SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(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, 1997
                                       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:                 Name of each exchange on which registered:
---------------------                 ------------------------------------------
       None                                                 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's   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 ]

The issuer's  revenues for the most recent  fiscal year ended  December 31, 1997
were $15,726,074.

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
March 20, 1998 was $14,545,745.

The number of shares of the  registrant's  common stock  outstanding as of March
20, 1998 was 7,179,718.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of Registrant's  definitive Proxy Statement relating to the 1998 Annual
Meeting of Stockholders are incorporated by reference into Part III hereof. Part
II  hereof   incorporates   information   by  reference  from  portions  of  the
Registrant's Annual Report to Stockholders for the year ended December 31, 1997.


<PAGE>


                                TABLE OF CONTENTS

                                                                            Page

PART I....................................................................

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

PART II...................................................................

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

PART III..................................................................

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


<PAGE>


                                     PART I



The most  important  factors that could  prevent the Company from  achieving its
goals--and cause the assumptions  underlying the forward-looking  statements and
the actual results of the Company to differ  materially  from those expressed in
or implied by those forward-looking statements--include, but are not limited to,
those identified in pages 9-17 of Amendment No. 5 to the Company's  Registration
Statement  on  Form  SB-2  filed  with  the   Commission   on  August  13,  1997
(Registration  No.  333-24681),  as well  as the  following:  (i) The  Company's
dependence  on its  flagship  Legends in Concert  production  and its  principal
production venues;  (ii) The ability of the Company to successfully  produce and
market new  productions  and to manage the  growth  associated  with the any new
productions;  (iii) Risks  associated with the Company's  acquisition  strategy,
including the Company's ability to successfully identify, complete and integrate
strategic  acquisitions;  (iv) The  Company's  ability  to obtain  financing  on
commercially  reasonable  terms;  (v)  The  Company's  ability  to  service  its
substantial  indebtedness;  (vi)  The  competitive  nature  of the  leisure  and
entertainment industry and the ability of the Company to continue to distinguish
its services;  (vii) Fluctuations in quarterly  operating results and the highly
seasonal nature of the Company's business;  (viii) The ability of the Company 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 its ability to protect its intellectual  property rights; (ix) The ability of
the Company to  successfully  manage the  litigation  pending  against it and to
avoid  future  litigation;  and (x) The results of  operations  which  depend on
numerous factors including,  but not limited to, the commencement and expiration
of  contracts,  the timing and amount of new business  generated by the Company,
the Company's 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.

ITEM 1.  Description of Business

General

     The Company  produces and markets live theatrical  productions and operates
live  theaters  and  dinner   theaters   worldwide.   The  Company  markets  its
productions,  directly and through ticket wholesalers,  to audiences at theaters
in resort and urban tourist locations.  The Company also markets its productions
to  commercial  clients,   which  include  casinos,   corporations,   fairs  and
expositions, theme and amusement parks, and cruise lines. The Company's flagship
Legends in Concert(R)  production  ("Legends")  is a live tribute show featuring
recreations of past and present music and motion picture  superstars through the
use  of  impersonators  and  is  the  longest  running  independently   produced
production in Las Vegas and Atlantic City. The Company currently has full-scale,
resident  Legends  productions  running  at the  Imperial  Palace in Las  Vegas,
Nevada,  Bally's Park Place in Atlantic  City, New Jersey,  Surfside  Theater in
Myrtle Beach, South Carolina, Legends Family Theater in Branson, Missouri and at
the Estrel  Residence & Congress  Hotel in Berlin,  Germany.  In  addition,  the
Company  plans to have a resident  Legends  production,  beginning in late April
1998 at the  Sheraton  Centre in  Toronto,  Canada.  The Company  also  produces
limited-run  Legends shows and  corporate  events and has performed in locations
such as the Illinois  State Fair,  MGM 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.  Also,  separate from the
Legends shows and as discussed  below,  the Company operates King Henry's Feast,
Wild Bill's Dinner  Extravaganza and Blazing Pianos(R) ("Blazing Pianos") in the
greater Orlando area as well as another Wild Bill's Dinner Extravaganza in Buena
Park, California.
<PAGE>

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 the Company's
productions, the expansion of existing and potential gaming and tourist markets,
the Company's exposure to various trends in the gaming industry, its acquisition
plans and the  benefits  the Company  anticipates  from such  acquisitions,  the
Company's business strategy including its plans to expand its sales network, its
intention to develop the convention  market and its plans regarding  merchandise
sales,  its  outstanding  litigation  matters and the defenses  available to the
Company,  the  seasonality of the Company's  business,  and liquidity as well as
information contained elsewhere in this Report where statements are preceded by,
followed by or include the words "believes,"  "expects,""anticipates" or similar
expressions.  For such statements, the Company 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  such  forward-looking  statements  and the actual  results to differ
materially from those expressed in or implied by the statements.

     In addition to Legends,  the Company has  developed  and  produced 15 other
theatrical  productions since its founding in 1985, including other tribute-type
shows, and a variety of musical reviews,  magic, ice and specialty shows. All of
the Company's  shows are designed to appeal to a broad  spectrum of attendees by
offering affordable,  quality entertainment incorporating experienced talent and
state-of-the-art  special effects and staging. By offering multiple  productions
in addition to  Legends,  the Company  seeks to run more than one show in highly
visited live  entertainment  markets,  thereby  generating  increased  operating
margins due to economies of scale  resulting from shared fixed costs and greater
market  share.  In  addition,   since  the  Company   currently  has  access  to
approximately 75 different Legends tribute acts, it can tailor each tribute show
to suit the unique  demographics of any audience and the size of any venue,  and
has been able to attract  significant  repeat business by varying  regularly the
composition of the acts in its shows.

