            ------------
         Total liabilities                               4,076,036               4,758,725

Contingencies (Note 5)                                      -                        -

Common stock, $0.001 par value,
  200,000,000 shares authorized
  7,776,500 issued and outstanding                           7,777                   7,777
Additional paid-in capital                                 348,348                 348,348
Accumulated deficit                                     (2,550,255)             (3,015,428)
                                                      ------------            ------------
       Total stockholders' deficit                      (2,194,130)             (2,659,303)

       Total liabilities and
         stockholders' equity                           $1,881,906              $2,099,422
                                                      ------------            ------------
                                                      ------------            ------------



</TABLE>
















        The accompanying notes are an integral part of these consolidated
                             financial statements.





                                        3


<PAGE>



MDI Entertainment, Inc. and Subsidiaries
Consolidated Statements of Operations
<TABLE>
<CAPTION>

                                                                               Three months ended
                                                                                    August 31,

                                                                             1998                   1997
                                                                          ---------              --------- 
                                                                         (unaudited)            (unaudited)

<S>                                                                      <C>                      <C>
Revenues                                                                 $2,102,324               $291,199

Cost of revenues                                                          1,096,139                212,737
                                                                          ---------             --------- 
    Gross profit                                                          1,006,185                 78,462

Selling, general and administrative expenses                                546,794                431,646
                                                                          ---------             --------- 
     Operating profit (loss)                                                459,391              (353,184)

Interest (income) expense, net                                              (6,366)                  8,016
Other income, net                                                             (192)                (3,335)
Minority interest                                                             (243)                    368

     Net income (loss) before income tax expense                            466,192              (358,233)

Income tax expense (Note 4)                                                   1,019                  5,650
                                                                          ---------             --------- 
Net income (loss)                                                          $465,173             $(363,883)
                                                                          ---------             --------- 
                                                                          ---------             --------- 

Basic earnings (loss) per common share (Note 3)                               $0.06                    N/A


</TABLE>
















   The accompanying notes are an integral part of these consolidated financial
                                  statements.


                                        4
<PAGE>

MDI Entertainment, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Deficit
<TABLE>
<CAPTION>

                                                              As of August 31, 1998 and May 31, 1998
                                                              - - - - - - - - - - - - - - - - - - - - 

                                                             Par          Additional          Retained
                                           *                Value           Paid-In           Earnings
                                         Shares             $.001           Capital           (Deficit)           Total
                                         ------             -----           -------           ---------           -----


<S>                                     <C>               <C>             <C>             <C>                   <C>
BALANCE, May 31, 1998                     7,776,500         $ 7,777         $  348,348    $    (3,015,428)  $     (2,659,303)
   Net profit                                 -                 -                 -       $       465,173   $        465,173
                                         ----------         -------         ----------    ---------------   ----------------
BALANCE, August 31, 1998                  7,776,500         $ 7,777         $  348,348    $    (2,550,255) $     (2,194,130)
                                         ----------         -------         ----------    ---------------   ----------------
                                         ----------         -------         ----------    ---------------   ----------------
</TABLE>


    * 200,000,000 shares authorized

   The accompanying notes are an integral part of these consolidated financial
                                  statements.


                                        5
<PAGE>

MDI Entertainment, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                                          Three months ended
                                                                                              August 31,
                                                                                    1998                      1997
                                                                              -----------------         ----------------
                                                                                (unaudited)              (unaudited)

<S>                                                                           <C>                       <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
                       
   Net income (loss)                                                          $         465,173         $      (363,883)
   Adjustments to reconcile net income (loss) to net
      cash provided by operating activities:
         Minority interest                                                                (243)                  (3,335)
         Depreciation and amortization                                                   49,111                   60,165
         Change in assets and liabilities:
               Increase in accounts receivable                                        (290,577)                (423,300)
               (Increase) decrease in inventory                                        (32,044)                   35,709
               (Increase) decrease in prepaid expenses                                (109,176)                   12,756
               Increase in marketing costs                                              (3,050)                 (48,394)
               (Increase) decrease in other assets                                     (21,168)                   29,525
               Increase (decrease) in accounts payable                                    8,553                 (43,521)
               Increase (decrease) in accrued expenses                                 (51,009)                   98,558
               Decrease in taxes payable                                                      -                 (44,322)
               (Decrease) increase in deferred revenue                                (566,220)                  615,684
                                                                              -----------------         ----------------

      Net cash used for operating activities                                          (550,670)                 (74,358)
                                                                              -----------------         ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                                                   (1,500)                        -
                                                                              -----------------         ----------------

      Net cash used for investing activities                                            (1,500)                        -
                                                                              -----------------         ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment of financing arrangements                                                 (73,754)                 (92,951)
   Borrowings from short-term debt                                                            -                  200,000
   Borrowings from stockholder                                                                -                   29,116
                                                                              -----------------         ----------------

