SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20450
                              FORM 10-KSB/A No. 2

(Mark One)

[X] Annual report  pursuant to section 13 or 15(d) of the Securities  Exchange
Act of 1934 For the fiscal year ended December 31, 1998 or

[ ] 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 0-92402

                          ON STAGE ENTERTAINMENT, INC.
            (Exact name of registrant as specified in its charter.)

            Nevada                                         88-0214292
 (State or other jurisdiction of                        (I.R.S. Employer
  incorporation or organization)                       Identification No.)


                               4625 W. Nevso Drive
                             Las Vegas, Nevada 89103
--------------------------------------------------------------------------------
             (Address of principal executive offices)(Zip Code)

Registrant's telephone number, including area code: 702-253-1333

          Securities registered pursuant to Section 12(b) of the Act:

Title of each class: None

Name of each exchange on which registered: None

          Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $0.01 per share
             Redeemable Warrants to purchase shares of Common Stock
                              (Title of Class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act of 1934 during the past 12 months (or for such
shorter  period that the  registrant  was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days:

YES [X] NO [ ]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of registrant' knowledge, in definitive proxy or information statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ X ] <PAGE>

   
The  registrant's  revenues for the most recent  fiscal year ended  December 31,
1998 were $27,847,476.
    

The aggregate market value of the voting stock held by  non-affiliates  computed
by  reference  to the  average  bid and asked  prices of such stock as quoted on
April 12, 1999 was $1.19.

The number of shares of the  registrant's  common stock  outstanding as of April
12, 1999 was 7,572,046.


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

   
    

                                       ii
<PAGE>

                               TABLE OF CONTENTS

                                                            Page No.
                                                            --------

PART I...................................................     1

Item 1.  Description of Business.........................     2
Item 2.  Description of Property.........................     24
Item 3.  Legal Proceedings...............................     26
Item 4.  Submission of Matters to a Vote of
          Security Holders...............................     27

PART II..................................................     28

Item 5.  Market for Common Equity and Related
          Stockholder Matters.............................    28
Item 6.  Management's Discussion and Analysis
          or Plan of Operation............................    28
Item 7.  Financial Statements.............................    28
Item 8.  Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure..........    28

PART III..................................................    29

Item 9.  Directors, Executive Officers, Promoters and
          Control Persons, Compliance with Section
          16(a) of the Exchange Act........................   29
Item 10. Executive Compensation............................   31
Item 11. Security Ownership of Certain Beneficial
          Owners and Management............................   33
Item 12. Certain Relationships and Related Transactions....   35
Item 13. Exhibits, and Reports on Form 8-K.................   37

                                      iii
<PAGE>

                                     PART I
   
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,  as well as the
following:

o    On Stage's dependence on our flagship Legends in Concert production and 
     our principal production venues;
o    The ability to  successfully  produce and market new  productions and to 
     manage the growth  associated with the any new productions;
o    Risks associated  with our acquisition  strategy,  including our ability to
     successfully identify, complete and integrate strategic acquisitions;
o    The ability  to meet  our commitments  under our credit facilities,   which
     are  currently  in  default,  and  to  obtain alternative, additional 
     financing on commercially reasonable terms;
o    The ability to continue as an ongoing  concern;
o    The competitive  nature of the leisure and  entertainment  industry  and 
     the  ability to  continue  to distinguish our services;
o    Fluctuations in quarterly operating results and the highly seasonal nature 
     of our business;
o    The ability to reproduce the performance,  likeness and voice of various 
     celebrities without  infringing on the publicity rights of such celebrities
     or their estates, as well as our ability to protect our intellectual  
     property  rights;
o    The ability to successfully  manage the litigation pending against us and 
     to avoid future litigation;  and
o    The results of operations which depend on  numerous  factors  including, 
     the  commencement  and expiration of contracts, the timing and amount of 
     new business generated by us, our revenue mix, the timing and level of 
     additional selling, general and administrative expense and the general 
     competitive conditions in the leisure  and  entertainment  industry  as
     well  as  the  overall  economy.  See "Description of Business-Risk 
     Factors."
    
<PAGE>
ITEM 1.  Description of Business

General

   
On Stage  produces and markets live  theatrical  productions  and operates  live
theaters and dinner theaters  worldwide.  We market our productions  directly to
audiences at theaters in resort and urban  tourist  locations.  During 1998,  On
Stage  performed  shows in the  following  live  theaters  and  dinner  theaters
worldwide.
    


---------------------- ------------------------ ---------------- --------------
                                                                     Owned/
 Tourist Market           Production             Location            Leased/
                                                                    Contracted
--------------------- ------------------------  --------------- ---------------
Atlatic City,
 New Jersey           Legends in Concert        Bally's Park       Contracted
                                                Place

                      Various                   Trump Taj Mahal    Contracted

                      Various                   Atlantic City
                                                Hilton             Contracted
--------------------- ------------------------- ----------------  --------------
Branson, Missouri     Legends in Concert        Legends Family
                                                Theater            Leased
--------------------- ------------------------  ----------------  --------------
Berlin, Germany       Legends in Concert        Estrel Residence
                                                & Congress Center  Contracted
--------------------- ------------------------ -----------------  --------------
Buena Park (Anaheim), Wild Bill's Dinner        Wild Bill's
California            Extravanganza             Dinner Theater     Leased
--------------------- ------------------------ -----------------  --------------
Las Vegas, Nevada     Legends in Concert        Imperial Palace    Contracted
--------------------- ------------------------ -----------------  --------------
Laughlin, Nevada      Spice 'N Ice              River Palms
                                                Casino             Contracted
--------------------- ------------------------ -----------------  --------------
Myrtle Beach,
 South Carolina       Legends in Concert        Legends Theater    Owned

                      Eddie Miles Show          Eddie Miles        Leased
                                                Theater
--------------------- ------------------------ -----------------  --------------
Orlando, Florida      King Henry's Feast        King Henry's
                                                Dinner Theater     Owned

                      Wild Bill's Dinner        Wild Bill's
                      Extravaganza              Dinner Theater     Owned
                                                Fort Liberty
                                                Retail Complex

                      Blazing Pianos            Blazing Pianos     Leased
                                                Bar
--------------------- ------------------------ ------------------- -------------
Toronto, Orlando      Legends in Concert        Legends Theater
                                                at Sheraton        Leased
                                                Centre Hotel
--------------------- ------------------------ ------------------- -------------
Valley Forge,
  Pennsylvania        Various                   Lily Langtry
                                                Dinner Theater     Contracted
--------------------- ------------------------ ------------------ --------------


                                       2
<PAGE>

   
On Stage also markets our  productions  to  commercial  clients,  which  include
casinos,  corporations,  fairs and  expositions,  theme and amusement parks, and
cruise lines.  We have  performed in locations  such as the Illinois State Fair,
MGM Grand Theme Park and  Dollywood  Theme  Park;  in  locations  as far away as
Australia,  Russia,  China,  Africa,  Japan and the  Philippines;  and for major
corporate clients such as McDonald's,  Hewlett Packard,  IBM, Pitney Bowes, Levi
Strauss and Texaco.

For the years  ended  December  31,  1998 and 1997,  approximately  40% and 25%,
respectively,  of On Stage's net revenue was generated  from theaters and dinner
theaters that we operate in resort and urban tourist markets;  approximately 41%
and 61%,  respectively,  of our net revenue was generated from live  productions
performed in gaming  markets,  predominantly  Las Vegas and Atlantic  City;  and
approximately  16% and 9%,  respectively,  of our net revenue was generated from
sales to  commercial  clients  other  than  casinos.  The  remaining  3% and 5%,
respectively,  of our net revenue was generated  from  merchandise  and souvenir
photography sales.

These percentages reflect the early results of On Stage's strategic objective to
become the leading owner and operator of affordable live theatrical productions,
dinner theaters and other  location-based  entertainment  in North America.  Our
primary strategy is to build location-based entertainment clusters consisting of
live  theatrical  productions  and other  forms of middle  market  entertainment
including,  for  example,  musical  reviews and magic  shows,  in major  tourist
markets. Our plan is to achieve this strategy by:

o    establishing a significant  market presence  through the acquisition of 
     multiple entertainment  venues with  strong,  predictable  cash flows;  
o    pooling our contacts with ticket wholesalers,  tour operators and 
     individual ticket sellers; and 
o    rolling  out a variety of  successful  entertainment  concepts in the
     localities in which we establishe our presence.  

Management believes this "clustering"  strategy will reduce On Stage's financial
exposure and will enhance our revenue by:

o    increasing  On Stage's  visibility and market acceptance in a greater 
     number of entertainment venues; 
o    enabling us to realize cost savings through the consolidation of sales 
     and marketing and the elimination of duplicative  administrative  overhead;
     and 
o    enabling us to market productions  traditionally performed in a particular 
     venue in a greater number of venues or an array of markets.

On Stage believes that strong  fundamentals  for the  consolidation  of multiple
entertainment  venues  and the  establishment  of  location-based  entertainment
clusters exist, including:

o    a large number of North American resort and urban tourist-driven  
     locations;
o    fragmented ownership of location-based  entertainment businesses;
o    ownership by individuals who lack the ability to capitalize on economies  
     of scale in sales  and marketing, operations, systems and capital 
     formation;
o    ownership by individuals who lack a clear exit strategy;
o    acquisitions  characterized  by  predictable  cash flows and the  ability 
     to leverage  real and  personal property;
o    numerous  cost  reduction  and revenue  enhancement  opportunities;
o    limited competition for acquisitions;  and
o    low acquisition  multiples (typically 4.0 - 5.0x EBITDA).

Given On Stage's current financial  condition (as discussed in the heading "Risk
Factors")  our  ability to pursue our  strategic  objectives  will be  severally
limited.
    

                                       3
<PAGE>
   
On Stage was  incorporated  on October  30,  1985 under the laws of the state of
Nevada as Legends in Concert,  Inc.  Subsequently,  on August 7, 1996,  On Stage
changed its name to On Stage Entertainment, Inc. Our principal executive offices
are located at 4625 West Nevso Drive, Las Vegas, Nevada 89103, and our telephone
number is (702) 253-1333.

DEVELOPMENTS DURING 1998

Gedco USA, Inc. Acquisition - March 1998

On March 13, 1998, we purchased assets of Gedco USA Inc., a Florida corporation,
for $14 million.  We utilized $11.5 million of our mortgage  financing  facility
with Imperial Commercial Credit Mortgage Investment Corporation,  or ICCMIC, and
595,238  shares of our common stock  valued at $4.20 per share,  or $2.5 million
worth of our common stock,  to fund this  transaction.  Included in the purchase
were  substantially  all of the  income  producing  assets and  associated  real
property of Orlando  Entertains  and LA  Entertains,  consisting of King Henry's
Feast and Blazing  Pianos  located in  Orlando,  Florida,  and the Fort  Liberty
retail shopping complex, which includes the Wild Bill's Dinner Theater,  located
in Kissimmee,  Florida,  and Wild Bill's Dinner  Theater  located in Buena Park,
California. For the year ended December 31, 1997, audited revenues of the assets
purchased were $13.9 million and earnings before interest,  taxes,  depreciation
and amortization were $2.7 million.

Kodak Relationship - June 1998

On June 3, 1998,  On Stage and Kodak  Themed  Entertainment,  a division  of the
Eastman  Kodak  Company  that is  interested  in  developing  a branded  imaging
presence in key entertainment  environments,  executed a letter of intent.  This
letter of intent  contemplates the joint  development of retail outlets known as
Kodak On Stage  Fantasy  Stores.  The Fantasy  Stores will  incorporate  Kodak's
digital photographic  technology with live impersonators from Legends in Concert
to create a unique and entertaining retail experience, blending the strengths of
Kodak's  brand  and  products  with the  "star  power"  provided  by On  Stage's
impersonators.  The retail  store will  include  Legends  merchandise,  licensed
themed  clothing,   souvenirs  of  legendary   superstars,   Kodak   traditional
photographic  products  and  Kodak  proprietary  digital  photographic  products
featuring licensed  character images from The Walt Disney Company,  Warner Bros.
Studios and Universal Studios. We are currently  evaluating initial launch sites
in New York, Las Vegas and Los Angeles.

Kodak and On Stage have also agreed to share revenue  generated by the operation
of digital  photography  systems to be provided by Kodak in some of our theaters
under a digital imaging  systems  agreement we executed on June 3, 1998. The new
systems are  currently  in place in our  entertainment  venues in Myrtle  Beach,
South Carolina, Branson, Missouri and Buena Park, California.
    
   
Calvin Gilmore Productions, Inc. Acquisition - June 1998

On  June  30,  1998,  On  Stage  purchased  certain  assets  of  Calvin  Gilmore
Productions,  Inc., a subsidiary of Fox Family  Worldwide,  Inc., Myrtle Beach's
oldest and largest  live  theater  operator,  for  approximately  $2.0  million,
consisting of $1.0 million in cash and 206,612 shares of common stock at a price
of $3.50  per  share.  On Stage  used $1.1  million  of our  mortgage  financing
facility  with Imperial  Credit to fund the cash portion of the purchase  price.
The assets acquired in the  transaction  include fee simple title to the Legends
Theater and a leasehold interest in the Eddie Miles Theater.

Upon consummation of the transaction, Fox Family also agreed to order television
programming and production services from On Stage, and to give us a 30-day right
of negotiation to acquire  specified  live  theatrical/stage  rights in projects
developed  and owned by Fox Family  over the next five years.  Also,  Fox Family
increased its stock  ownership to a 5% equity stake in On Stage,  and Mel Woods,
President and Chief Operating Officer of Fox Family, was elected to our board of
directors.
    
                                       4
<PAGE>

Substantial Indebtedness Incurred
   
During 1998, On Stage  received  mortgage  financing  from  Imperial  Credit and
extended our existing  credit  facilities with First Security Bank of Nevada and
First  Security  Leasing  Company in order to fund our existing  operations  and
finance our growth strategy with future  acquisitions.  On Stage has been unable
to service our substantial  indebtedness and is, consequently,  in default under
these facilities. See Existing Defaults under Credit Facilities" below.

Industry Background

On Stage has focused our clustering efforts in North American resort and tourist
markets. In 1996, international and domestic travelers spent over $473.0 billion
on travel and tourism  within the U.S. The table below  outlines the spending of
domestic and international travelers within the U.S. for the past 10 years.

[Bar Graph Representing 10-Year Growth Tourism Expenditures in the U.S. omitted]

According to the Travel Industry  Association's  National Travel Survey,  of the
715 million trips taken in 1997, over 61% were pleasure trips. In 1997, the most
popular 10 states  among U.S.  travelers  were  California,  Florida,  New York,
Texas, Illinois,  Nevada, Hawaii, New Jersey,  Pennsylvania and Georgia. In 1998
On  Stage  ran  productions  in seven of  these  10  states  and has  identified
potential acquisitions in the other three. Below is a chart illustrating the top
ten states by traveler expenditures.

[Bar Graph Representing Travel Expenditures by State omitted]

According  to the  Travel  Industry  Association  of  Americans,  theme park and
entertainment  attractions  are one of the  top six  types  of  family  vacation
destinations.  While the most popular destinations include the top gaming sites,
Las Vegas,  Nevada and Atlantic City, New Jersey,  and the top theme park sites,
Orlando, Florida and Los Angeles, California,  several emerging resort locations
such as Myrtle Beach, South Carolina and Branson, Missouri were also included.