     For the years ended December 31, 1996 and 1997,  approximately 44% and 47%,
respectively,  of the Company's net revenue was generated  from resort and urban
tourist markets;  approximately 40% and 35%, respectively,  of the Company's net
revenue was generated in gaming  markets,  predominantly  Las Vegas and Atlantic
City; and approximately 15% and 17%, respectively,  of the Company's net revenue
was  generated  primarily  from various  theme and  amusement  parks,  fairs and
expositions,  meetings  and  conventions,  and cruise  lines.  Such  percentages
reflect  the  Company's  growing  focus  on  the  establishment  of  "four-wall"
productions  (where the Company assumes the  responsibility  for the cost of the
theater,  whether leased or purchased,  and all of the costs associated with the
production and is the recipient of all of the show's potential revenues, profits
and/or losses) in resort and urban tourist  markets,  over which the Company has
greater control and, in connection with which, it has more choices  available to
it. In addition,  the profit potential,  while riskier,  is often  substantially
greater with such  "four-wall"  tourist  productions  than those associated with
shows produced by the Company for its casino gaming clients.

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

Recent Acquisition

     On December 29, 1997,  the Company  announced  the  acquisition  of certain
assets from Gedco USA, Inc. for  $14,000,000,  consisting of $11,500,000 in cash
and 595,238 shares of the Company's common stock, par value $0.01 per share (the
"Common Stock") valued at $2,500,000 (the "Gedco Acquisition").  Included in the
Gedco  Acquisition  are  substantially  all of the income  producing  assets and
associated real property of Orlando Entertains and LA Entertains,  consisting of
King Henry's Feast,  Blazing Pianos piano bar, the Fort Liberty shopping complex
that includes a Wild Bill's Dinner ExtravaganzaTheater, each of which is located
in greater Orlando, Florida and a second Wild Bill's Dinner Extravaganza Theater
located in Buena Park,  California.  The Gedco  Acquisition  closed on March 13,
1998. Gerard O'Riordan,  President of Gedco USA, Inc., has joined the Company as
President of On Stage Theaters,  Inc., a wholly-owned  subsidiary of the Company
that  manages  the  acquired  dinner  theaters  and  piano  bar as well as other
selected theaters.

     For the year ended December 31, 1997,  the acquired  assets from Gedco USA,
Inc. had unaudited revenues of $13,900,000 and earnings before interest,  taxes,
depreciation and amortization of $2,700,000.
<PAGE>


Industry Background

     Resort and Urban Tourist Markets

     In  1996,  approximately  96  million  Americans  planned  to take a family
vacation  trip  100  miles or more  away  from  home.  While  the  most  popular
destinations for these vacationers  included the top gaming sites, Las Vegas and
Atlantic  City, and the top theme park sites,  Orlando and Los Angeles,  several
emerging resort locations such as Myrtle Beach, Daytona Beach and Virginia Beach
were also included.

     Myrtle Beach, which has 99 golf courses and 11 live  entertainment  venues,
was one of the  five  most  popular  destinations  during  the  summer  of 1996,
according  to  a  survey  reported  by  the  American  Automobile   Association.
Interestingly,  Myrtle Beach enjoys this top tourists rating despite only having
25,000 hotel rooms versus Las Vegas' 105,000 rooms (with 20,750 additional rooms
to  be  completed  by  2000).   What  has  historically  been  a  warm  weather,
golf-oriented  resort, is emerging quickly as a year-round resort. The Company's
resident  Legends  production at the Surfside  Theater in Myrtle Beach opened in
March 1995, with successful results to date.

     In 1996, a record number of 39.2 million tourists visited Orlando, Florida,
which was  ranked as the top theme  park  destination  for 1996 by the  National
Tourism Association.  Orlando's hotel industry is keeping up with the demands of
the visitors  with over 85,000 hotel rooms  available in 1996, an 8% growth over
the prior 4 years. In March 1998, the Company acquired King Henry's Feast,  Wild
Bill's  Dinner  Extravaganza  and  Blazing  Pianos,  all  located in the greater
Orlando area.

     Anaheim,  California,  home of Disneyland,  hosted 37.5 million visitors 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 (i) a 750-room  Craftsman-style
hotel,  (ii) a second theme park to be named "Disney's  Californian  Adventure,"
and (iii) a 200,000 square foot entertainment, dining and retail complex joining
the two theme parks.  In March 1998,  the Company  acquired  Wild Bill's  Dinner
Extravaganza  performed  at the  Wild  Bill's  Dinner  Theater  in  Buena  Park,
California, which is in close proximity to Anaheim.

     Branson,  Missouri attracted 5.8 million visitors to 36 live theater venues
in 1995  and was The  National  Tour  Association's  number  one  domestic  tour
destination.   Live   entertainment   in   Branson,   predominantly   a  retiree
"day-tripper"  market,  is  atypical  of other  theater  districts,  with  shows
beginning  mid-morning  and continuing  throughout the day and into the evening.
The Company has presented  Legends in Branson since 1995 for limited runs,  with
successful results. Recently, based on the Company's favorable experience in the
market, the Company decided to "four-wall" in Branson,  renting the Christy Lane
Theater in August  1997 and  renaming  it the Legends  Family  Theater.  Legends
reopened in Branson at the Legends Family Theater on March 13, 1998.