      Net cash provided by (used for) financing activities                             (73,754)                  136,165
                                                                              -----------------         ----------------

NET INCREASE (DECREASE) IN CASH                                                       (625,924)                   61,807

CASH, beginning of the period                                                           960,398                    8,190

                                                                              -----------------         ----------------
CASH, end of the period                                                       $         334,474         $         69,997
                                                                              -----------------         ----------------
                                                                              -----------------         ----------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:
   Cash paid for -
      Interest                                                                $           3,264         $         40,578
      Income taxes                                                            $             181         $         33,769
   Non-cash items:
      Issuance of note in connection with exchange
         transaction to shareholders                                          $              -          $        300,000
</TABLE>

   The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                        6
<PAGE>



MDI ENTERTAINMENT, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

1.  Presentation of Unaudited Interim Consolidated Financial Statements.

         Information in the accompanying interim consolidated financial
statements and notes to the financial statements for the three-month periods
ended August 31, 1998 and 1997 is unaudited. The accompanying interim unaudited
consolidated financial statements have been prepared by the Company in
accordance with generally accepted accounting principles and Regulation S-B.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ended August 31, 1998, are not
necessarily indicative of the results that may be expected for the year ending
May 31, 1999. The consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
audited financial statements of the Company as and for the period ended May 31,
1998.

2.  Revenue Recognition

         Revenue is derived by the Company from contracts with the state
lotteries for scratch ticket games based on licensed brand names and
entertainment properties. The Company provides the lotteries with second chance
prize packages consisting of grand prizes and various consolation prizes in
addition to marketing support related to each of the games. Most of the lottery
contracts require the lotteries to pay the Company in full upon the signing of
the contract. The Company defers this revenue and recognizes the revenue when
the terms of the applicable game are satisfied (i.e., the shipment of contracted
merchandise).

3.  Earnings per Share

         Basic earnings per common share are based on the average number of
common shares outstanding during the fiscal year. Diluted earnings per common
share include, in addition to the above, a dilutive effect of common share
equivalents during the fiscal year. Common share equivalents represent dilutive
stock options using the treasury method. The Company had no common share
equivalents during the periods ended August 31, 1998 and 1997, respectively. The
number of shares used in the earnings per common share computation for the 1998
and 1997 periods were as follows:
<TABLE>
<CAPTION>

                                                                Three Months Ended
                                                                     August 31,
                                                                1998          1997
                                                                ----          ----

<S>                                                           <C>             <C>
Shares:  Basic weighted average common
                 shares outstanding                             7,776,500       N/A*


</TABLE>

*Due to the fact that the Company did not issue shares associated with its
 reverse mergers until August 1997, an earnings per share computation is not
 relevant for the period ended August 31, 1997.



                                        7
<PAGE>



     MDI ENTERTAINMENT, INC. AND SUBSIDIARIES

     Notes to Unaudited Consolidated Financial Statements (Continued)

4.  Income Taxes

         The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS No. 109), "Accounting for Income
Taxes," which requires that a deferred tax liability or asset be recognized for
the estimated future tax effects attributable to temporary differences between
the Company's financial statements and its tax return. SFAS 109 provides for
recognition of a deferred tax asset for all future deductible temporary
differences that, more likely than not, will provide the Company a future
benefit. As of August 31, 1998 and May 31, 1998, the Company had a significant 
deferred tax asset, primarily as a result of net operating loss carry-forwards.

         The Company has established a valuation allowance for the full amount
of this deferred tax asset. No provision for deferred taxes was recorded because
there was no significant item which would result in a deferred tax liability.

         The Company has a significant net operating loss carry-forward at 
August 31, 1998 and May 31, 1998. Due to such carry-forward, the Company 
reported minimal tax expense at August 31, 1998 and May 31, 1998, respectively.

5.  Contingencies

         The Company is involved in various lawsuits incidental to its business.
The Company believes that these proceedings, in the aggregate, will not have a
material adverse effect on the Company's operations or financial position.



                                        8
<PAGE>



                                    SIGNATURE

         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.

Dated: October 16, 1998

                                     MDI ENTERTAINMENT, INC.
                                          (Registrant)

                                     By:   /s/ Steven M. Saferin
                                     ---------------------------
                                           Steven M. Saferin
                                           President and Chief Executive Officer
                                            and Director
                                            (Principal Executive Officer)

                                     By:   /s/ Kenneth M. Przysiecki
                                     -------------------------------
                                           Kenneth M. Przysiecki
                                           Chief Financial Officer and Secretary
                                            and Director
                                            (Principal Financial Officer)



                                       9