Set forth  below,  is general  information  on the key markets in which On Stage
operated in 1998.
    
Anaheim /Buena Park, California

Anaheim/Buena Park, California, home of Disneyland, hosted 37.5 million visitors
in 1997,  according to the  Anaheim/Orange  County Visitors & Convention Bureau.
Visitors spent  approximately  $5.6 billion,  of which $1.3 billion was spent on
entertainment.  In Buena Park alone, over $81 million was spent on entertainment
in 1997. The Anaheim  Convention  Center,  in conjunction with  Disneyland,  has
announced a plan to spend over $2 billion over the next five years to revitalize
the convention center and surrounding  areas, and expand  Disneyland.  Expansion
plans for Disneyland include the construction of: 

o    a 750-room Craftsman-style hotel;  
o    a second theme park to be named "Disney's  Californian  Adventure;" and
o    a 200,000 square foot entertainment, dining and retail complex joining
     the two theme parks.  
                                       5
<PAGE>
   
We  believe  this new  investment  will  increase  tourism to this  market  with
potentially positive results for other entertainment  suppliers.  In March 1998,
we acquired Wild Bill's Dinner  Extravaganza  which  performs at the Wild Bill's
Dinner Theater in Buena Park,  California.  Buena Park is in close  proximity to
Anaheim, California.

Atlantic City, New Jersey

In 1997,  Atlantic City received  approximately 37 million visitors according to
the Atlantic City Convention and Visitors  Bureau.  On Stage currently  produces
Legends at Bally's Park Place in Atlantic City,  and various  productions at the
Trump Taj  Mahal,  and we have  produced  numerous  other  shows in this  market
including the Atlantic City Swing at the Atlantic City Hilton,  Magic!,  Magic!,
Magic! at the Showboat Hotel and Casino,  Cabaret on Ice at Trump's Castle,  and
Bon Voyage and The Atlantic City Experience at Bally's Park Place.  Furthermore,
we are aware of at least two new casino  hotel  projects  under  development  in
Atlantic  City and we believe  that these will also contain  showrooms  for live
entertainment.
    
Branson, Missouri

Branson is less than a one-day  drive for half of the U.S.  population  and is a
popular vacation  destination.  The Branson Chamber of Commerce reported that in
1997,   Branson  attracted  six  million   visitors.   Branson  is  home  to  40
entertainment  venues  with  over 70 live  productions.  The live  entertainment
industry in Branson is atypical of other theater districts, with shows beginning
mid-morning and continuing throughout the day and into the evening. On Stage has
presented  Legends  in Branson  since 1995 for  limited  runs,  with  successful
results to date.  Legends is currently being performed in Branson at the Legends
Family Theater.

Myrtle Beach, South Carolina

Myrtle  Beach,  which has 99 golf courses and 11 live  theatrical  venues,  was,
according  to BYWAYS  magazine,  ranked the second most highly  preferred  motor
coach  destination  in the United  States in 1997.  The Myrtle Beach  Chamber of
Commerce  reported  that 13.4 million  people  visited  Myrtle Beach in 1997 and
spent  approximately  $2.6  billion.  Visitors,  according  to the Myrtle  Beach
Chamber of Commerce, have an average stay of 5.7 days. On Stage resident Legends
production  at the Legends  Theater at  Surfside  Beach  (located  just South of
Myrtle Beach in beautiful  Surfside Beach) opened in March 1995, and is known as
one of the top shows in town.

Las Vegas, Nevada
   
In  1997,  Las  Vegas  had  over 30  million  visitors, according  to Las  Vegas
Convention  and Visitors  Authority,  an increase of almost 30% since 1993,  and
spent $25  billion.  Las Vegas has 80 hotels and casinos and 35  different  live
productions.  Visitors  to Las  Vegas,  according  to Las Vegas  Convention  and
Visitors Authority,  spent an average of $33.24 a day on shows during an average
4.5 day stay per visitor.  According to the Las Vegas Visitor  Profile Study, of
these  30  million   visitors,   48%  attended   shows  during  their  stay,  up
significantly from 40% in 1994.

Of those people that attended shows,  almost 78% attended a regularly  scheduled
production  show. On Stage's  Legends has been playing at the Imperial Palace in
Las Vegas since 1983 and On Stage has produced numerous limited  engagements and
other shows in Las Vegas.
    
                                       6
<PAGE>
Laughlin, Nevada

Laughlin,  Nevada is another  emerging  tourist market in close proximity to Las
Vegas.  According to the Laughlin Visitor's Bureau,  five million people visited
Laughlin  in 1997 and spent an average  of $187 per day.  In 1997,  visitors  to
Laughlin spent almost $20 per day on shows and stayed an average of 3.5 days. In
1998, On Stage began performances of Spice'N Ice, an ice skating extravaganza at
the River Palms Hotel & Casino.

Orlando, Florida

Orlando is one the most popular  destination cities in the United States and was
voted as the number one theme park  destination in 1996 by the National  Tourism
Association.  According to Orlando's Visitors Bureau, approximately 36.5 million
tourists  visited Orlando in 1997 and spent $15.9 billion.  In 1997, the Orlando
Visitor's Bureau reported that visitors spent $3.3 billion on entertainment  and
stayed for an average  of 3.7 days.  Orlando's  hotel  industry  is meeting  the
demands of  visitors,  with over 85,000  hotel rooms  available  in 1996,  an 8%
growth over the prior four years.  In March 1998, On Stage acquired King Henry's
Feast,  Wild Bill's Dinner  Extravaganza and Blazing Pianos,  all located within
the greater Orlando area.

Toronto, Ontario

Toronto is the tenth  largest  metropolitan  area in North America and the third
largest  English-speaking  theater market in the world after London and New York
according to Tourism  Toronto,  the official  tourism sales and marketing agency
for the Toronto region.  Approximately  20.2 million tourists visited Toronto in
1997 and spent  approximately  $3.3  billion.  Of the $3.3 billion  spent,  $193
million was spent on  entertainment.  Tourism Toronto estimates average spending
per  person  to be  approximately  $93  per  day.  Toronto  is  home  to 83 live
productions  in 39  live  entertainment  venues  including  On  Stage's  Legends
production  featured  at the  Sheraton  Centre  Hotel which ran from May of 1998
through April of 1999.

Other Potential Urban and Resort Markets
   
We believe  that there are  numerous  other  emerging  urban and resort  tourist
markets,  both in the United  States  and  Canada,  where the demand  exists for
quality, affordable live entertainment.  We believe that the following urban and
resort  tourist  locations may be suitable for the  acquisition,  production and
marketing of location-based entertainment:

                 Chicago                Niagara Falls
              Corpus Christi               Orlando
                  Miami                    Phoenix
                Montreal                Pigeon Forge
              New Orleans                 San Diego
             New York City              San Francisco
          South Padre Island              Vancouver


OTHER COMMERCIAL CLIENTS

On Stage has also produced  limited-run Legends shows in the last five years for
other types of commercial clients, including:

o    theme parks--Six Flags-MGM Grand Theme Park, Lotte World in Korea;
o    cruise ships--Royal  Caribbean Cruise Lines,  Singapore  Cruise  Lines; and
o    major  fairs--Dade  County  Youth Fair, Illinois  State  Fair.  
    
                                       7
<PAGE>
   
In  addition,  in 1997 and 1998,  On Stage  produced  approximately  185 and 172
events,  respectively,  for corporate clients,  such as McDonald's,  Bell South,
Home Depot, IBM, Norwest Bank, and Anheuser Busch.

Show Offerings

Since our inception, On Stage has developed, produced or acquired many different
productions.  These productions include Legends,  other tribute shows, a variety
of musical reviews,  magic shows,  ice skating  productions and specialty shows.
The principal productions currently produced by On Stage are as follows:

Legends in Concert

Our flagship  Legends in Concert  production is a live  theatrical  tribute show
featuring  impersonators  who recreate past and present music and motion picture
superstars.  Legends is the longest running independently produced production in
Las Vegas and Atlantic City.  Based on our access to  approximately 75 different
Legends  tribute  acts,  we can  tailor  each  tribute  show to suit the  unique
demographics of any audience and the size of any venue, and we have been able to
attract  significant repeat business by varying regularly the composition of the
acts  in our  shows.  In  1998,  full-time  resident  Legends  productions  were
performed in Atlantic City, New Jersey; Berlin, Germany; Branson,  Missouri; Las
Vegas, Nevada; Myrtle Beach, South Carolina; and Toronto, Canada.

Wild Bill's Dinner Extravaganza

As  a  result  of  the  Gedco  Acquisition,   we  acquired  Wild  Bill's  Dinner
Extravaganza,  a two hour dinner show that  features  the best of the Wild West.
The show includes Indian tribal dances,  gun fighting,  and showgirls.  The show
runs every day throughout the year at the Wild Bill's Dinner Theater at our Fort
Liberty  Complex in  Kissimmee,  Florida and the Wild Bill's  Dinner  Theater in
Buena Park, California.

King Henry's Feast

As a result of the Gedco Acquisition, we acquired King Henry's Feast, a two hour
dinner show that takes the patrons back to the time of King Henry VIII. The show
includes a sword swallower,  a jester, a trapeze act and a sword fight. The show
runs every day  throughout  the year at our King Henry's Feast Castle located in
Orlando, Florida.

Blazing Pianos

As a result  of the Gedco  Acquisition,  we also  acquired  Blazing  Pianos,  an
interactive  piano bar  featuring  three  talented  comedic  piano  players  and
vocalists,  who  simultaneously  play song  requests  from  patrons on  separate
pianos.  The shows runs nightly throughout the year at the Blazing Pianos Bar in
Orlando, Florida.
    
Spice 'N Ice

Spice 'N Ice  combines  performances  by world  class  skaters  with  adagio and
comedic skits by skating clowns, dancers and ensemble skating.  Currently, Spice
'N Ice runs at the River Palms Casino in Laughlin, Nevada.

                                       8
<PAGE>

PRODUCTION ECONOMICS
   
Most financial  structures for theatrical  productions in theaters in resort and
urban  markets  and in larger  casinos  are based on the  "four-wall"  method of
expense and revenue allocation between the producer and the client,  while those
produced for clients, such as smaller casinos, corporations, fairs, cruise lines
and theme parks, are typically  "contracted  productions" are generally produced
for a fixed or "guaranteed" fee.

The four  "walls"  of any  live  theatrical  production  can be  illustrated  as
follows:

[Graphic presenting the "four walls" of live theaterical production described in
following paragraph]

On Stage generally operates our resident productions in resort and urban tourist
markets and in Las Vegas  casinos under either a  "four-wall"  arrangement  or a
"two-wall"  arrangement.  Under the "four-wall" arrangement On Stage assumes the
responsibility for the cost of the theater, whether leased or purchased, and all
other expenses associated with the presentation of the production, including:

o    the  artistic  aspects of the production of a show; 
o    the technical requirements  associated with producing a show;  
o    the promotion of a show; and 
o    ticket sales,  concession sales and  maintenance.  

In return  for  assuming  full  responsibility  for the cost of  presenting  the
production under a "four wall" arrangement,  On Stage is entitled to 100% of the
revenues, profits and/or losses generated by a show under that arrangement.

Under the  "two-wall"  arrangement,  the client owns or manages the theater.  On
Stage and the client are responsible for two of the costing responsibilities, or
"walls,"  described above. On Stage and our client share revenue  generated by a
show under this  arrangement;  each retains an agreed  percentage  of the show's
revenues.

Shows  produced  under  either  of these two  arrangements  are  referred  to as
"at-risk"  shows,  because our revenues are dependent  upon customer  attendance
levels.  Our resident Legends shows at Myrtle Beach, South Carolina and Toronto,
Canada are  examples of  "four-wall"  arrangements,  and our Legends show at the
Imperial Palace in Las Vegas, Nevada is an example of a "two-wall"  arrangement.
Although  most  contracts of this type are by their nature  short-term,  clients
typically  renew  their  contracts  or host a variety  of our  productions  on a
regular basis.

On Stage also operates  "low-risk"  productions  where the client is responsible
for all  non-production  related expenses and retains all revenue generated from
ticket sales. In these arrangements,  On Stage is responsible for all production
related  expenses--performers,  orchestra,  dancers and company  manager--and we
typically receive a guaranteed weekly fee, regardless of attendance levels. This
is  a  typical  structure  for  shows  sold  to  commercial  clients,   such  as
corporations,  fairs and theme  parks,  and to  casinos  outside  the Las Vegas,
Nevada  market.  Our Legends  show at Bally's Park Place in Atlantic  City,  New
Jersey  is an  example  of a  "low-risk"  arrangement.  Although  many of  these
contracts are short term,  clients  typically renew their contracts on a regular
basis.
    
                                       9
<PAGE>

CORPORATE STRUCTURE
   
On Stage Casino Entertainment, Inc.

On Stage has been a leading  provider of live  entertainment to casinos for over
15 years.

In 1998,  On Stage  Casino  Entertainment  had long running  productions  in the
following locations:

------------------- ----------------------- ----------------------------------
     Venue                    City                   Type of Structure
------------------- ----------------------- ----------------------------------
Imperial Palace          Las Vegas                      "Two-Wall"
Bally's Park Place       Atlantic City                Guaranteed Fee
River Palms Casino       Laughlin                     Guaranteed Fee
Trump's Taj Mahal        Atlantic City                Guaranteed Fee
Atlantic City Hilton     Atlantic City                Guaranteed Fee
------------------- ----------------------- ----------------------------------

On Stage Theaters, Inc.

Upon  completion of the Gedco asset  acquisition,  we formed On Stage  Theaters,
Inc., a wholly-owned  subsidiary created to manage our theaters from our offices
in  Orlando,  Florida.  During  1998,  On  Stage  operated  seven  live  theater
productions,  managed the  sublease of the Eddie Miles  Theater and produced one
show under contract in the following locations:

-----------------     --------------   -----------   ------------- ------------
Venue                    City          # of Seats      Own/lease/     Date of
                                                       contracted    expiration
-----------------     --------------   -----------   ------------- ------------
Contracted
 Productions:

Lily Langtry
 Dinner Theater        Valley Forge, PA     500        Contracted        1/00

"Four -  Wall"
   Productions:

Blazing Pianos Bar     Orlando, FL          400        Lease             10/00
Eddie Miles Theater    N.Myrtle Beach, SC   946        Lease             12/04
King Henry's Dinner
 Theater               Orlando, FL          620        Own               N/A
Legends Theater        Myrtle Beach, SC     800        Own               N/A
Legends at Sheraton
 Centre Hotel          Toronto, ON          647        Lease             2/03
Wild Bill's Dinner
 Theater               Buena Park, CA       820        Lease             6/10
Wild Bill's Dinner
 Theater               Kissimmee, FL        628        Own               N/A
Legends Family
 Theater               Branson, MO          984        Lease             12/98
-----------------    ---------------   -----------   ------------  -------------
    
                                       10
<PAGE>

   
On Stage Events, Inc.