      The Company  believes  that there are numerous  other  emerging  urban and
resort  tourist  markets,  both in the United States and abroad,  where the need
exists for  quality,  affordable  live  entertainment.  The Company is currently
researching the suitability of the following urban and resort tourist  locations
for the production and marketing of resident and/or limited-run Legends shows:

     North America  --     Phoenix,  Arizona;  San  Diego  and  San
                           Francisco,  California;  Orlando and Miami,  Florida;
                           Chicago,  Illinois; New Orleans,  Louisiana; New York
                           City,  New  York;  Corpus  Christi  and  South  Padre
                           Island, Texas; and Montreal and Vancouver, Canada.

     International  --     Australia, England, France, Germany, Japan, Korea,
                           Philippines,  Singapore and Spain.
<PAGE>


     Gaming Markets

     There are currently over 600 gaming venues in North America ranging in size
from single  gaming rooms to large casino  hotels.  Las Vegas,  in Clark County,
Nevada, is the largest gaming market in the United States with 79 casino hotels.
Over forty of these casino hotels have showrooms  featuring  live  entertainment
and  actively  promote  their shows as a means to  generate  traffic to increase
their  gaming  revenues.  In  addition,  every major hotel and many  tourist and
visitor centers have in-house ticket reservation services, and tour operators in
this  market  frequently  buy blocks of  tickets  to  include in package  tours.
Legends has been playing at the Imperial  Palace in Las Vegas since 1983 and the
Company has produced numerous limited  engagements and other shows in Las Vegas.
The Company is aware of at least four new casino hotel  projects in  development
in  Clark  County,   Nevada  that  will  contain  showrooms  suitable  for  live
entertainment.

     The second largest gaming market in the United States is Atlantic City, New
Jersey with 14 casino hotels. All of these casino hotels contain showrooms which
feature live entertainment and provide  complimentary  tickets to visitors in an
attempt to retain them  during the  evening  hours.  Furthermore,  since  casino
visitors  in  this  market  do not  typically  expect  to pay to  attend  a live
theatrical  production,  casino  executives  are often willing to  "guarantee" a
weekly revenue stream to a producer of live entertainment, which the casino then
offers  free of  charge  or at a  reduced  rate to its  customers.  The  Company
currently  produces  Legends at Bally's Park Place in Atlantic  City and Fiesta!
Fiesta!  at the Trump Taj Mahal,  and has produced  numerous other shows in this
market  including  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,  the Company is aware of at least
one new casino hotel  project  under  development  in Atlantic City and believes
that it will also contain a showroom for live entertainment.

     As of the Spring of 1996, 24 states  allowed casino  gambling,  an increase
from only two states in 1988.  As the number of casino  markets has grown,  both
the number of  entertainment  venues and the dollars spent on  entertainment  in
these markets have grown as well. This growth is particularly  significant since
the actual time and dollars spent  gambling in these  markets has declined.  For
example,  according to a July 1996  article in Forbes,  visitors to Las Vegas in
1995 spent 4.1 hours and $114 per day gambling, down from 5.0 hours and $120 per
day in 1989, while spending on shows,  sightseeing and other activities  tripled
over this same  period to $97 per day per  visitor.  The Company  believes  that
casinos will  increase  the  entertainment  options  offered in order to attract
visitors and that the continued  emergence of new gaming markets,  combined with
the increasing need for affordable,  non-gaming  entertainment  in such markets,
will result in multiple  opportunities for Legends and other shows.  While there
is currently a  consolidation  trend within the casino gaming  industry,  it has
not,  as of yet,  resulted  in a  reduction  in the number of casinos  currently
operating.

     Internationally,  there are numerous emerging gaming jurisdictions in which
Las  Vegas-style  casino  hotels  with live  entertainment  showrooms  are under
construction.  For  example,  the Pacific  Rim,  one of the most recent areas to
legalize  gaming,  is experiencing  new  construction in the resort locations of
Malaysia,  the  Philippines,  New Zealand and Australia.  Several  Mediterranean
islands have had legalized gaming for years. For example,  Cyprus has 18 casinos
in operation and permits are pending for an additional 30 casinos.

     The  Company  continuously  researches  the  suitability  of  existing  and
potential  gaming  markets  for  the  production  and  marketing  of new  shows,
including, in particular:

     North America  --  Reno, Nevada;  Atlantic City, New Jersey; Biloxi and
                        Tunica,  Mississippi;  Lake Charles and New Orleans,
                        Louisiana;  Prior Lake, Minnesota;  Rising Sun, Indiana;
                        and St. Louis and Kansas City, Missouri.