On Stage  Events  creates  numerous  types of special  entertainment  events for
corporate  clients  such as  casinos,  fairs,  theme  parks,  cruise  lines  and
corporations.  These events utilize On Stage's inventory of props,  decorations,
sound,  lighting and costumes. In addition to creative  custom-designed  events,
this business segment has in-stock,  unique  interactive shows, as well as stage
shows,  which have  played for long runs at  theaters  and  casinos  and are now
available  for private  events.  On Stage Events has typically  produced  either
interactive  dinner shows or theme  parties,  such as Las Vegas  Spectacular,  a
theme party in which a casino is created and  participants are allowed to gamble
as if they were in a Las Vegas casino.  In 1998,  the division had sales offices
in Atlantic City, New Jersey, Atlanta, Georgia, Palm Springs, California and Las
Vegas, Nevada. Examples of our corporate clients are:

Illinois State Fair       Dollywood Theme Park        Hyatt Hotels Worldwide
MGM Grand Theme Park      McDonald's                  Six Flags Over Georgia
Hewlett Packard           IBM                         National Football League
Levi Strauss              Texaco                      Xerox

On Stage Merchandise, Inc.

On Stage Merchandise sells merchandise at all of its venues in tourist locations
and,  if  permitted,  in client  venues.  Merchandise  includes  logo  clothing,
keychains,  magnets,  pins,  canvas tote bags and coffee  mugs,  plus  specialty
licensed  merchandise  featuring On Stage's  more  popular  Legends acts such as
Elvis,  the Blues Brothers and Marilyn Monroe.  In addition,  this  wholly-owned
subsidiary sells autographed photographs of impersonators or other headline acts
posing with audience  members,  for which it pays nominal  royalties to featured
performers.  We believe that our  relationship  with Kodak Themed  Entertainment
will further  augment  revenues from  merchandising.  See  "Developments  During
1998".

On Stage Productions, Inc.

On Stage Productions is located in Las Vegas,  Nevada.  This division is capable
of  simultaneously  producing  multiple shows of varying  complexity.  Among its
responsibilities  are  choreography,  costume,  talent,  lighting and sound.  We
intend to produce  multiple shows in each locality in which we have  established
ourself through this single, centralized production facility.

CORPORATE OPERATIONS

Sales and Marketing

Since many people plan to attend a specific  live  performance  prior to leaving
for  vacation,  it is  imperative  that On Stage market to  potential  customers
before they arrive at their  destination.  The  development  and  maintenance of
amicable,  professional  relationships with individual sales representatives and
individuals  working in group sales  offices  is,  therefore,  essential  to our
clustering  strategy.  At some point in the future,  we may invest in or acquire
receptive operators.

On Stage  generally  targets mass market  audiences  with average prices for our
productions  ranging  from $20.00 to $40.00 per adult  ticket.  Show  pricing is
determined by competition in the local  marketplace and is typically neither the
lowest nor the highest in a  particular  market.  Once  ticket  pricing has been
determined,  the  composition of the  show--number  of headline  acts,  singers,
dancers, orchestra,  technicians,  etc.--and facility and equipment requirements
are  adjusted  so that each show will  generate  profits  based  upon  projected
attendance. We distribute, from time to time, show coupons offering discounts of
up to 20% on individual  ticket  purchases,  and offer volume discounts of up to
60% to ticket and tour wholesalers buying large blocks of tickets.
    
                                       11
<PAGE>

Advertising and Promotion
   
On Stage  provides  advertising  and  publicity  support and seeks major ongoing
media  coverage  for all of our shows  through  our  network of media  contacts.
Exposure  on  television  and  radio,   and  in  national   periodicals,   major
metropolitan  newspapers,  and local tourist  entertainment guides has served to
promote On Stage's shows both  regionally  and  nationally.  Over the last three
years,  publicity for On Stage  included  appearances  at the 1996 Miss Universe
Pageant,  Jay Leno's Tonight Show from Las Vegas,  Nevada, VH1's Route 96, CNN's
Burden of Proof and on  Wheel-of-Fortune.  In February 1999, our Legends Show in
Branson,  Missouri  was  featured on a winter  season  special on The  Nashville
Network.

Advertising  designed to target the individual  tourist  includes  newspaper and
magazine  print  ads,  television  and radio  commercials,  airport  videos  and
signage, billboard and outdoor advertising,  transit advertising,  and brochures
placed in areas with a high  concentration  of  tourists  (such as  visitor  and
tourist welcome centers).  In some resort markets,  such as Myrtle Beach,  South
Carolina and Branson, Missouri,  advertising commences up to one year in advance
of a show's opening, and includes direct mail campaigns,  attendance at consumer
and  travel  trade  shows,  and  placement  of print  ads in  travel  and  trade
publications.  Within casinos and hotels, table tent cards, coupons,  flyers and
brochures  are  placed  in each  guest-room,  restaurant  and  lounge,  whenever
possible,  and  promotional  show videos are  broadcast  on in-house  television
systems.  As On Stage begins to control other pieces of the distribution  chain,
and forms entertainment  clusters,  traditional  advertising and promotion costs
can be decreased due to economies of scale.

Competition

The  leisure  and  entertainment  market,  which  includes  the  market for live
theatrical  productions,  is highly  competitive.  Many of our markets contain a
large  number of  competing  live  theatrical  productions.  In resort and urban
tourist  locations,  we compete for ticket sales with other live productions and
headline stars,  many of whom have better name recognition and greater financial
and other resources.

The live  theatrical  entertainment  industry is highly  fragmented and contains
many  small,  independent  production  companies  and several  major  production
companies.  On Stage  competes  with  these  production  companies  for the most
desirable   commercial  and  tourist  venues,  and  for  talent  and  production
personnel.  Major production companies in our markets include Feld Entertainment
Productions,  Blair  Farrington  Productions and Dick Foster  Productions in Las
Vegas, and Greg Thompson Productions in Seattle. In addition to competition from
major production companies,  which produce other forms of live theatrical shows,
we also compete directly against a large number of smaller independent producers
who sometimes produce tribute or impersonator  shows.  However,  we believe that
only one of these competitors, Spring Time Productions, produces such shows on a
continuous basis in more than one location,  and therefore  presently offers any
material  competition.  Spring Time Productions  currently produces its American
Superstars  impersonator show at the Stratosphere Hotel and Casino in Las Vegas,
Nevada and at the Grand Casino in Gulfport, Mississippi.

In Orlando,  Florida and Buena Park, California,  where On Stage operates dinner
theaters,  other major  competing  dinner theater shows include  Medieval Times,
Arabian Nights, and Wizards. The dinner theater market is highly competitive and
we compete  with other  forms of live  entertainment  in  addition to the dinner
theaters, primarily theme parks.
    
                                       12
<PAGE>

Talent

   
On Stage has featured  approximately 175 impersonators and numerous variety acts
(magicians,   aerial  acts,  jugglers,   clowns,  sword  fighters,  jesters  and
comedians),   singers,   dancers,   musicians  and  musical   directors  in  our
productions, and we regularly receive promotional materials from individuals who
are eager for work. An average of 30 inquiries  are received per month,  and for
every  working  performer,  we have  access  to  approximately  three  potential
performers.  We periodically hold auditions for new impersonators,  singers, and
dancers in Las Vegas,  Nevada,  Atlantic City, New Jersey,  Myrtle Beach,  South
Carolina  and Los  Angeles,  California,  and we often view acts in outside show
environments and clubs.

All performers receive creative and professional support from On Stage's various
in-house  personnel.  On  Stage  employs  choreographers  to work  with  new and
existing  entertainers  to develop their skills and improve their  confidence on
stage. Utilizing our in-house music library,  musical arrangements are developed
for new and  existing  performers  and  digital  audio tapes are  developed  for
principal  acts.  Our in-house  wardrobe  personnel,  together with several well
established costume designers,  create new performers'  wardrobes and update the
wardrobes of existing  talent.  We contract with an independent  photographer to
provide  promotional  photographs  of the  headline  acts and employ a writer to
prepare professional biographies and press releases.

On Stage believes we are the premier  producer of  impersonator  shows worldwide
and that we have the ability to offer a variety of  consistent  work to our acts
by rotating them among our  different  shows and events.  On Stage's  musicians,
singers,  dancers and production  personnel are generally employees of On Stage,
while headline acts, including the impersonators  utilized in our tribute shows,
are treated as independent contractors in accordance with industry practice.

Intellectual Property

On Stage has filed the following intellectual property marks:
    
Name:                Class(es)          Status              Country

Legends in Concert   41                 Registered          United States
Legends in Concert   41                 Registered          Japan
Legends in Concert   41                 Registered          Canada
Legends in Concert   41                 Registered          Great Britain
Legends in Concert   41                 Registered          Mexico
Legends in Concert   6, 16, 18, 21,
                     25, 26             Registered          United States
Legends in Concert
  w/ design          6, 16, 18, 21,
                     25, 26             Registered          United States
Legends in Concert   41                 Pending             Europe
Legends in Concert   41                 Pending             Australia
Legends of Country   41                 Pending             United States
Legends Live         107                Registered          United States
Legends of the
  Rat Pack           41                 Published           United States
Atlantic City
  Experience         41                 Registered          United States
Camouflage Aux
  Folles             41                 Published           United States
Wild Bill's
  Extravaganza       41                 Pending             United States


                                       13
<PAGE>
   
We anticipate filing  applications for protection of our Legends service mark in
France,   South  America,   China  and  several  other  foreign  countries,   as
appropriate.  We believe we either own or have appropriately licensed all of the
intellectual  property  rights  required  to perform  our shows in the manner in
which they are currently produced,  including, the right to publicly present and
otherwise perform all non-dramatic  copyrighted musical compositions pursuant to
musical  licenses  with  Broadcast  Music,  Inc.  (BMI) and American  Society of
Composers, Authors and Publishers (ASCAP).

We typically  require our independent  contractors,  employees,  consultants and
advisors to execute appropriate  confidentiality and non-competition  agreements
in connection with their  employment,  consulting or advisory  relationship with
us.

Government Regulation

Providing  entertainment  to the casino gaming  industry may subject On Stage to
various licensing regulations.  We are regulated and required to obtain a casino
industry license from the New Jersey Casino Control  Commission  pursuant to the
New Jersey Casino Control Act. Our current casino service  industry license from
the New Jersey  Casino  Control  Commission  was issued on January  17, 1997 and
expires on September 30, 1999. In connection with the license  application,  the
New Jersey Division of Gaming Enforcement conducted an investigation of On Stage
to determine our suitability for licensure.  Management believes that we are not
required to obtain a license to provide our  services to casinos in Nevada or in
any other  jurisdictions in which we operate,  other than New Jersey. The Nevada
Gaming Control Board and similar  authorities in other  jurisdictions,  however,
have  broad  authority  to  order  providers  of  services  to  casinos  to file
applications,  be  investigated,   have  their  suitability  determined,  obtain
licenses and cease providing their services,  if they find the service providers
to be unfit. Additionally, many of the casinos mandate that a production company
is either  properly  licensed in accordance with the local gaming laws before it
will contract for their services.

In  addition,  On Stage  leases  or owns  certain  of the  theaters  for our new
brand-name  resident   productions,   thereby  absorbing  all  costs  and  risks
associated  with  producing  the  show in  order to  retain  100% of the  show's
profits.  Producing shows under this  "four-wall"  arrangement may require us to
obtain and maintain  certain  local  licenses and permits as we were required to
obtain for the opening of our Myrtle Beach show, a"four-wall" production.  These
licenses and permits could include,  amusement  licenses,  music licenses (i.e.,
BMI or ASCAP),  business licenses,  liquor licenses,  retail sales tax licenses,
food and beverage  licenses and a health  inspection  rating (if dairy  products
and/or hot food, other than popcorn, is to be sold).  Difficulties or failure in
obtaining  required licenses or regulatory  approvals could delay or prevent the
opening  of a new show or,  alter,  delay or  hinder  our  expansion  plans.  In
addition,  the suspension of, or inability to renew, a license needed to operate
any of our currently running productions would adversely affect our operations.
    
Employees

   
As of  March  25,  1999,  On  Stage  employed  approximately  (a) 207  full-time
employees,  including  51  entertainers,  37 theater  operations  personnel,  17
production personnel, 25 food & beverage personnel, 40 administrative personnel,
20 marketing  personnel,  8 box  office/concession  personnel and nine executive
officers;  and (b) 402 part-time  employees.  None of our current  employees are
covered by a collective bargaining  agreement.  We believe that our relationship
with our employees is good.
    
                                       14
<PAGE>

EXISTING DEFAULTS UNDER CREDIT FACILITIES

Working Capital Line
   
In May 1997,  First Security Bank of Nevada issued a line of credit to us for up
to $250,000. Borrowings under this line of credit bear variable interest at 1.5%
over the First  Security Bank of Idaho's index 10% per year as of the facility's
inception--and are due on demand. John W. Stuart has personally  guaranteed this
line of credit.

On March 28, 1998,  First  Security  agreed to increase this line of credit from
$250,000 to $1,000,000 and the  expiration  date was extended to March 25, 1999.
As of December 31, 1998, On Stage had drawn $1,000,000 on the line of credit. As
of March 31, 1999, On Stage had failed to pay off any part of the line of credit
and is in default under its terms.  We are  continuing  to negotiate  with First
Security  to either  extend  the line of credit or  convert  it into a term loan
facility.  On April 29, 1999,  we received a notice of default under the line of
credit from First  Security.  In the notice of default,  First Security asked On
Stage to make a repayment  proposal  and provide  additional  information  on or
before May 3,  1999.  While we are  attempting  to  negotiate  an  extension  or
restructuring  of this  line of  credit,  there  can be no  assurance  that  our
attempts to negotiate an extension or  restructuring of this line of credit will
be successful or that First Security will not take additional  action to collect
this debt.

Capital Equipment  Financing  Commitment

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

Mortgage Financing Commitment

On March 13, 1998, Imperial Credit Commercial  Mortgage  Investment  Corporation
agreed to provide up to  $20,000,000 of mortgage  financing to On Stage.  On the
same date, we used  $12,500,000 of said facility to fund the cash portion of the
Gedco asset  acquisition  and related fees. We  subsequently  used $1,100,000 on
June  30,  1998 to fund the  cash  portion  of the Fox  Family  acquisition  and
$550,000 on October 7, 1998 for our working capital needs. Concurrently with the
Imperial Credit financing,  Mark Karlan,  the President of Imperial Credit,  was
named a member of On Stage's  board of directors,  filling a vacancy  created by
the  resignation  of Kenneth Berg. We made our January,  February and March 1999
payments under this loan after the due date for those  payments.  As a result of
those delinquencies,  we have incurred late charges and default interest,  which
we have not paid.  We are in default under the Imperial  Credit  facility and we
are unable to borrow additional funds under the facility.  As of May 3, 1999, we
had not made our  payments to Imperial  Credit due April 1, 1999 or May 1, 1999.
We are  currently  negotiating  with  Imperial  Credit  to  extend  some  of the
repayment  terms under this facility and to obtain  waivers or  amendments  with
respect to other defaults under the facility, including a breach of debt service
coverage ratio warranties.