     International  --  Auckland,  New Zealand;  Burswood,  Darwin and
                        Melbourne,  Australia;  Sun City,  South Africa; Cyprus;
                        and Turkey.
<PAGE>


     While the Company  will  continue to market its  productions  to the casino
gaming industry,  and depend upon it for a significant  portion of its revenues,
the  Company has begun to shift its  primary  focus away from the casino  gaming
industry  and toward the resort and urban  tourist  market,  as evidenced by the
changing  composition  of the  Company's  net revenues over the last three years
(during such period its revenues from gaming  markets  decreased from 57% to 35%
of its total net revenues and its revenues from resort and urban tourist markets
increased  from  41% to 64%  of its  total  net  revenues).  This  shift  in the
Company's  primary focus began as a hedge  against the  declining  growth in the
casino gaming industry,  which has resulted from emerging  consolidation trends.
If  the  consolidation  trends  continue  in the  casino  gaming  industry,  the
Company's  exposure to such decreasing  growth may be reduced as a result of its
shift in primary focus.

     Other Commercial Client Markets

     The Company has also produced  limited-run  Legends shows (and, in the case
of Premier  Cruise  Lines,  resident  Legends  shows) in the last five years for
other types of  commercial  clients,  such as theme parks (Six Flags,  MGM Theme
Park,  Lotte  World in Korea),  cruise  ships  (Royal  Caribbean  Cruise  Lines,
Singapore  Cruise Lines),  and at major fairs (Dade County Youth Fair,  Illinois
State Fair). In addition,  in 1996 and 1997, the Company produced  approximately
80 and 185 events,  respectively,  for such diverse clients as McDonald's,  Bell
South, Home Depot, IBM, Norwest Bank, and Anheuser Busch.

Show Offerings

     The Company has developed and produced 16 different theatrical  productions
since its founding in 1985. These  productions  include  Legends,  other tribute
shows, a variety of musical reviews,  magic shows, ice skating productions,  and
specialty shows.

     Legends

     The Company's flagship  production  "Legends in Concert -- A Tribute to the
Superstars  of  Yesterday   and  Today,"  is  a  live  tribute  show   featuring
re-creations of past and present music and motion picture superstars.  Conceived
by the Company's Chairman and Chief Executive Officer,  John W. Stuart,  Legends
has run continuously at the Imperial Palace in Las Vegas since its debut in 1983
and,  since that date,  has been  performed  in over 17  countries.  The Company
believes it is the premier worldwide producer of superstar tribute shows and has
featured 175 impersonation  artists  portraying over 75 different legends in its
13-year history.  In 1996,  Legends shows were seen by approximately one million
people.  In addition to Las Vegas,  the Company  currently has resident  Legends
productions in Atlantic City,  Myrtle Beach,  Branson and Berlin.  For the years
ended December 31, 1996 and 1997,  revenues  attributable to Legends productions
(including  both resident and limited-run  engagements)  and the sale of related
Legends merchandise  accounted for approximately 98% and 88%,  respectively,  of
the Company's net revenue.

     The Company's  full-scale  Legends shows  utilize  state-of-the-art  sound,
lighting,  and  special  effects and  incorporate  numerous  backup  singers and
dancers and feature live orchestras.  Smaller-scale Legends shows, such as those
performed for corporate  events,  typically use taped orchestra  music.  Vocals,
however,  are performed live in all Legends shows;  there is no lip-synching nor
are any vocal tapes utilized during any show.  Superstars from the past, such as
Elvis Presley,  Marilyn Monroe and the Beatles,  who have maintained  their high
level of  popularity  since the time  when  they  performed,  are  selected  for
tributes.  In addition,  the Company selects present  superstars who it believes
will have similar  long-lasting  appeal,  such as Madonna,  Michael  Jackson and
Dolly  Parton.  The Legends  shows are also  versatile in that a casino,  hotel,
resort or  convention  has the  luxury of  selecting  the stars it wants to have
portrayed,  as well as the actual  composition of the show, and star lineups can
periodically  be  rotated  to  accommodate   seasonal  changes  and  the  unique
demographics of any audience.  In addition,  the size of any Legends show can be
tailored to accommodate the budget  constraints and profitability  goals of most
showrooms.
<PAGE>


     Other Productions

     In addition to Legends,  in 1994, the Company began developing a variety of
other tribute and non-tribute show offerings  incorporating the same versatility
and professionalism as the original Legends production.  Non-Legends productions
accounted  for 1.7% and 9.3% of the  Company's  net  revenue for the years ended
December 31, 1996 and 1997, respectively.  The Company's non-Legends productions
include, among others, the following:

         "The Heroes Of Rock And Roll -- A Tribute To The Musical Artists Of The
         '50s & '60s." -- a salute to the great musical rock and roll artists of
         the fifties and sixties such as Richie  Valens,  Buddy  Holly,  The Big
         Bopper,  Chuck Berry,  Jerry Lee Lewis, Sonny and Cher, The Beach Boys,
         Aretha Franklin,  and John Lennon. Heroes performed in the fall of 1995
         at the Primadonna Hotel and Casino in Stateline, Nevada.

         "Glitz -- A Tribute To The  History Of Las  Vegas." -- a musical  revue
         chronicling  the  development  of Las Vegas from Frank  Sinatra and his
         contemporaries  to the  rise of  modern  revue  shows,  which  featured
         celebrity hosts Marty Allen and Steve Rossi and Australian  singer Greg
         Bonham.  Glitz completed a five-month  engagement in the summer of 1995
         at the Sands Hotel and Casino in Las Vegas.