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

                                       15
<PAGE>
   
Delisting Inquiry

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

RISK FACTORS

Existing  Defaults  Under  Credit  Facilities.  During 1998,  On Stage  received
mortgage   financing  from  Imperial  Credit  Commercial   Mortgage   Investment
Corporation and extended our existing credit facilities with First Security Bank
of Nevada and First Security Leasing Company to fund our existing operations and
finance our growth  strategy  with future  acquisitions.  We have been unable to
service our substantial indebtedness and we are, consequently,  in default under
those facilities.

We are  continuing to negotiate with First Security to either extend the line of
credit or  convert it into a term loan  facility.  We are also  discussing  with
Imperial Credit a possible  restructuring  of their loans. On April 29, 1999, On
Stage received a notice of default under the line of credit from First Security.
In the notice of default,  First Security asked us to make a repayment  proposal
and provide additional  information.  We have provided additional information to
First Security and are currently discussing various  restructuring  options with
First   Security.   While  we  are  attempting  to  negotiate  an  extension  or
restructuring  of all of our loans,  there can be no assurance that our attempts
to negotiate an extension or  restructuring  of our debt will be  successful  or
that  either  or both of  Imperial  Credit  or  First  Security  will  not  take
additional action to collect their debt.

Need for Additional  Financing.  On Stage's cash, cash  equivalent  balances and
anticipated  revenues from operations will not be sufficient to fund our current
operations or to service our substantial  indebtedness under our existing credit
facilities.  We must restructure our existing  indebtedness or obtain additional
sources  of  financing  in  order  to  avoid   foreclosure  under  these  credit
facilities.  There  can be no  assurance  that we will  be able to  negotiate  a
restructuring  or that  funds  will be  available  to us. We will not be able to
pursue our growth  strategy  if we are not able to obtain  additional  financing
and, as a result of our financing  difficulties,  we are currently  reevaluating
our  growth  strategy.  We have no  current  arrangements  with  respect  to, or
potential  sources  of,  additional  financing,  and  any  inability  to  obtain
financing could cause us to curtail,  delay or eliminate  present or anticipated
productions,  or to fund  those  productions  through  arrangements  with  third
parties that may require us to relinquish rights to substantial  portions of our
revenue, which may result in foreclosure under our existing credit facilities.

Increased  Operating  Expenses.  Increased operating expenses in connection with
our  recent  acquisitions  or  our  proposed  expansion  plans,  delays  in  the
introduction  of new  productions  and factors  adversely  affecting our current
productions,  could  have a  material  adverse  effect on our  future  operating
results. There can be no assurance that we will continue to generate significant
net income in the future or that our future operations will be profitable.

Dependence  on Legends.  To date,  our revenue has been  limited  largely to the
production of Legends.  Our future success will depend, to a significant extent,
on our ability to successfully produce and market Legends shows in other venues.
To the extent we are unsuccessful in expanding the production of Legends,  or to
the extent the Legends  production concept ceases to be successful or profitable
for us, there will be a material adverse effect on us.

Reliance on  Principal  Production  Venues . On Stage  anticipates  that we will
continue  to rely upon our six current  largest  revenue  producing  show sites,
including  our  resident  Legends  productions  in Las Vegas,  Nevada,  Branson,
Missouri and Myrtle Beach,  South  Carolina,  as well as our King Henry's Dinner
Theater in Orlando Florida, Wild Bill's Dinner Theater in Buena Park, California
and Wild  Bill's  Dinner  Theater in  Kissimmee,  Florida,  for the  substantial
majority  of our  revenue.  The  loss  of all or a  substantial  portion  of the
business  generated  at  those  venues  or  the  termination  or  impairment  of
contractual  relationships  that make some of these venues available to us would
have a material adverse effect on us.
    

                                       16
<PAGE>
   
Risks Associated with Proposed  Acquisition  Strategy.  If we are able to pursue
our expansion  plans, we intend to pursue  strategic  acquisitions  of, or joint
ventures with,  independent  production companies,  and to market our brand name
products to the established  customer bases of any acquired companies,  in order
to  increase  revenues  and  market  share.  In  addition,  we intend to acquire
additional established,  brand-name shows which we believe have the potential to
be  successful  in new  markets.  We have  planned to enter into these  types of
arrangements  on a  shared  revenue  and/or  profit  basis  and  to  make  these
acquisitions  through  limited  equity  distributions  rather than  through cash
payments or investments.  In addition, if our stock price is too low, we may not
be able or willing to use our common  stock in  acquisitions.  There may, in the
future, be attractive  acquisition candidates for which cash funding is our only
choice,  in which  case,  any  acquisitions  will likely be  contingent  upon us
acquiring additional  financing.  There can be no assurance that we will be able
to acquire financing or, even with additional financing, that we will be able to
acquire acceptable production companies or shows, nor can there be any assurance
that we will be able to enter into  beneficial  joint  ventures on  commercially
reasonable terms or in a timely manner. Furthermore, we can provide no assurance
that any acquired customer bases will be receptive to our productions or that we
will be able to successfully develop any acquired shows. To the extent we effect
an acquisition or joint venture,  there can be no assurance that we will be able
to successfully  integrate into our operations any business or productions which
we may acquire.  Any inability to do so,  particularly  in instances in which we
make significant  capital  investments,  could have a material adverse effect on
us. In addition,  there can be no  assurance  that any  acquired  business  will
increase our revenue  and/or  market share or  otherwise  improve our  financial
condition.

Competition. The leisure and entertainment market, which includes the market for
live  theatrical  productions,  is highly  competitive,  and many of On  Stage's
markets  contain a large number of competing  live  theatrical  productions.  In
resort  and urban  tourist  locations,  we  compete  for  ticket  sales with the
producers of other live  productions,  many of whom have greater  financial  and
other  resources than we do and/or feature  productions  and headline stars with
greater name recognition than those we have. In addition,  we compete with other
production  companies for the most  desirable  commercial and tourist venues and
for talent and  production  personnel.  Any  inability to secure those venues or
personnel could have a material  adverse effect on us. In addition,  one or more
of the  commercial  venues in which we currently  have,  or plan to have, a live
production show could decide to self-produce its live entertainment needs. There
can be no  assurance  that we will be able  to  secure  alternative  venues  for
displaced  productions or that those  alternative  venues could be secured under
similar or favorable terms.

Availability  of Talent  and Lack of  Long-Term  Contracts.  On  Stage's  future
success  will depend  largely  upon our ability to attract and retain  personnel
sufficiently  trained in performing  arts and theatrical  production,  including
singers, dancers, musicians, choreographers and technical personnel. We maintain
rigorous  standards  with respect to the  abilities  and level of  experience of
these personnel in order to ensure  consistency,  quality and professionalism in
our  productions.  This may make it more  difficult  for us to obtain  qualified
personnel. Moreover, that difficulty is compounded by the fact that Legends, our
flagship  production,  features  impersonators  of past  and  present  superstar
vocalists.  Because  these  headline  performers  must look,  sound and act like
specific  celebrities,  the  pool of  performers  from  which we can  choose  is
significantly reduced. In addition,  while our musicians,  singers,  dancers and
production personnel are generally employees,  our headline acts are independent
contractors  who enter into new contracts  with us for each new show or venue in
which  they  perform.  We do not  maintain  any  long-term  contracts  with  our
performers.   We  will  need  to  hire  additional   performers  and  production
technicians  as we continue to open new  productions,  as well as to  supplement
personnel  in our  existing  productions.  Our  inability  to attract and retain
needed personnel, for either new or existing productions,  could have a material
adverse effect on us.
    

                                       17
<PAGE>
   
Fluctuations in Quarterly  Operating  Results;  High  Seasonality.  On Stage has
experienced,  and expects to continue to experience,  fluctuations  in quarterly
results  of  operations.  Our live  theatrical  production  business  is  highly
seasonal.  We  expect  these  seasonal  trends  to  continue.  Additionally,  we
typically spend significant resources on new resident theatrical  productions up
to six months in advance of show  openings,  and believe  that,  as we emphasize
pre-opening market research and development as part of our expansion plans, both
the amount of pre-opening  expenditures and the lag between the time in which we
incur those expenditures and the receipt of post-opening  revenue will increase.
Accordingly,  our operating results may also vary  significantly from quarter to
quarter  or year to year due to the  opening  and  timing  of new  shows and the
fluctuations  associated  with  the  pre-opening  and  start-up  phases  of  new
productions in new and varying venues.  Consequently,  revenue as well as profit
and loss may vary  significantly  from quarter to quarter and the results in any
one period will not necessarily be indicative of results in subsequent periods.

Cyclical and Economy-Sensitive Industry; Changing Trends. The live entertainment
industry  is  cyclical,   with  consumer  spending  tending  to  decline  during
recessionary  periods  when  disposable  income is low.  Although we believe our
moderate ticket prices may enhance the appeal of our productions to consumers in
a  recessionary  environment,  there  can be no  assurance  that a poor  general
economic  climate will not have an adverse  impact on our ability to compete for
limited consumer resources.  The live entertainment  industry is also subject to
changing   consumer   demands  and  trends  and,  while  the  markets  for  live
entertainment have grown significantly over the past several years, there can be
no  assurance  that such growth will  continue or that these  trends will not be
reversed.  For instance,  the rate of growth in the casino  gaming  industry has
recently begun to decrease due to consolidation within the industry. Our success
will  depend on our  ability to  anticipate  and  respond to  changing  consumer
demands and trends and other factors affecting the live entertainment  industry,
including new artists and  musicians,  as well as general  trends  affecting the
music  industry  and its  performers.  Failure to respond to these  factors in a
timely manner could have a material adverse effect on us.

Dependence on the Casino Gaming Industry. Although On Stage has recently shifted
our primary  emphasis away from gaming  markets and towards the resort and urban
tourist markets, our success has been, and will continue to be, highly dependent
on the casino gaming industry. Consequently, a change in the laws or regulations
governing the casino gaming industry,  or a significant decline in casino gaming
in the United States, could have a material adverse effect on us.

Intellectual  Property.  On Stage's  success  depends  to a large  extent on our
ability to reproduce the performance,  likeness and voice of various celebrities
without  infringing  on the  publicity  rights  of  those  celebrities  or their
estates.  Although  we  believe  that  our  productions  do  not  violate  those
intellectual  property  rights under  applicable  state and federal laws, in the
event a claim were made against us, litigation, regardless of the outcome, could
be  expensive  and time  consuming  for us to defend.  Additionally,  if we were
determined to be infringing any  intellectual  property rights in the production
of our  performances,  we could be required to pay  damages--possibly  including
treble and/or statutory damages--costs and attorney fees, alter our productions,
obtain  licenses or cease  certain  activities,  all of which,  individually  or
collectively,  could have a material  adverse effect on us.  Furthermore,  if we
were required to obtain licenses from the celebrities we impersonate,  there can
be no assurance that we would be able to acquire those licenses on  commercially
favorable terms, if at all. In addition,  an element of our business strategy is
to expand our  merchandising  program by introducing a wider variety of clothing
items and new products,  such as compact  discs,  and audio and video tapes.  We
have filed trademark applications,  as necessary, in order to protect our rights
in the products that we sell.  There can be no assurance that we will be able to
obtain any trademarks on terms and conditions acceptable to us. Our inability to
obtain  those  rights  could have a material  adverse  effect on our  ability to
successfully implement our merchandising strategy. Additionally,  Representative
Coble  (R-NC),  Chairman of the House  Judiciary  Committee's  Sub-Committee  on
Courts and Intellectual  Property, is currently drafting legislation to create a
federal right to publicity,  which if made into law, could significantly  impair
our ability to perform our flagship Legends in Concert production.
    
                                       18
<PAGE>
   
Government Regulation. Providing entertainment to the casino gaming industry may
subject On Stage to various  licensing  regulations.  For  instance,  the Casino
Control  Commission of the State of New Jersey  requires that we obtain a Casino
Service  Industry  License to perform  our shows at our  Atlantic  City  venues.
Although we have obtained this license,  there may be other  licenses or permits
which may be required for us to perform our shows in casinos in other areas.

In addition,  under our expansion  program we plan to lease or purchase theaters
for our new Legends or other brand-name  resident  productions.  As a result, we
will be required to absorb all costs and risks  associated  with  producing  the
show in order to retain 100% of the show's profits--referred to as a "four-wall"
production.  Producing shows on this basis may require us to obtain and maintain
certain  business,  professional,  retail and local licenses and  permits--as we
were  required to obtain for the opening of our Myrtle Beach show, a "four-wall"
production. Difficulties or failure in obtaining required licenses or regulatory
approvals  could delay or prevent the opening of a new show or, alter,  delay or
hinder our expansion  plans.  In addition,  the  suspension  of, or inability to
renew,  a license  needed to operate any of our  currently  running  productions
would adversely affect our operations.

Our current casino service  industry  license from the New Jersey Casino Control
Commission  was issued on January 17, 1997 and expires on September 30, 1999. In
connection  with the  license  application,  the New Jersey  Division  of Gaming
Enforcement  conducted an investigation of On Stage to determine our suitability
for licensure.  Management believes that we are not required to obtain a license
to provide our  services to casinos in Nevada or in any other  jurisdictions  in
which we operate,  other than New Jersey.  The Nevada  Gaming  Control Board and
similar  authorities in other  jurisdictions,  however,  have broad authority to
order providers of services to casinos to file  applications,  be  investigated,
have their  suitability  determined,  obtain  licenses and cease providing their
services, if they find the service providers to be unfit. Additionally,  many of
the casinos mandate that a production company be properly licensed in accordance
with the local gaming laws before it will contract for their services.

Dependence on Key  Personnel.  On Stage's  future success will depend largely on
the efforts and abilities of our existing senior  management,  particularly  Mr.
John W. Stuart, On Stage's chairman and chief executive  officer,  and Mr. David
Hope, On Stage's president and chief operating officer. The loss of the services
of Mr.  Stuart,  Mr. Hope or other members of On Stage's  management  team could
have a  material  adverse  effect on us.  In April  1999,  our  chief  financial
officer, Kiran Sidhu, agreed to restructure his contract with us to provide that
we will utilize his services on a contract, and not a full-time, basis. Although
we currently  maintain a key-man life insurance policy on the life of Mr. Stuart
in the amount of $5,000,000,  those proceeds may not be sufficient to compensate
us for the loss of his services. In particular,  Mr. Stuart's death would result
in the loss of his creative contribution to On Stage and would give the owner of
the Imperial  Palace the right to terminate its contract with us relating to our
resident Legends  production in Las Vegas, one of our largest revenue  producing
venues.  In  addition,   while  Messrs.   Stuart  and  Hope  have  entered  into
non-competition  agreements  restricting  their ability to work for a competitor
during  the  term  of  their  employment  agreements--which  expire  on May  31,
2000--and  thereafter  for  periods of up to five and two  years,  respectively,
there  can  be no  assurance  that  those  non-competition  agreements  will  be
enforceable or that On Stage will be in a position to pay Messrs. Stuart or Hope
the contractual  amount required to effectuate their respective  non-competition
agreements.  Finally,  there can be no  assurance  that On Stage will be able to
attract  and  retain  the  additional   qualified  senior  management  personnel
necessary to manage our planned growth.