         "Magic,  Magic,  Magic!" -- combines master  magicians and illusionists
         with special visual  effects,  comedy,  music and dance.  Each magician
         principal,  complemented  by a troupe of singers and dancers,  performs
         several different  components of magic:  sleight-of-hand,  comedy magic
         and grand scale illusion. Magic, Magic, Magic! completed an eleven-week
         engagement  at the  Showboat  Hotel and Casino in Atlantic  City in May
         1996 and completed an eight-week engagement at Players Island Casino in
         Mesquite, Nevada in September 1996.

         "Country Stars On Ice" -- combines  performances by World Class skaters
         with  comedic  skits by skating  clowns and ensemble  skating.  Country
         Stars On Ice was  performed  at the  Coliseum  Theater in Pigeon  Forge
         during the first 10 months of 1995 and at Trump's  Castle (where it was
         renamed  "Cabaret on Ice") in Atlantic  City during the last two months
         of 1995.

         "Atlantic  City  Experience"  -- a  30-minute,  five-screen  multimedia
         history  chronicling  the founding,  development and growth of Atlantic
         City from the 1600's through the introduction of gaming.  Atlantic City
         Experience  ran through the summer of 1995 at Bally's Park Place and is
         an excellent  showcase of the  Company's  multimedia  video  production
         capability.

In addition, as a result of the Gedco Acquisition, the Company will be producing
the following non-Legends shows:

         "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 the  Company's  King  Henry's  Feast
         Castle located in Orlando, Florida.

         "Wild  Bills'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 Company's  Fort Liberty  Complex in Kissimmee,  Florida
         and the Wild Bill Dinner Theater in Buena Park, California.

         "Blazing  Pianos" -- an interactive  piano bar featuring three talented
         comedic  piano  players and  vocalists,  who  simultaneously  play song
         requests from patrons on three pianos. The shows run nightly throughout
         the year at the Company's Blazing Pianos Bar in Orlando, Florida.
<PAGE>


Show Acquisition and Development

     Most  shows in  tourist  locations  like  Myrtle  Beach are  structured  as
"four-wall"  arrangements,  the riskiest type of financial  arrangement  for the
Company.  Since the Company  believes that Legends and similar  brand-name shows
are easier to market and implement than new show concepts,  as a result of their
built-in recognition among ticket and tour wholesalers,  it generally intends to
implement its "roll-out"  strategy in new resort and urban tourist  markets only
with Legends and similar  brand-name  shows. As part of its "roll-up"  strategy,
the  Company  intends to acquire  additional  brand-name  shows with  "roll-out"
potential  through joint ventures and other  arrangements  with other production
companies.  For instance, in October 1996, the Company entered into an agreement
with Improv West,  Inc. to  co-produce a conceptual  show entitled An Evening at
the Improv(R) Spectacular.  Pursuant to the terms of the agreement, Improv West,
Inc. granted to the Company the right to use its federally  registered trademark
and brand-name "Improv(R)" and agreed to assume 50% of the show's pre-production
costs  in  return  for  co-production  billing  rights  and  50% of all  profits
generated by the show. In March 1997, the Company began performing An Evening at
the Improv(R) Spectacular for the Trump Taj Majal in Atlantic City, where it ran
from March 1997  through  July 1997.  The  Company has also  identified  certain
variety, magic, ice and interactive dinner and other theater productions,  which
it  believes,  like  Legends,  have the  quality,  versatility  and broad appeal
necessary to succeed in multiple markets.

     In addition to acquiring  brand-name  shows,  the  Company,  as part of its
"roll-up"  strategy,  will also seek to acquire  production  companies with show
concepts which it believes have the potential to develop into brand-name  shows.
By leveraging its in-house production expertise and infrastructure,  the Company
believes  it can  improve  the  quality  of  acquired  show  concepts,  and,  by
capitalizing  upon its already  established  Legends  name and  reputation,  the
Company  believes it can improve  and/or  hasten the  marketability  of new show
concepts.

     In keeping with this "roll-up"  strategy,  on November 1, 1996, the Company
purchased all of the outstanding  capital stock of Interactive  Events,  Inc., a
small  Atlanta  based  corporate  events  company,  as well as the rights to two
interactive  dinner  shows,  Frankie  and Angie Get  Married  and Wake Up Shamus
O'Reilly, in exchange for 30,304 shares of Common Stock and a non-plan option to
purchase  15,000  shares of  Common  Stock,  at a price  per share  equal to the
initial public  offering  price of the Common Stock.  Interactive  Events,  Inc.
specializes  in producing  audience  participation  theme  parties for corporate
clients,  which it anticipates  rolling out to the general public.  For example,
Frankie  and Angie Get Married is a mock New  York/Italian  wedding in which the
audience  participates  as guests of the  wedding  families,  and Wake Up Shamus
O'Reilly is a mock Irish wake with a funeral service.  In addition,  Interactive
Events,  Inc. has produced  several other audience  participation  theme parties
including  its  Las  Vegas  Spectacular,  in  which  a  casino  is  created  and
participants  are  allowed  to gamble  as if they  were in a Las  Vegas  casino.
Interactive  Events,  Inc.  has  held  these  types of  theme  parties  for such
corporate clients as the City of Las Vegas,  Hyatt Hotels  Worldwide,  Six Flags
Over Georgia, The National Football League, IBM, Xerox and Conoco.