Risk of Employment Tax Liability.  Consistent with industry standards,  On Stage
has, since  inception,  treated,  and expects to continue to treat, the headline
acts of  productions  as independent  contractors  rather than as employees.  In
making the determination that we are qualified to characterize the headline acts
as  independent  contractors,  On  Stage,  in  addition  to  following  industry
precedent,   made  an  independent  review  of,  and  analyzed,  the  applicable
guidelines  issued by the Internal Revenue  Service.  There can be no assurance,
however,  that we are  qualified  to  treat  the  headline  acts as  independent
contractors.  If we have improperly  classified the headline acts as independent
contractors,  than we would be liable for the  payment of  employment  taxes for
those  periods in which the  headline  acts were  incorrectly  characterized  as
independent contractors.  If imposed, that employment tax liability would have a
material adverse effect on us.

                                       19
<PAGE>

Litigation.  On Stage is involved in certain pending and threatened  lawsuits in
which the adverse  parties are seeking  damages.  There can be no assurance that
any of the  instituted or threatened  lawsuits will be settled or decided in our
favor.  Moreover,  regardless of the outcome of those lawsuits and claims, if we
were to be engaged in protracted litigation,  the costs of that litigation could
be  substantial.  Even in  situations  where we are fully  indemnified  by third
parties,  the time and effort  expended by On Stage personnel in connection with
those matters could be significant,  leaving us with less  opportunity to pursue
our strategic goals.

Limitations  on Liability  of Directors  and  Officers.  On Stage's  Articles of
Incorporation  include provisions to eliminate,  to the full extent permitted by
Nevada General Corporation Law, the personal liability of directors for monetary
damages  arising  from a breach  of their  fiduciary  duties as  directors.  Our
Articles of  Incorporation  also include  provisions to the effect that On Stage
shall,  to the maximum extent  permitted  under Nevada law,  indemnify and, upon
request,  advance  expenses  to any  director  or officer to the extent that the
indemnification and advancement of expense is permitted under that law.

No  Dividends.  On Stage has never paid any dividends on our common stock and we
do not anticipate paying cash dividends in the foreseeable  future. Our existing
credit facilities also prohibit the payment of dividends. We currently intend to
retain all earnings for use in connection with our business. The declaration and
payment of future dividends, if any, will be at the sole discretion of our board
of directors and will depend upon our profitability,  financial condition,  cash
requirements,  future  prospects,  credit  agreements  and other factors  deemed
relevant by the board.
 
Possible  Adverse  Effects  of  Authorization  of  Preferred  Stock.  On Stage's
Articles  of  Incorporation  authorize  the  board of  directors  to issue up to
1,000,000  shares of "blank  check"  preferred  stock,  with such  designations,
rights and  preferences  as may be determined  from time to time by the board of
directors.  Accordingly,  the  board of  directors  will be  empowered,  without
stockholder  approval,  to issue  preferred  stock with  dividend,  liquidation,
conversion,  voting,  or other rights,  which could adversely  affect the voting
power of the holders of common stock and,  under  certain  circumstances,  could
make it  difficult  for a third  party to gain  control of On Stage,  prevent or
substantially delay a change in control, discourage bids for the common stock at
a premium,  or otherwise  adversely affect the market price of the common stock.
Although we have no current plans to issue any shares of preferred stock,  there
can be no assurance that the board will not decide to do so in the future.

Unaffiliated  Bankruptcy. A real estate partnership which is not affiliated with
On Stage but of which Mr.  John W.  Stuart,  our  chairman  and chief  executive
officer,  was a  partner,  Maze  Stone  Canyon  Estates  Partnership,  filed for
bankruptcy  under Chapter 11 in December  1991 in the United  States  Bankruptcy
Court, Central District of California.  The partnership's plan of reorganization
was  withdrawn  before  adoption by the  bankruptcy  court in August  1992.  The
partnership Maze Stone Canyon Estates Partnership was subsequently dissolved.

Possible  Delisting of Securities from the Nasdaq SmallCap  Market.  In order to
continue  to be listed on the Nasdaq  SmallCap  Market,  On Stage must  maintain
$2,000,000  in total  assets,  a $200,000  market  value of the public float and
$1,000,000  in total  capital and  surplus.  In  addition,  continued  inclusion
requires two market-makers and a minimum bid price of $1.00 per share; provided,
however,  that if On Stage  falls below that  minimum bid price,  we will remain
eligible for  continued  inclusion on the Nasdaq  SmallCap  Market if the market
value of the  public  float is at least  $1,000,000  and we have  $2,000,000  in
capital and surplus.  Our stock price has recently dipped below $1.00 per share.
Nasdaq has recently  proposed new  maintenance  criteria  which, if implemented,
would eliminate the foregoing exception to the minimum bid price requirement and
require,  among other  things,  $2,000,000  in net tangible  assets,  $1,000,000
market value of the public float and adherence to certain  corporate  governance
provisions.

                                       20
<PAGE>

On April 20, 1999,  On Stage  received a letter of inquiry from The Nasdaq Stock
Market, Inc. requesting that we submit a detailed letter describing our plans to
address the specific items that led to the issuance of a "going concern" opinion
from our independent  auditor,  BDO Seidman,  LLP. The letter further  requested
that we discuss  why we believe we will be able to sustain  compliance  with the
continued  listing  standards of The Nasdaq SmallCap Market.  We are required to
provide  a  responsive  answer  by June  4,  1999.  The  failure  to meet  these
maintenance  criteria in the future, and the failure to adequately assure Nasdaq
that we will be able to meet the listing  criteria in the future,  may result in
the delisting of our securities from the Nasdaq SmallCap Market. If this occurs,
the trading,  if any, in our  securities  would be  conducted in the  non-Nasdaq
over-the-counter  market. As a result of a delisting,  an investor could find it
more difficult to dispose of, or to obtain accurate  quotations as to the market
value of, our securities.

Risks Relating to Penny Stocks. In addition,  if the common stock were to become
delisted from trading on the Nasdaq SmallCap Market and the trading price of the
common stock were to remain  below $5.00 per share,  trading in the common stock
would also be subject to the  requirements of certain rules,  promulgated  under
the Exchange Act,  which require  additional  disclosure  by  broker-dealers  in
connection  with any  trades  involving  a stock  defined  as a  "penny  stock."
Generally,  "penny stock" is any  non-Nasdaq  equity  security that has a market
price of less than $5.00 per share,  subject to limited exceptions.  Those rules
require the  delivery,  prior to any penny stock  transaction,  of a  disclosure
schedule explaining the penny stock market and the risks associated with it, and
impose  various sales practice  requirements  on  broker-dealers  who sell penny
stocks  to   persons   other   than   established   customers   and   accredited
investors--generally   institutions.   For  these  types  of  transactions,  the
broker-dealer  must make a special  suitability  determination for the purchaser
and have received the purchaser's  written  consent to the transaction  prior to
sale. The additional  burdens imposed upon  broker-dealers by these requirements
may discourage  broker-dealers from effecting  transactions in the common stock,
which could  severely  limit the market  liquidity  of the common  stock and the
ability of stockholders to sell the common stock in the market.

Current Annual Report on Form 10-KSB and State Registration Required to Exercise
Warrants.  Holders of outstanding warrants to acquire On Stage common stock will
be able to  exercise  their  warrants  only if a current  Annual  Report on Form
10-KSB  under the  Securities  Act  relating to the  securities  underlying  the
warrants,  is then in effect  and those  securities  are  qualified  for sale or
exempt from qualification under the applicable  securities laws of the states in
which the various holders of warrants reside. Although we intend to use our best
efforts  to  maintain  a current  Annual  Report  on Form  10-KSB  covering  the
securities  underlying  the warrants at the earliest  practicable  date,  to the
extent required by federal  securities  laws,  there can be no assurance that we
will be able to do so. As a result of the defaults under our credit  facilities,
we are not eligible to use the "short-form" registration procedures available to
other issuers under the  Securities  Act.  Therefore,  our ability to maintain a
current  Annual  Report  on Form  10-KSB  will be  impaired  until we are  again
eligible  to use  the  "short-form"  registration  procedures,  which  we do not
anticipate  will occur prior to March 31, 2000. The value of the warrants may be
greatly  reduced  if a Annual  Report on Form  10-KSB  covering  the  securities
issuable  upon  the  exercise  of the  warrants  is not kept  current  or if the
securities are not  qualified,  or exempt from  qualification,  in the states in
which the holders of warrants  reside.  Persons  holding  warrants who reside in
jurisdictions  in which those securities are not qualified and in which there is
no exemption  will be unable to exercise their warrants and would either have to
sell their warrants in the open market or allow them to expire unexercised.

Restrictive Debt Covenants. On Stage's various loan agreements contain covenants
that, among other things,  restrict the ability of our operating subsidiaries to
dispose of assets,  incur additional  indebtedness,  pay cash dividends,  create
liens on  assets,  make  investments  or  acquisitions,  engage  in  mergers  or
consolidations,  make capital expenditures,  engage in certain transactions with
affiliates or redeem or repurchase the  indebtedness  of such  subsidiaries.  In
addition, under our loan agreements,  we are required to satisfy financial ratio
tests, including interest expense, fixed charges and total debt coverage ratios.
Our ability to satisfy  financial tests and ratios could be affected by numerous
events beyond our control,  including economic, weather and industry conditions.
The breach of any financial  covenant contained in a loan agreement could result
in the  termination  of  our  credit  facilities--and  the  acceleration  of the
maturity of all amounts outstanding thereunder--and,  by virtue of cross default
provisions,  the  acceleration  of the maturity of our other  indebtedness.  See
"Management  Discussion  and  Analysis of  Financial  Conditions  and Results of
Operations."

                                       21
<PAGE>

Prior  Losses.  For the year  ended  December  31,  1996,  we had net  income of
$900,998.  For the years ended  December 31, 1997 and December 31, 1998, and for
the  three  months  ended  March 31,  1999,  we had net  losses  of  $2,946,056,
$4,870,989 and $883,564, respectively. Moreover, increased operating expenses in
connection with our proposed expansion plans,  delays in the introduction of new
productions and factors adversely affecting our current productions could have a
material  adverse  effect on us. There can be no assurance that we will generate
net income in the future or that our future  operations will be profitable.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations,"  "Certain  Transactions"  and the  financial  statements  contained
elsewhere in this Annual Report on Form 10-KSB .

No Assurance of Continued Public Market; Possible Continued Volatility of Market
Price of Common Stock.  There can be no assurance that a regular  trading market
for the common stock will be sustained.  The market prices of our securities may
continue to be characterized by volatility and low trading volume.  Factors such
as  our  operating  results,  announcements  by us or  our  competitors  of  new
production contracts,  and various factors affecting the entertainment  industry
generally, may have a significant impact on the market price of our securities.

Risks Relating to Proposed  Expansion  Plans;  Possible  Inability to Achieve or
Manage Growth. On Stage's continued growth depends,  to a significant degree, on
our ability to produce and market new  theatrical  productions  on a  profitable
basis.  It will also be highly  dependent  on our  ability  to  restructure  our
existing  debt and obtain  additional  financing.  Our  expansion  plans include
increasing both the number of productions in operation at any given time and the
rate at which such productions  open. This expansion  strategy  contemplates the
opening of up to ten additional  resident  productions  over the next 36 months,
which  strategy,  if  successful,   will  place  significant  pressures  on  our
personnel,   as  that  growth  will  require  development  and  operation  of  a
significantly  larger business over a broader  geographical area. Because of our
current debt position and defaults,  we are reevaluating our expansion strategy.
The success of our expansion,  if we are able to pursue it, strategy will depend
upon a number of factors, including, among others:

o    our ability to restructure our debt and obtain additional financing;  
o    our ability  to hire  and  retain  additional  skilled  management,  
     marketing, technical and performing arts and theatrical  production  
     personnel;  
o    our ability to secure suitable venues for new productions on a timely 
     basis and on commercially  reasonable terms; and o our ability to 
     successfully manage our  growth  (which  will  require  us to  develop  and
     improve  upon  our operational, management and financial systems and 
     controls).

Our prospects and future growth will also be largely  dependent upon the ability
of our  Legends  productions  to achieve  significant  market  share in targeted
tourist  and  gaming  markets  and our  ability to develop  and/or  acquire  and
commercialize additional productions.  There can be no assurance that we will be
able to  achieve  our  expansion  goals or that,  if we are able to  expand  our
operations,  we will be able to  effectively  manage our growth,  anticipate and
satisfy  all of the  changing  demands  and  requirements  that this growth will
impose upon us or achieve greater operating income or  profitability.  Moreover,
in light of

     (1)  the  significant   up-front   capital   expenditures  and  pre-opening
          costs--estimated  to be  approximately  $500,000 to  $1,000,000 in the
          case of a leased  theater--associated  with the establishment of a new
          resident production,

     (2)  the  length of time  required  to  prepare  for the  opening  of a new
          resident production (typically three to six months), and

     (3)  the  significant  time required  before a new resident  production can
          achieve the market acceptance and name recognition  required for local
          ticket wholesalers and tour specialists to promote it,

the  discontinuation  of any new  production--whether  due to inadequate advance
marketing, inadequate performances, poor site selection or otherwise--would have
a material adverse effect on us. For instance,  during 1997, we discontinued our
resident  production of Legends in Daytona Beach,  Florida,  as a result of less
than optimal  ticket sales in the  start-up  phase of the show,  which caused an
aggregate estimated loss to us of at least $877,000.

                                       22
<PAGE>

Control  by  Principal  Stockholder.  John W.  Stuart,  our  chairman  and chief
executive  officer,  beneficially  owns  approximately  48.6% of the outstanding
common stock. Accordingly, Mr. Stuart, together with our other officers, is able
to control On Stage and direct our affairs, including the election of directors,
and cause an increase in our authorized  capital or the  dissolution,  merger or
sale of On Stage or substantially all of our assets.

Our  Facilities.  On Stage's  corporate  headquarters  consist of  approximately
16,000  square feet of  nondescript  office and  warehouse  space  located in an
industrial  strip mall in Las Vegas,  Nevada.  This  lease is  currently  set to
expire on August 31, 1999.  Leases of other  facilities  in Atlantic  City,  New
Jersey,  and Branson , Missouri  are  scheduled  to expire in 1999.  Although we
intend to let the leases expire on some of our  locations  that we do not intend
to continue to occupy,  we will need to retain or replace the leases for some of
this space. There can be no assurance that we will be successful in retaining or
replacing  the space we want.  The  termination  of the  lease of these  desired
facilities could have a material adverse effect on our operations.

Many of the  properties  we presently  occupy and use for our  productions  were
acquired with loans provided by Imperial Credit Commercial  Mortgage  Investment
Corporation. Imperial Credit holds mortgages covering these properties to secure
these loans.  We are currently in default under these loans and any  foreclosure
by Imperial  Credit may cause us to lose these  properties  as venues to operate
our productions.
    

                                       23
<PAGE>
ITEM 2.  Description of Property
   
On Stage's corporate headquarters consist of approximately 16,000 square feet of
nondescript  office and warehouse  space located in an industrial  strip mall in
Las Vegas, Nevada. This lease is currently set to expire on August 31, 1999. The
table provided below lists certain  information  regarding our other  facilities
that were in use during 1998.