     In  addition  to  the  above-mentioned   acquisitions,   the  Company  also
periodically  conceives new show ideas,  and if it cannot adapt an existing show
to  suit a  client's  needs,  it may  develop  a new  show  to  meet a  client's
requirements.  Depending  on  the  client's  budget,  the  Company  may  hire  a
development team and/or consultation team to augment its in-house  capabilities.
In most  instances,  the Company  self-produces  its shows,  and when  possible,
utilizes performers in the Company's  database.  Budgets are prepared as part of
the show development process, and the Company targets a 30% average gross margin
on each of its productions.

Sales and Marketing

     The Company currently markets its productions to commercial clients,  which
include casinos, corporations, fairs and expositions, theme and amusement parks,
and cruise lines, from its offices in Las Vegas, Atlantic City, Atlanta,  Myrtle
Beach and  Orlando.  However,  historically,  the Company  has not  aggressively
marketed its shows to potential  commercial  clients,  relying  instead upon its
reputation  and  word-of-mouth  to  generate  business.  Part  of the  Company's
business  strategy is to become more proactive in the  commercial  market and it
plans to expand its national sales network (primarily  through  acquisitions) in
order to target,  on a regional  basis,  new commercial  clients and effectively
service, and sell additional shows to, existing clients.
<PAGE>


     In the casino,  theme and amusement park, and cruise  markets,  the Company
markets its shows directly to entertainment  directors and senior  executives or
through agents that have established  relationships  with such individuals.  The
Company has  historically  marketed  its  productions  to fairs and  expositions
through a network of agents,  and has recently started to augment its efforts in
this segment by marketing through trade  publications,  trade shows, direct mail
and  telemarketing.  The  Company  has also  started to market  directly  to the
meeting  and  convention  market  through  direct  mail,  trade  shows and trade
advertisements  and  intends  to form  alliances  with small  independent  event
planners and collectively  market to corporate  clients.  The Company intends to
augment  its  efforts  in this  segment by  acquiring  event  planners  in urban
centers,  focusing  primarily  on events with larger  entertainment  budgets (in
excess of $10,000),  and  marketing to catering  managers in large  metropolitan
hotels.

     The Company  markets its  productions  to audiences at venues in resort and
urban tourist locations  directly through its own box offices and through ticket
wholesalers  and tour  operators.  Since  many  people  do not plan to  attend a
specific  live  performance  prior to leaving  for  vacation,  unless  they have
purchased the show as part of a packaged tour or group outing,  the Company also
relies on  focused  show  promotion  and  word-of-mouth  to  attract  additional
"walk-up"  traffic to its box office.  In  addition,  the  Company  aggressively
markets to tour  operators and ticket  wholesalers,  through  partnerships  with
entities such as Calvin  Gilmore  Productions  in Myrtle Beach,  for  additional
sales and marketing support.

     The Company generally targets mass market audiences with average prices for
its 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 principals, singers, dancers,
orchestra,  technicians,  etc.) and  facility  and  equipment  requirements  are
adjusted  so  that  each  show  will  generate   profits  based  upon  projected
attendance.  The Company  distributes,  from time to time, show coupons offering
discounts  of up to  20% on  individual  ticket  purchases,  and  offers  volume
discounts  of up to 46% to ticket and tour  wholesalers  buying  large blocks of
tickets.

Advertising and Promotion

     The  Company  provides  publicity  support and seeks  major  ongoing  media
coverage for all of its shows through its 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 the
Company's  shows both  regionally  and  nationally.  Over the last three  years,
publicity exposure for the Company included impersonator appearances at the 1996
Miss Universe Pageant, on Jay Leno's Tonight Show from Las Vegas, on VH1's Route
96, on CNN's Burden of Proof and on Wheel-of-Fortune.

     Prior to the opening of each new  "four-wall"  show produced by the Company
in the resort and urban tourist market, the Company,  as an integral part of its
"roll-out"  strategy,  intends  to  undertake  a  detailed  analysis  of  market
demographics,  available  media  and the  various  transportation  modes  to the
theater site. In addition,  the Company prepares press kits for dissemination to
the local and regional media, which include a show synopsis,  biographies of all
principals and production personnel,  an opening press release,  photographs and
support materials. A "press night" is typically held during the first week after
the  opening  of a new show and many show  principals  actively  participate  as
goodwill  ambassadors at community and charitable  events. The Company maintains
an in-house video,  photo and press clipping library and is capable of producing
promotional videos and commercials upon client request.

     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 and
Branson,  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,  and  promotional  show videos are
broadcast on in-house television systems.
<PAGE>


Show Merchandising

     The  Company  sells  Legends  merchandise  at all of its  shows in  tourist
locations and, if permitted, in client venues. Merchandise includes Legends logo
clothing,  keychains,  magnets,  pins,  canvas tote bags and coffee  mugs,  plus
specialty  merchandise featuring the Company's more popular Legends acts such as
Elvis,  the Blues Brothers and Marilyn  Monroe.  In addition,  the Company sells
autographed photographs of impersonators posing with audience members, for which
it pays nominal  royalties to featured  performers.  For the year ended December
31, 1996 and 1997, sales of merchandise accounted for approximately 3% and 5% of
the Company's net revenue, respectively.

     Part of the  Company's  business  strategy is to increase  its  merchandise
sales by introducing  new products such as compact discs,  audio and video tapes
and a wider variety of clothing items,  and by designing more effective point of
sale  displays.  In  addition,  the  Company  intends to  implement  centralized
purchasing  and  marketing  to achieve  economies  of scale,  ensure  consistent
quality of product,  and obtain sales data in a timely manner. See "Intellectual
Property."

Talent

     The Company has  featured  approximately  175  impersonators  and  numerous
variety acts (magicians, dancers, aerial acts, jugglers, clowns, sword fighters,
jesters and comedians), singers, dancers, musicians and musical directors in its
productions,  and regularly receives promotional  materials from individuals who
are eager for work. An average of 30 inquiries  are received per month,  and for
every working performer,  the Company has access to three potential  performers.
The Company  periodically  holds auditions for new impersonators,  singers,  and
dancers in Las Vegas,  Atlantic  City,  Myrtle Beach and Los Angeles,  and often
views acts in outside show environments and clubs.

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

     The  Company  believes it is the premier  producer  of  impersonator  shows
worldwide and has the ability to offer a variety of consistent  work to its acts
by  rotating  them among its  different  shows and events.  The  Company  offers
compensation  which is competitive  with market  standards and, for certain long
production  runs,  offers housing to principal  acts.  The Company's  musicians,
singers,  dancers  and  production  personnel  are  generally  employees  of the
Company,  while  headline  acts,  including  the  impersonators  utilized in the
Company's  tribute shows,  are treated as independent  contractors in accordance
with  industry  practice.  An  in-house  attorney  handles  the  negotiation  of
contracts  with  all  entertainers,  and  each  impersonator  enters  into a new
contract for each new show or venue.  The contracts  provide for the term of the
engagement,   the   compensation   to  be   paid   to  the   impersonator,   the
responsibilities   and   obligations   of  the  parties,   confidentiality   and
noncompetition provisions and other general terms.

Operations and Show Implementation

     The Company has  developed a  centralized  operation  capable of  producing
multiple  shows of varying  complexity  simultaneously.  The  Company's  team of
professionals,   including  sound,  lighting,  multimedia,  costume  and  scenic
personnel,  have many years of collective  experience in the live  entertainment
industry.  The  key  personnel  necessary  to  implement  a  show  include:  (i)
entertainers  -  principal   acts,   singers,   dancers  and   musicians;   (ii)
choreographer - assisted by a dance captain; (iii) technical director - assisted
by a lighting  designer,  a master  electrician,  and audio and video engineers;
(iv) stage manager - assisted by stage hands; (v) wardrobe  personnel;  and (vi)
production manager - directs the show and ensures that schedules and budgets are
satisfied.
<PAGE>


     New  productions  are  conceptualized  in detail before any  implementation
begins.  Renderings of sets,  scenery,  and costumes are executed,  and lighting
plots and staging layouts are generated using computer  programs such as WYSIWYG
(lighting  design),   AutoCad13  (set  and  prop  design),  LiteWrite  (lighting
programmer)  and Corel Draw.  Each new venue must be evaluated to determine  the
availability of in-house equipment, the projected cost of shipping supplementary
equipment,  and the estimated cost of  transporting  and housing  personnel.  In
1996,  the Company began to utilize  H.I.T.S.,  used by the major motion picture
studios  and  theatrical   equipment  rental  companies,   to  ensure  efficient
pre-production  technical planning and avoid unnecessary pre-opening and capital
costs.  After final  Company-wide  implementation  (expected in late 1998),  the
H.I.T.S.   system  will  contain  an  up-to-date  list  of  all  Company  assets
(equipment, sets, costumes), historical cost, availability, and current location
of each asset, how often each asset has been used and serviced,  and the asset's
estimated  life  expectancy.  Timely access to this  information  will allow the
Company  to  identify  props or  costumes  that need to be built and  additional
lighting  or sound  equipment  that  needs to be  purchased  or rented  prior to
opening a new show.  In addition,  in order to manage the  logistics of multiple
shows in  multiple  markets,  the  Company  intends  to  install a  Company-wide
computer  network  whereby all sales  offices and  production  venues would have
access to a central database containing real-time show scheduling, inventory and
revenue information.

Competition

     The leisure and  entertainment  market,  which includes the market for live
theatrical productions,  is highly competitive and many of the Company's markets
contain a large number of competing live theatrical productions.  In resorts and
urban tourists locations,  the Company competes for ticket sales with other live
productions  and headline stars,  many of whom have better name  recognition and
greater  financial  and other  resources  than the Company.  The pricing for the
Company's productions is based upon local market conditions, including the level
of competition, and is typically neither the lowest nor the highest in any given
market.

     The  live  theatrical  entertainment  industry  is  highly  fragmented  and
contains  many  small,  independent  production  companies  and  numerous  large
production  companies.  The Company competes with these production companies for
the most desirable  commercial and tourist venues, and for talent and production
personnel.  Major  production  companies in the Company's  markets  include Feld
Entertainment   Productions,   Blair  Farrington  Productions  and  Dick  Foster
Productions in Las Vegas,  Calvin  Gilmore  Productions in Myrtle Beach and Greg
Thompson   Productions  in  Seattle.  In  addition  to  competition  from  major
production  companies  who produce  other forms of live  theatrical  shows,  the
Company also  competes  directly  against a large number of smaller  independent
producers who sometimes  produce tribute or  impersonator  shows.  However,  the
Company believes 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 real  competition  to the Company.  Spring Time
Productions currently produces its American Superstars impersonator shows at the
Stratosphere  Hotel and Casino in Las Vegas,  at the  Flamingo  Hilton Hotel and
Casino in Reno, Nevada and at the Grand Casinos in Gulfport, Mississippi.