--------------------- ------------ ------------- -----------  ----------------
                        Square      Type of         Lease        Principal
    Location           Footage     Possession     Expiration      Function
--------------------- ------------ ------------- -----------  ----------------
Atlantic City, NJ        2,000        Lease         09/99        Office
Atlantic City,NJ (1)      N/A         Lease         06/00        Residential
Branson, MO             27,500        Lease         12/99        Theater/Office
Buena Park, CA (2)      27,599        Lease         06/10        Theater
Kissimmee, FL (3)       31,350        Own           N/A          Retail
Kissimmee, FL (4)       18,221        Own           N/A          Theater
Las Vegas, NV (5)       16,000        Lease         08/99        Corporate
                                                                 Office
Las Vegas, NV (5)        4,668        Lease         08/99        Warehouse
N. Myrtle Beach, SC (6) 15,000        Lease         12/04        Theater/Office
Myrtle Beach, SC (7)    16,171        Own           N/A          Theater/Office
Orlando, FL              3,640        Lease         06/02        Warehouse
Orlando, FL (8)         10,000        Lease         10/00        Office/Bar
Orlando, FL (9)         15,500        Own           N/A          Theater
Toronto, ON              9,410        Lease         02/03        Theater
Toronto, ON                627        Lease         Month-to-
                                                     Month       Office
--------------------- -------------- ------------ ---------- -----------------

(1)  Consists of seven condominium units for use by our performers when they are
     performing in our Legends show at Bally's Park Place in Atlantic  City, New
     Jersey.  We lease  these  units from John W.  Stuart,  our chief  executive
     officer, and his wife.

(2)  On Stage's wholly-owned subsidiary, On Stage Theaters, Inc., subleases this
     property from Wild Bill's California, Inc., a wholly-owned subsidiary of On
     Stage Theaters.  Wild Bill's  California,  Inc. leases the property from an
     unrelated third party.

(3)  This property is owned by Fort Liberty, Inc., a wholly-owned  subsidiary of
     On Stage  Theaters.  On Stage  Theaters  leases  this  property  from  Fort
     Liberty, Inc. Fort Liberty,  Inc.'s ownership is subject to a lien in favor
     of Imperial Credit securing a loan in the principal amount of $2.7 million.
     The terms of this loan  provide for monthly  interest  payments of $21,938,
     plus monthly principal  amortization of $7,500,  commencing April 13, 1999.
     The loan matures March 16, 2008, at which time the projected  loan balance,
     assuming no prepayments,  of $2,676,199 million will be due and payable. We
     have no present plans for the further  development  or  improvement  of the
     property, beyond ordinary
    

                                       24
<PAGE>
   
maintenance.  The annual real property  taxes on the property are  approximately
$33,400. Depreciation with respect to the building at the property is taken at a
rate of $22,630 per year under the straight line method over a 30-year estimated
life. The occupancy of this mixed-use  retail space is  approximately  83% and a
restaurant tenant occupies  approximately 17% of the total square footage of the
property on a lease and providing for monthly  triple net rent of  approximately
$7,300. The following is a schedule of the lease expirations at the property for
each of the next 10 years, with none with terms beyond 2004:

                           Square Feet      Percent of
Year                       Expiring         Annual Rent       Total Rent

Month to
  Month  Leases
1999                       8,500             21.29            $ 100,420
2000                       4,840             14.52            $  68,520
2001                       3,750             11.26            $  53,120
2002                      11,658             37.27            $ 175,820
2003                         750              3.18            $  15,000
2004                       2,669              7.58            $  35,750
2005                       1,500              4.90            $  23,140


(4)  This property is owned by Fort Liberty, Inc., a wholly-owned  subsidiary of
     On Stage  Theaters.  On Stage  Theaters  leases  this  property  from  Fort
     Liberty,  Inc. The lease is for a term of 11 years and provides for monthly
     rent of $89,117, plus taxes and utilities.  Fort Liberty,  Inc.'s ownership
     is subject  to a lien in favor of  Imperial  Credit  securing a loan in the
     principal  amount  of $3.9  million.  The terms of this  loan  provide  for
     monthly interest payments of $31,688,  plus monthly principal  amortization
     of $10,833,  commencing April 13, 1999. The loan matures March 16, 2008, at
     which  time  the  projected  loan  balance,  assuming  no  prepayments,  of
     $3,856,620  will be due and  payable.  We have  no  present  plans  for the
     further  development  or  improvement  of  the  property,  beyond  ordinary
     maintenance.   The  annual  real   property   taxes  on  the  property  are
     approximately  $65,800.  Depreciation  with  respect to the building at the
     property  is taken at a rate of $26,568  per year under the  straight  line
     method over a 30-year estimated life.

(5)  This lease may be terminated at any time after August 31, 1999 by providing
     written notice of that intention.

(6)  This property is subleased to Eddie Miles Entertainment.

(7)  This property is owned by On Stage Theaters,  Inc. On Stage Theaters leases
     this property from On Stage Theaters Surfside Beach, Inc.
    

                                       25
<PAGE>
   
(8)  On Stage  Theaters  subleases  this property from Blazing  Pianos,  Inc., a
     wholly-owned  subsidiary of On Stage Theaters.  Blazing Pianos, Inc. leases
     the property from an unrelated third party.

(9)  This property is owned by King Henry's, Inc., a wholly-owned  subsidiary of
     On Stage  Theaters.  On Stage  Theaters  leases  this  property  from  King
     Henry's, Inc. King Henry's,  Inc.'s ownership is subject to a lien in favor
     of Imperial Credit  securing a loan in the principal  amount of $5 million.
     The terms of this loan  provide for monthly  interest  payments of $40,625,
     plus monthly principal amortization of $13,999,  commencing April 13, 1999.
     The loan matures March 16, 2008, at which time the projected  loan balance,
     assuming no prepayments,  of $4.33 million will be due and payable. We have
     no  present  plans  for  the  further  development  or  improvement  of the
     property,  beyond ordinary  maintenance.  The annual real property taxes on
     the property are  approximately  $89,850.  Depreciation with respect to the
     building at the  property is taken at a rate of $44,201  under the straight
     line method over a 30-year estimated life.

We believe  that our  existing  facilities  are  suitable  and  adequate for our
current operations and are adequately insured.

ITEM 3.  Legal Proceedings

On September 25, 1998, On Stage successfully defended a suit filed against it in
March 1997 by Benny R.  Pittman,  a shareholder  of Grand Strand  Entertainment,
Inc. This suit arose out of a dispute relating to the termination of a licensing
agreement between On Stage and Mr. Pittman and the control of On Stage's Legends
in  Concert  production  in  Surfside  Beach,  South  Carolina.  While  On Stage
prevailed on all the counts  alleged in the  complaint,  On Stage  stipulated to
allow an arbitrator to resolve  plaintiffs  claim for damages in quantum meruit.
The plaintiffs  claim for damages  quantum meruit was resolved by the arbitrator
in the  favor of the  plaintiff  for a total of  $15,400  in  consideration  for
services provided to On Stage by the plaintiff in connection with the opening of
the Legends production.  While it is our position that any claim Mr. Pittman may
have against us was fully  adjudicated by the arbitrator,  we have recently been
informed that Mr. Pittman intends to file a complaint in South Carolina  against
us alleging a claim for loss of business opportunities. However, no formal claim
has been filed against us to date.

On August 20, 1998, a complaint was filed against On Stage by the trustee of the
United States  Bankruptcy  Court for the District of Nevada,  alleging breach of
contract,  monies due and owing and turnover of the property to the estate.  The
basis of the complaint  stems from the purchase of certain  furniture by a third
party while purporting to be a representative  of On Stage. We believe we have a
valid defense for this claim based upon fraud and misrepresentation. The case is
currently in the discovery  stage of litigation  and the matter has been set for
trial on May 27, 1999.

On May 28, 1998, Silver State Property Management,  a Nevada corporation,  Roger
A. Bergmann  Enterprises,  a Nevada  corporation,  and R.E. Lyle Corp., a Nevada
corporation filed a complaint in the Second Judicial District Court of the State
of Nevada, County of Washoe,  alleging, among other things, that John W. Stuart,
acting as an agent,  chairman  of the board and chief  executive  officer  of On
Stage, breached an alleged oral agreement to purchase the Plaintiff's respective
interests  in the  Legends in  Concert  production  in Hawaii  for an  aggregate
purchase  price of $1,000,000.  The case is currently in the discovery  stage of
litigation and the matter has been set for trial on September 20, 1999.
    


                                       26
<PAGE>
   
On April 21,  1998,  On Stage filed a complaint  for  declaratory  relief in the
United States District Court for the District of Nevada, against Hemisphere Tour
and Travel,  Inc., Richard Winokur,  Media Corp. of America and Stephen Zadrick.
On Stage filed this complaint in order to obtain a declaration by the court that
the  defendants  were not entitled to  commissions  claimed by the defendants in
connection  with our  acquisition  of assets of Gedco USA,  Inc. The  defendants
counterclaimed,  alleging  breach  of  contract  and  demanding  payment  of the
disputed commission. This matter has been stayed by the court pending settlement
negotiations.

In July 1996, an impersonator of Hank Williams,  Sr. who performed for On Stage,
filed suit against On Stage in the circuit court of Taney County,  Missouri. The
plaintiff alleges that On Stage misappropriated his name, image and likeness for
commercial  purposes  by  taking  a  photograph  of him  during  a  performance,
reproducing  that  photograph  and  publishing it in an On Stage  brochure.  The
plaintiff has claimed damages in the amount of $2,000,000. During discovery, the
plaintiff agreed to settle this dispute for a nominal payment in favor of us.

Although On Stage believes that it has meritorious  defenses with respect to all
of the  foregoing  matters  which it will  vigorously  pursue,  there  can be no
assurance  that the ultimate  outcome of these or any other  actions that may be
asserted  against On Stage will be  resolved  favorably  to On Stage or that the
litigation will not have an adverse effect on us.

ITEM 4.  Submission of Matters to a Vote of Security-Holders

No  matters  were  submitted  to  a  vote  of  our  stockholders,   through  the
solicitation of proxies or otherwise, during the fourth quarter of 1998.
    




                                       27
<PAGE>

                                     PART II

ITEM 5.  Market for Common Equity and Related Stockholder Matters
   
The common stock trades on the Nasdaq  SmallCap  Market under the symbol "ONST."
The  following  table sets forth,  for the periods  indicated,  the high and low
sales prices as quoted on the Nasdaq SmallCap Market.

Period                                       High                Low

Fiscal 1998:
     First Quarter                           5.4375              3.50
     Second Quarter                          5.125               3.625
     Third Quarter                           4.75                1.75
     Fourth Quarter                          2.25                1.18

Fiscal 1997:

     Third Quarter                           5.625               4.50
     Fourth Quarter                          6.50                3.825

As of April 9, 1999 there were 85  holders  of record on the  common  stock.  On
April 12,  1999,  the closing  sale price of the common stock as reported by the
Nasdaq Stock Market was $1.19.

On Stage has never declared or paid any cash dividends on its capital stock.  On
Stage  currently  intends to retain its  earnings to finance  future  growth and
working  capital  needs  and  therefore  does  not  anticipate  paying  any cash
dividends in the foreseeable future.

ITEM 6.  Management's Discussion and Analysis or Plan of Operation

The information appearing in the section captioned "Management's  Discussion and
Analysis of Financial  Condition and Results of Operations" from the portions of
On Stage's 1998 Annual  Report to  Stockholders,  filed as Exhibit 10.18 to this
Form 10-KSB, is incorporated herein by reference.

ITEM 7.  Financial Statements and Supplementary Data

The information  appearing in the section captioned "Financial  Statements" from
the portions of On Stage's 1998 Annual Report to  Stockholders  filed as Exhibit
10.18 to this Form 10-KSB,  are incorporated  herein by reference.  See "List of
Financial Statements" beginning on page F-1.
    
ITEM  8.  Changes  in and  Disagreements  With  Accountants  on  Accounting  and
Financial Disclosure

None.


                                       28
<PAGE>
                                    PART III

ITEM 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
   
The  following  sets  forth  biographical  information  about each of On Stage's
directors  and  executive  officers who served  during 1998 or who are presently
serving in those capacities.

Name                            Age    Position

John W. Stuart...............   56     Chairman and Chief Executive Officer
David Hope...................   40     President and Chief Operating Officer
Kiranjit S. Sidhu............   34     Senior Vice President, Chief
                                       Financial Officer and Treasurer
Christopher R. Grobl.........   31     General Counsel and Secretary
James L. Nederlander.........   38     Director
Mark Tratos..................   46     Director
Mel Woods....................   47     Director
Matthew Gohd.................   43     Director

John W.  Stuart has served as the  Chairman  and Chief  Executive  Officer of On
Stage since April 1996 and also was the  President of On Stage from October 1985
through  March 1996.  He founded On Stage in 1985.  He has been  involved in the
theatrical  business  since age seven and has  produced  or appeared in over 200
theater productions and several feature films. Mr. Stuart received a Bachelor of
Arts degree in 1967 from California State University at Fullerton.

David  Hope has  served  as the  President,  Chief  Operating  Officer  and as a
director of On Stage since  joining On Stage in April 1996.  For ten years prior
to that time, Mr. Hope served in various capacities,  including most recently as
Executive  Vice President and Chief  Operating  Officer,  for ITC  Entertainment
Group ("ITC"), a major independent producer and worldwide distributor of feature
films,  television  movies and  mini-series  and a subsidiary of Polygram  N.V.,
where, as Chief Operating Officer, he was responsible for day-to-day operations,
as well as strategic and corporate  development and acquisitions.  Prior to that
time, Mr. Hope was a production manager with Hinchcliffe  Productions,  a United
Kingdom-based  producer and distributor of documentaries and motor sport events.
Mr. Hope received a degree in Management  Science in 1981 from the  Loughborough
University in England.

Kiranjit S. Sidhu has been On Stage's  Senior Vice  President,  Chief  Financial
Officer and Treasurer since joining On Stage in August 1995. Prior to joining On
Stage, Mr. Sidhu served as Chief Financial  Officer and Corporate  Secretary for
Aspen Technologies,  a computer peripheral manufacturer,  from July 1994 to July
1995.  From  January 1993 to June 1994,  Mr.  Sidhu  served as  President  and a
director for Aspen Peripherals,  a computer peripheral  reseller.  From February
1992 to June 1993,  Mr.  Sidhu  served as a financial  consultant  to ITC.  From
January 1992 to July 1993,  Mr. Sidhu served as Vice  President of Finance and a
director for Nuvo Holdings of America, a computer peripheral  manufacturer.  Mr.
Sidhu holds a Masters of  Business  Administration  from the  Wharton  School of
Business and a Bachelor of Arts in Computer Science from Brown University.
    

On April 16,  1999,  Mr.  Sidhu  agreed to  restructure  his current  employment
agreement with On Stage in an attempt to assist On Stage with our  restructuring
plan.  Pursuant to the terms of his employment  restructuring,  Mr. Sidhu and On
Stage  entered  into  a new  agreement  under  which  he  will  be an  "at-will"
consultant.

Christopher  R. Grobl has been the  General  Counsel and  Secretary  of On Stage
since  November  1994.  Mr.  Grobl  received a Bachelor of Arts in 1990 from the
University  of Illinois  and a Juris  Doctor in 1994 from the John  Marshall Law
School in Chicago, Illinois.
   
James L.  Nederlander  has been a director of On Stage since August 1996. He has
also been the  Chairman of the  Nederlander  Production  Company of  America,  a
producer of live entertainment  shows, since August 1996 and prior to such time,
commencing in 1980, he was Executive Vice President of that organization.
    



                                       29
<PAGE>
   
Mark Tratos has been a director of On Stage  since  March 1997.  Mr.  Tratos has
been the  managing  partner of the law firm Quirk & Tratos of Las Vegas,  Nevada
since 1983.  He received his Juris Doctor degree from Lewis and Clark Law School
in 1979.  Since  1982,  Mr.  Tratos has also  served as a member of the  adjunct
faculty of the University of Nevada Las Vegas, teaching a variety of subjects in
the areas of fine and performing arts and entertainment and business law.

Mel Woods has been a director  of On Stage  since July  1998.  Mr.  Woods is the
President  and Chief  Operating  Officer of Fox Family  Worldwide,  Inc.,  Saban
Entertainment's parent company since 1997.  Previously,  Mr. Woods was the Chief
Financial Officer and Senior Vice President of DIC Enterprises.

Matthew Gohd has been a director of On Stage since  September  1998. Mr. Gohd is
currently  a  Senior  Managing  director  at  Whale  Securities  Co.,  LP.,  the
underwriter for On Stage's initial public  offering.  Mr. Gohd has over 20 years
in the  securities  field  working in various  companies in  industries  such as
retail, technology, healthcare and consumer finance.

Directors Resigning During 1998 and 1999

Four directors resigned during 1998 and 1999, Kenneth Berg, Nelson Foster, Jules
Haimovitz and Mark S. Karlan.  Mr. Berg resigned on January 21, 1998, Mr. Foster
resigned on June 26, 1998, Mr.  Haimovitz  resigned on September 8, 1998 and Mr.
Karlan  resigned on April 16, 1999. Mr. Foster  resigned to create a vacancy for
current director Mel Woods and Jules Haimovitz  resigned to create a vacancy for
current  director Matt Gohd. Mr. Karlan has been the President,  Chief Executive
Officer and a director of Imperial Credit Commercial  Mortgage Investment Corp.,
a publicly  traded real estate  investment  trust,  since July 1997.  Mr. Karlan
resigned from the board  following On Stage's default in its loans from Imperial
Credit.
    

Section 16(a) Beneficial Ownership Reporting Compliance

Based  solely on our  review of the  copies of Forms 3, 4 and 5  received  by On
Stage or of written  representations from officers,  directors and other persons
required to report under  Section 16(a) of the  Securities  Exchange Act of 1934
initial or changes in  beneficial  ownership  of On  Stage's  common  stock,  we
believe that all the  reporting  persons  complied  with the  applicable  filing
requirements of Section 16(a) for 1998.

Executive Bonus Plan

   
In March 1997, On Stage implemented a three-year  executive bonus plan, which is
administered  by the  compensation  committee of the board.  Under the executive
bonus  plan,  an annual  bonus  pool of up to 5% of On Stage's  audited  pre-tax
earnings,   after  non-recurring  charges,  such  as  original  issue  discount,
compensation and interest expense charges and excluding extraordinary items, may
be established for distribution at the discretion of the board of directors,  to
our executive  officers (other than Mr. Stuart,  who is not eligible for bonuses
under the  plan) in 1999 and  2000,  provided  that On Stage  achieves  at least
minimum pre-tax  earnings as calculated  under the for the respective  preceding
fiscal year as follows:

                       Year              Minimum Pre-Tax Earnings
                      -------     -----------------------------------
                        1998                $5,000,000
                        1999                $8,700,000
 
The terms of the executive bonus plan,  including the minimum  pre-tax  earnings
requirements set forth above,  were determined by negotiations  between On Stage
and the underwriter of our initial public offering,  and should not be construed
to imply or predict  any future  earnings.  No bonuses  have been paid under the
executive bonus plan.

Compensation of Directors

Directors  currently are not paid a fee for their  services,  but are reimbursed
for all reasonable  expenses incurred in attending board meetings.  In addition,
each  non-employee  director  will  receive  options to purchase an aggregate of
    

                                       30
<PAGE>
   
10,000 shares of common stock each year that the director  serves as a director,
partially contingent upon the director's  attendance at the four scheduled board
of directors meetings during the year of grant. One-quarter of the annual option
grant will vest as of each of the grant year's scheduled  meetings.  In 1998, On
Stage  granted  each  director  10,000  stock  options at $1.50  strike price as
consideration  for the  excessive  time and  energy  the board  spent on company
issues during 1998.
    
ITEM 10.  Executive Compensation
<TABLE>
<CAPTION>                Executive Compensation

<S>                           <C>      <C>     <C>       <C>            <C>             <C>
 
                                                Annual                Long Term
                                              Compensation           Compensation
                                              ------------           ------------
                                                                     Securities
                                                      Other Annual    Underlying    All Other
Name and Principal Position   Year    Salary   Bonus  Compensation   Options/SAR   Compensation
---------------------------   ----    -------  ------ -------------  ----------    ------------

John W. Stuart.............   1998   $250,000     -       35,869(1)     75,000            -
 Chairman and Chief           1997   $259,615     -       38,321(2)        -          239,398(3)
 Executive Officer

David Hope.................   1998   $207,308     -       19,578(4)     50,000            -
 President and Chief          1997   $221,461  $37,865    19,578(5)        -              -
 Operating Officer

Kiran Sidhu................   1998   $157,385     -       14,993(6)     30,000            -
 Senior Vice President        1997   $161,596 $162,129(8) 17,215(7)     85,000            -
 Chief Finanical Officer
 and Treasurer

Gerard O' Riordan..........   1998   $106,664     -        14,424(9)       -              -
 President-On Stage Theaters  1997       -        -           -            -              -

Richard Kanfer.............   1998   $109,154     -        14,791(10)   15,165            -
 Vice President- Sales        1997   $115,769     -        10,560(11)      -              -

Gary Panter................   1998   $102,370  10,595(14)  13,627(12)   21,439            -
 Senior Vice President        1997   $101,400     -        13,909(13)   10,389            -
 Operations
</TABLE>
   
(1)  Represents $11,971 in unused vacation time accrued but not paid and $23,898
     of car and health  allowances  accrued,  of which $14,895 was paid in 1998.
     Does not  include  $149,686  of rent  accrued for the leases to On Stage of
     which $76,028 was paid in 1998.

(2)  Represents $14,423 in unused vacation time accrued but not paid and $23,898
     of car and health  allowances  paid in 1997.  Does not include  $150,686 of
     rent for the leases to On Stage paid in 1997.

(3)  Includes  $221,500 in  compensation  as a result of  forgiveness of certain
     indebtedness  owed by Mr.  Stuart to On Stage and  payment  of  $17,898  of
     unused vacation time carried forward from prior years.

(4)  Represents  $6,346 in unused vacation time accrued but not paid and $13,232
     of car and health allowances accrued, of which $9,732 was paid in 1998.
    


                                       31
<PAGE>
   
(5)  Represents  $6,346 in unused vacation time accrued but not paid and $13,232
     of car and health allowances accrued, paid in 1997.

(6)  Represents  $5,393 in unused  vacation time accrued but not paid and $9,600
     of car and health allowances accrued, of which $6,100 was paid in 1998.

(7)  Represents  $7,615 in unused  vacation time accrued but not paid and $9,600
     of car and health allowances paid in 1997.

(8)  Represents the fair market value of the issuance of 40,532 shares of common
     stock as incentive compensation pursuant to his employment agreement.

(9)  Represents $14,424 of car and health allowances paid in 1998.

(10) Represents  $4,231 in unused vacation time accrued but not paid and $10,560
     of car and health allowances accrued, of which $7,560 was paid in 1998.

(11) Represents $10,560 of car and health allowances paid in 1997.

(12) Represents  $3,238 in unused vacation time accrued but not paid and $10,389
     of car and health allowances  accrued, of which $8,639 was paid in 1998 and
     $11,050 of housing allowance payments.

(13) Represents  $3,520 in unused vacation time accrued but not paid and $10,389
     of car and health allowances, was paid in 1997.

(14) Represents $10,595 non-recurring relocation-related expenses.
    
Option  Grants.  The table  below sets forth the grants of stock  options to the
persons named in the Summary  Compensation  Table during the year ended December
31, 1998
<TABLE>
   
<CAPTION>                Option Grant in Last Fiscal Year

                                         Percent                                         Value at
                                           of                                          Assumed Annual
                                        Options/SARS                                   Rates of Stock
                                          Granted                                     Price Application
Name and Principal             Options  to Employees       Exercise  Expire  Potential      Value
Position                       Granted  in Fiscal Year      Price     Date      5%           10%
--------------------           -------- --------------     --------  ------  --------- ----------------
<S>                              <C>        <C>               <C>      <C>     <C>             <C>
John W. Stuart...............   75,000      21%             $ 4.38     6/03   $418,780    $528,449
 Chairman and Chief
 Executive Officer

David Hope...................   50,000      14%             $1.50      6/03   $95,721     $120,788
 President and Chief
 Operating Officer

Kiran Sidhu..................   30,000(2)    9%             $1.50      9/03   $57,433     $ 72,473
 Senior Vice President
 Chief Financial Officer
 and Treasurer

Gerard O' Riordan............      0(1)      0%               -          -       -             -
 President, On Stage
 Theaters

Richard Kanfer...............   15,165       4%             $1.50       9/03  $29,032     $ 36,635
 Vice President-Sales

Gary Panter..................   12,500       4%             $1.50       9/03  $23,930     $ 30,197
 Senior Vice President of
 Operations
</TABLE>
(1)  Excludes  warrants to purchase  180,000  shares of common stock  granted in
     connection with the Gedco asset  acquisition.  
(2)  Mr. Sidhu's options were subsequently cancelled.
    

                                       32
<PAGE>
Option  Exercise  and  Fiscal  Year-End  Option  Values   

The following  table  summarizes  the value of vested and unvested  in-the-money
options for the persons named in the Summary  Compensation Table at December 31,
1998.  Year-end values are based upon a price of $1.50 per share,  which was the
closing market price of a share of common stock on December 31, 1998. No options
were exercised by the named executive officers in 1998.

<TABLE>
<CAPTION>  Aggregated Option Exercise in Last Year and Year-End Option Values

   
                                                         Value of Unexercised
                        Number of Unexercised            In-the-Money Options
                     Options at December 31, 1998        at December 31, 1998
                    ----------------------------       ------------------------
                    
Name                Exercisable    Unexercisable       Exercisable    Unexercisable
--------------      -------------  -------------       ------------   -------------   
<S>                      <C>            <C>                 <C>           <C>              
John W. Stuart.....       -           75,000             $    -         $     -

David Hope.........    361,300          -                $    -         $     -

Kiran Sidhu........    139,794          -                $    -         $     -

Gerard O'Riordan...       -             -                $    -         $     -

Richard S. Kanfer..       -             -                $    -         $     -

Gary Panter........      1,563        10,937
</TABLE>
    

ITEM 11.  Security Ownership of Certain Beneficial Owners and Management
   
The following table sets forth certain  information as of April 30, 1999 (except
as otherwise noted) regarding the ownership of On Stage common stock (1) by each
person known by us to be the  beneficial  owner of more than five percent of the
outstanding  common stock, (2) by each director,  (3) by each executive  officer
named  in the  Summary  Compensation  Table  and  (4) by all  current  executive
officers and directors as a group.
    
                               Number of Shares           Percentage of
Name and Address (1)        Beneficially Owned (2)          Class(2)
----------------------      ----------------------        -------------

John W. Stuart (3)..............  3,678,755                    48.6%
David Hope (4)..................    377,300                    5.0%
Kiranjit S. Sidhu (5)...........    147,000                    1.9%
James L. Nederlander (6)........     30,000                     *
Mark Tratos (7).................     30,000                     *
Mel Woods (8)...................     20,000                     *
Matt Gohd (9)...................    367,500                    4.8%
Hanover Restaurants, Inc........    595,238                    7.9%
Imperial Credit Industries,
 Inc (10).......................    575,000                    7.6%
All executive officers and
 directors as a group
 (9 persons) (11)...............  5,820,793                   76.8%
-------------------------
*Less than one percent
   
(1)  Unless otherwise indicated,  the address for each named individual or group
     is in care of On Stage at 4625 West Nevso, Las Vegas, NV 89103.

(2)  Unless otherwise indicated, On Stage believes that all persons named in the
     table have sole voting and  investment  power with respect to all shares of
     common  stock shown as  beneficially  owned by them,  subject to  community
     property  laws  where  applicable.  In  accordance  with  the  rules of the
     Securities and Exchange Commission, a person is deemed to be the beneficial
     owner of common  stock that can be acquired by that person  within 60 days,
     upon  the  exercise  of  options  or  warrants.   Each  beneficial  owner's
     percentage  ownership is  determined  by assuming that options and warrants
     that are held by that person  (but not those held by any other  person) and
     which are  exercisable  within 60 days  have  been  exercised.  Percentages
     herein assume a base of 7,572,046 shares of common stock  outstanding as of
     April 30, 1999.
    


                                       33
<PAGE>
   
(3)  Includes:  (a) 382,790 shares of common stock  transferarable by Mr. Stuart
     to third  parties  upon the  exercise  of options  granted by him;  and (b)
     300,000  shares of common stock  issuable upon the exercise of  immediately
     exercisable warrants.

(4)  Includes  368,800  shares of common  stock  issuable  upon the  exercise of
     options or warrants.

(5)  Includes  142,500  shares of common  stock  issuable  upon the  exercise of
     options or warrants.

(6)  Includes  30,000  shares of common  stock  issuable  upon the  exercise  of
     options.  

(7)  Includes  30,000  shares of common  stock  issuable  upon the  exercise  of
     options.

(8)  Includes  20,000  shares of common  stock  issuable  upon the  exercise  of
     options.  

(9)  Includes  217,500  shares of common  stock  issuable  upon the  exercise of
     options or warrants.

(10) Includes  325,000 shares of common stock issuable upon the exercise of an a
     warrant  granted  to  Imperial  Credit   Commercial   Mortgage   Investment
     Corporation. Imperial Credit is managed by Imperial Credit Commercial Asset
     Management  Corporation,  which is a wholly  owned  subsidiary  of Imperial
     Credit Industries,  Inc. Imperial Credit Industries, Inc. also beneficially
     owns approximately 8.9% of the outstanding common stock of Imperial Credit.
     Also includes  250,000 shares of common stock issuable upon the exercise of
     a  warrant  granted  to  Imperial  Capital  Group,   LLC.  Imperial  Credit
     Industries,  Inc. has a 60% interest in Imperial  Capital  Group.  Imperial
     Credit Industries, Inc. disclaims the beneficial ownership of the shares of
     common stock held by Imperial  Capital Group.  All information  provided in
     this  footnote 10 was derived from a Schedule 13G filed by Imperial  Credit
     Industries,  Inc. with the Securities  and Exchange  Commission on April 3,
     1998.

(11) Includes  464,973  and 339,375  shares of common  stock  issuable  upon the
     exercise of options and warrants.
    


                                       34
<PAGE>
ITEM 12.  Certain Relationships and Related Transactions

Subsequent Events

DY/DX Corporation Common Stock Purchase Agreement
   
On October 2, 1998, On Stage entered into a Stock Purchase  Agreement with DY/DX
Corporation,  an Illinois  corporation,  to sell up to 500,000  shares of common
stock at an aggregate purchase price of $500,000.  As of November 4, 1998, DY/DX
Corporation  had  purchased  55,000  shares of  common  stock  pursuant  to this
agreement.

Common Stock Purchase Agreement with Whale Securities Co., L.P.

On or about January 28, 1999, On Stage entered into a Stock  Purchase  Agreement
with its underwriter  Whale  Securities Co., L.P., under which we agreed to sell
150,000  shares of our  common  stock to certain  of  Whale's  customers  for an
aggregate purchase price of $100,000.
    
Notes Payable to Principal Stockholder
   
On April 5, 1999,  On Stage  entered into an agreement  with Mr.  Stuart,  under
which On Stage agreed to accept a bridge loan from Mr. Stuart in an amount of up
to $500,000 in return for a one year promissory note bearing 12% interest,  a 5%
origination  fee and a warrant to  purchase  one share of common  stock for each
$1.00 loaned, provided that On Stage did not repay Mr. Stuart within thirty (30)
days.  As of May 3,  1999,  On Stage  had  accepted  $200,000  of the  potential
$500,000 from Mr. Stuart.

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

In March 1997,  On Stage  agreed  with the  underwriter  of our  initial  public
offering, Whale Securities Co., L.P., that we would neither loan nor advance any
sums to or on behalf of Mr. Stuart, other than those sums advanced to Mr. Stuart
from  December  31, 1996  through  August 13, 1997,  the  effective  date of our
initial public offering  without Whale's prior written  consent.  On October 23,
1997 and again on November 17, 1997,  On Stage  advanced Mr. Stuart an aggregate
of  $105,483,  for  which we  obtained  Whale's  prior  written  consent.  Whale
authorized On Stage on March 25, 1998 to advance an  additional  $150,000 to Mr.
Stuart for settlement of litigation related to his involvement in the Legends in
Concert show in Hawaii. As of June 30, 1998, On Stage had advanced Mr. Stuart an
aggregate of $136,194,  evidenced by a promissory note. The funds advanced by On
Stage accrued  interest at the rate of ten percent (10%) per annum.  The advance
to Mr.  Stuart  became  due and  payable  one year from the date of which it was
made. On July 6, 1998, Mr. Stuart paid the advance in full.

In February 1997, Mr. Stuart granted to Senna Venture Capital Holdings, Inc., an
affiliate of DYDX Legends  Group L.P.  (and a lender to On Stage),  an option to
purchase 142,292 of his shares of common stock at an exercise price of $5.00 per
share, in  consideration  for (i) DYDX waiving a technical  default under a loan
agreement  entered into  between DYDX and On Stage and (ii) DYDX's  agreement in
connection with a waiver to allow  $1,780,424 in debt  forgiveness to Mr. Stuart
in 1997.  That  option  is  exercisable  for a period  of two  years  commencing
February 9, 1998.

On Stage leases from Mr. Stuart seven  condominium  units in Atlantic  City, New
Jersey for use by On Stage's performers.  The current lease term expires on June
30,  2000.  The total lease  payment to Mr.  Stuart  from On Stage is  currently
$7,833 per month, which amount we believe approximates the fair market value for
the use of these properties.  In addition,  commencing as of January 1, 1997, On
Stage began paying directly the association dues, insurance,  taxes, maintenance
and utilities on the leases.  On Stage paid aggregate rent to Mr. Stuart for the
leases of $150,686 and  $149,686  for each of the years ended  December 31, 1997
and 1998, respectively.
    


                                       35
<PAGE>
Note Receivable from Chief Financial Officer
   
On April 13, 1998,  On Stage loaned  $63,213 to Kiran Sidhu,  On Stage's  Senior
Vice President and Chief Financial Officer,  to assist Mr. Sidhu with satisfying
personal  income taxes  incurred as a result of the issuance of 40,532 shares of
common stock in accordance  with the terms of Mr. Sidhu's  employment  agreement
with On Stage.  The note,  which recently matured on April 12, 1999, was secured
by Mr. Sidhu's 40,532 shares of common stock. Mr. Sidhu  subsequently  requested
that On Stage extend the maturity date of the note through to December 31, 1999,
due  primarily to the fact that he does not have  sufficient  funds to repay the
note, coupled with the fact that the common stock which secures the repayment of
the note is not enough to satisfy the outstanding  debt,  since the common stock
has declined in value from $5.00 per share when issued,  to approximately  $1.00
per share as of the maturity  date. On April 13, 1999, On Stage agreed to extend
the maturity date on the note to December 31, 1999.
    
   
On April 16, 1999,  Mr. Sidhu sold Mr. Stuart the 40,532 shares of common stock.
In exchange, Mr. Stuart agreed to assume Mr. Sidhu's $60,798 note in favor of On
Stage,  with recourse only to the 40,532 shares of common stock  purchased  from
Mr. Sidhu.  Mr. Sidhu executed a new promissory note in the principal  amount of
$7,472,  which  was  subsequently  forgiven  as part of Mr.  Sidhu's  employment
restructuring.

Chief Financial Officer Employment Restructuring

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

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

Additionally,  On Stage agreed to pay Mr. Sidhu $25,000  within ninety (90) days
of the  restructuring,  in  consideration  for Mr.  Sidhu's  execution  of a new
confidentiality and non-competition agreement.
    
Imperial Credit Commercial Mortgage Investment Corporation Related Transactions
   
On March 13, 1998, Imperial Credit Commercial  Mortgage  Investment  Corporation
signed  an  agreement  with  On  Stage  to fund up to  $20,000,000  of  mortgate
financing.  On the same day, On Stage used  $12,500,000  of the facility to fund
the cash portion of the  acquisition of assets of On Stage  purchased from Gedco
USA,  Inc.  and related  fees.  On June 30,  1998,  On Stage used an  additional
$1,100,000 to fund the cash portion of the purchase of a fee simple  interest in
the Legends  Theater in Surfside Beach,  South  Carolina,  and the purchase of a
leasehold  interest  in the Eddie Miles  Theater in North  Myrtle  Beach,  South
Carolina.  On October 7, 1998, On Stage used an additional  $550,000 for working
capital purposes.  The initial $12,500,000 loan and the subsequent $1,650,000 in
loans  extended by  Imperial  Credit to On Stage  under the  mortgage  financing
facility currently bear interest at the rate of 9.06% and 9.9%, respectively. In
addition,  On Stage granted  Imperial  Credit and a related  entity  warrants to
purchase an aggregate of 575,000  shares of common stock at an exercise price of
$4.44 per share. In consideration  for Imperial Credit's October 7, 1998 funding
of $550,000,  On Stage reset the strike price on 325,000 of the Imperial  Credit
warrants from $4.44 to $1.25 per share. This transaction is discussed in Item 11
entitled "Security Ownership of Certain Beneficial Owners and Management" below.
Mr. Karlan, a director of On Stage until April 20, 1999, is the President, Chief
Executive Officer and a Director of Imperial Credit.

Re-Purchase of Common Stock and Resale of Interactive Events, Inc.

On February 23, 1999,  On Stage entered into a Common Stock  Purchase  Agreement
with Richard S. Kanfer,  On Stage's former vice president of sales,  under which
the parties agreed to rescind the November 1996 acquisition by On Stage of
    

                                       36
<PAGE>
   
Interactive Events,  Inc., a Georgia corporation owned by Mr. Kanfer.  Under the
terms of the  Agreement,  On Stage  reconveyed  all of the assets of Interactive
Events,  Inc. to Mr. Kanfer, in consideration for the reconveyance by Mr. Kanfer
of 30,304  shares of On Stage's  common  stock  valued at $1.125  per  share,  a
non-plan  option to purchase  15,000 shares of common stock and incentive  stock
options to purchase 19,835 shares of common stock at a price of $5.00 per share.
In  addition,  the  parties  agreed to release one  another  from any  liability
arising out of the November 1996 acquisition of Interactive Events, Inc. and any
claim relating to Mr. Kanfer's subsequent employment with On Stage. On Stage and
Mr. Kanfer also entered into a exclusive  right of  representation  agreement in
February 1999, under which On Stage granted to Mr. Kanfer the right to represent
our Legends  production in designated areas in consideration of a portion of the
gross proceeds generated from those productions.
    
   
    
   
ITEM 13.  Exhibits, Listed and Reports on Form 8-K

(a) Exhibits

The following is a list of exhibits  filed as part of this annual report on Form
10-KSB.  Exhibits which were previously  filed are incorporated by reference and
this has been indicated by a footnote.  For exhibits  incorporated by reference,
the location of the exhibit in the previous filing is indicated parenthetically,
except in those  situations  where the exhibit  number was the same as set forth
below.
    


                                       37
<PAGE>
                                   SIGNATURES
   
In accordance with the  requirements of Section 13 or 15(d) of the Exchange Act,
the registrant caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                    ON STAGE ENTERTAINMENT, INC.
                                    (Registrant)


Dated: May 21, 1999               By:  /s/ John W. Stuart
                                        -----------------------------
                                        John W. Stuart, Chairman of the Board
                                        and Chief Executive Officer


    


                                       38
<PAGE>
In accordance  with the  requirements  of the Exchange Act, this report has been
signed below by the  following  persons on behalf of the  registrant  and in the
capacities and on the dates indicated.


      Signature                    Title                            Date
     -----------                   -------                         --------
   

/s/ John W. Stuart       Chairman and Chief Executive         May 21, 1999
---------------------    Officer and Director
John W. Stuart           (principal executive officer)


/s/ David Hope           President, Chief Operating           May 21, 1999
---------------------    Officer and Director
David Hope


/s/ Kiranjit S. Sidhu    Chief Financial Officer (principal   May 21, 1999
---------------------    financial and accounting officer)
Kiranjit S. Sidhu        and Treasurer


/s/ Mel Woods            Director                             May 21, 1999
---------------------
Mel Woods


/s/ Matthew Gohd         Director                             May 21, 1999
---------------------
Matthew Gohd


/s/ James L. Nederlander Director                             May 21, 1999
-----------------------
James L. Nederlander


/s/ Mark Tratos          Director                             May 21, 1999
----------------------
Mark Tratos
    





                                       39
<PAGE>

Exhibit
Number   Description


3.1      Articles of Incorporation of the Registrant (1)
3.2      Bylaws of the Registrant (3)
4.1      Specimen Stock Certificate Representing the Common Stock (3)
4.2      Specimen Warrant Certificate Representing the Warrants (3)
4.3      Form of Public Warrant Agreement (3)
4.4      Form of Underwriter's Warrant Agreement (3)
10.1     Employment Agreement between the Registrant and John W. Stuart (1)
10.2     Employment Agreement between the Registrant and David Hope (1)
10.3     Employment Agreement between the Registrant and Kiranjit S. Sidhu (1)
10.4     Confidentiality and Non-Competition Agreement between the Registrant
         and John W. Stuart (1)
10.5     Confidentiality and Non-Competition Agreement between the Registrant
         and David Hope (1)
10.6     Confidentiality and Non-Competition Agreement between the Registrant
         and Kiranjit S Sidhu (1)
10.7     Amended and Restated 1996 Stock Option Plan (1)
10.8     Contribution  Agreement between the Registrant and John W. Stuart (1)
10.9     Security and Pledge Agreement between the Registrant and John W.
         Stuart Relating to Contribution of LVHE shares (1)
10.10    Security and Pledge Agreement between the Registrant and John W. Stuart
         relating to LVHE Litigation Indemnity (1)
10.11    Indemnification Agreement between the Registrant, John W. Stuart  and
         Grand Strand Entertainment, Inc. (1)
10.12    Security and Pledge Agreement between the Registrant and  John W.
         Stuart relating to Grand Strand Entertainment, Inc. Litigation
         Indemnity (1)
10.13    Promissory Note to John Stuart dated March 4, 1999+
10.14    Entertainment Production Agreement between the Registrant, Imperial
         Palace, Inc. and John W. Stuart dated December, 1995 (3) (Filed in
         redacted form pursuant to Rule 406 promulgated under the Securities
         Act. Filed separately in unredacted form subject to a request for
         confidential treatment pursuant to Rule 406 under the Securities Act.)
10.15    Agreement  between the  Registrant  and Bally's Park Place,  Inc. dated
         September 1, 1994 and subsequent renewal letters (3) (Filed in redacted
         form pursuant to Rule 406  promulgated  under the Securities Act. Filed
         separately  in  unredacted  form subject to a request for  confidential
         treatment pursuant to Rule 406 under the Securities Act.)
10.16    Common Stock Purchase Agreement between Registrant and Interactive
         Events, Inc. (2) (Exhibit No. 10.18)
10.17    (a)  Show Production Agreement between the Registrant and Kurz
         Management (3) (Exhibit No. 10.19)
10.18    Portions of 1998 Annual Report to  Stockholders+
10.19    Promissory Note to John Stuart  dated April 5, 1999+ 
10.20    First Security  Bank Agreement+
10.21    Common Stock Purchase Agreement with Whale Securities dated
         December 1998+
10.22    Common Stock Purchase Agreement between On Stage Entertainment, Inc.
         and Richard S. Kanfer+
13       Management's Discussion and Analysis of Financial Condition and Results
         of Operations; Report on Audited Consolidated Financial Statements For
         the Years Ended December 31, 1997 and 1998+
21       Subsidiaries of the Registrant+
23.1     Consent of Independent Certified Public Accountants
27       Financial Data Schedule+
------------------
   
+    Previously filed.
(1)  Filed as an exhibit to the Company's Registration Statement on Form SB-2 on
     April 7, 1997 (Registration No. 333-24681).
(2)  Filed  as an  exhibit  to  Amendment  No. 1 to the  Company's  Registration
     Statement on Form SB-2 on June 3, 1997(Registration No. 333-24681)
(3)  Filed  as an  exhibit  to  Amendment  No. 3 to the  Company's  Registration
     Statement on Form SB-2 on August 6,1997 (Registration No. 333-24681)
(4)  Reports on Form 8-K
    


                                       40
<PAGE>
   
(b)  Reports on Form 8-K

We filed  reports on Form 8-K on October 6, 1998 and on November 16,  1998.  The
report filed on October 6, 1998 we reported  under Item 5 information  about our
proposed  acquisition of Country Tonight. No financial  statements were filed in
that report.

In the report filed on November 16, 1998, we filed amended financial information
under Item 7 relating to our  acquisition  of assets of Gedco USA,  Inc. and its
related  entities  with  this  Report,   we  filed  the  following   amended  or
supplemental financial statements relating to the Gedco asset acquisition:

1.   Audited Financial  Statements of business  acquired,  relating to the Gedco
     entities

2.   Pro Forma Financial  Information  (unaudited),  relating to the Gedco asset
     acquisition.  

     a)   Unaudited  Pro Forma  Balance  Sheet as of December  31, 1997
     b)   Unaudited  Pro Forma  Statement of Operations  for year ended  
          December 31, 1997 
     c)   Notes to Pro Forma Consolidated Financial Statements
    

                                       41
<PAGE>