     In Orlando, Florida and Buena Park, California,  where the Company operates
dinner  theaters,  other major competing  dinner theater shows include  Medieval
Times,  Arabian  Nights,  and  Wizards.  The  dinner  theater  market  is highly
competitive  and the Company  finds  itself  competing  with other forms of live
entertainment in addition to the dinner theaters, primarily theme parks.

Intellectual Property

     On October 7, 1986,  the name  "Legends in  Concert"  was  registered  as a
federal  service  mark by Mr.  Stuart in the United  States.  In late 1986,  Mr.
Stuart granted to the Company the  non-exclusive  right to produce and otherwise
use the Legends  service mark for all of its  productions  within and outside of
the United States.  Subsequent to his grant of such right, Mr. Stuart formed Las
Vegas/Hawaii Entertainment, Inc., a Nevada subchapter S corporation ("LVHE") and
granted LVHE or any successor  entity the right to use the Legends  service mark
in the state of Hawaii.  In August,  1994, Mr. Stuart and LVHE granted  R.B.L.S,
Ltd.  ("R.B.L.S."),  a Nevada limited liability company in which LVHE owns a 40%
membership  interest,  the exclusive right to produce Legends (including the use
of the  Legends  service  mark) in the state of  Hawaii,  contingent  upon their
continuous  operation of the Legends show in Hawaii.  On December 11, 1996,  Mr.
Stuart  assigned  all of his rights to the  Legends  concept  and his  federally
registered  rights in  Legends,  including  the  Legends  service  mark,  to the
Company,  subject to R.B.L.S.'s exclusive rights to the use thereof in Hawaii as
described above.
<PAGE>


     The  Legends  service  mark was also  registered  in the United  Kingdom in
November 1996 and applications for its registration in Canada, Japan, Mexico and
with  the  European  Economic  Community  are  currently  pending.  The  Company
anticipates  filing  applications  for protection of its Legends service mark in
France and several  other  foreign  countries,  as need be. The  Legends  United
States service mark registration expires in the year 2006 and its United Kingdom
service mark registration expires in the year 2005.

     The United States  Copyright Law specifies that  copyrighted  musical works
cannot be performed  publicly without  obtaining the permission of the copyright
owner.  Permission can be obtained from either the copyright owner directly,  or
from another  person or entity  entitled to license said right on the  copyright
owner's behalf. Currently, the two primary entities that are entitled to license
copyrighted  musical works are Broadcast  Music,  Inc.  ("BMI") and the American
Society of Composers,  Authors and Publishers  ("ASCAP").  The Company  believes
that  it  either  owns or has  appropriately  licensed  all of the  intellectual
property  rights  required  to perform its shows in the manner in which they are
currently produced, including, but not limited to, the right to publicly present
and otherwise perform all non-dramatic copyrighted musical compositions pursuant
to BMI and ASCAP licenses.  The Company  believes that Legends does not infringe
any intellectual property rights of any third parties, including the celebrities
portrayed in the show.

     In  connection  with its  merchandising  strategy,  the  Company  filed two
Legends  trademark  applications  in the United  States and  anticipates  filing
trademark applications in certain foreign countries,  as necessary, to cover the
various  goods  to  be  sold  by  the  Company.  As  the  Company  develops  its
merchandising  program,  the Company also  intends to conduct the due  diligence
reasonably  necessary  to ensure  that its  merchandise  does not  infringe  the
intellectual  property  rights,  including  the publicity  rights,  of any third
parties,  including the  celebrities  portrayed in its shows.  In the event that
such due diligence  indicates that the unlicensed sale of any merchandise  would
infringe  the  rights of any third  party,  the  Company  intends  to obtain the
necessary licenses prior to selling the merchandise in question.

     In addition to the above, the Company has filed trademark  applications for
various show concepts  (Legends of the Rat Pack,  Atlantic City Experience,  Las
Vegas Experience and Camouflage Aux Folles) and names (Legends  Casino,  Legends
Hotel,  and  Legends in Concert  Hotel & Casino).  All of the  applications  are
currently pending.

     The Company  typically  requires its  independent  contractors,  employees,
consultants and advisors to execute  appropriate  confidentiality  agreements in
connection with their employment,  consulting or advisory  relationship with the
Company.

Government Regulation

     The Company  currently has full-scale  Legends  productions in two casinos:
Bally's  Park Place in Atlantic  City and the Imperial  Palace in Las Vegas.  In
addition, the Company currently has its Fiesta! Fiesta!  production at the Trump
Taj Mahal in Atlantic City, New Jersey. The Company is currently researching the
suitability  of existing and potential  casino gaming markets for the production
and  marketing  of new  shows.  Providing  entertainment  to the  casino  gaming
industry may subject the Company to various licensing  regulations.  The Company
is  regulated  and  required to obtain a casino  industry  license  from the New
Jersey Casino Control Commission  pursuant to the New Jersey Casino Control Act.
The Company's 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 the Company to determine its
suitability for licensure.  Management believes that the Company is not required
to obtain a license to provide its services to casinos in Nevada or in any other
jurisdictions  in which it operates,  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. In
addition,  pursuant to the  Company's  expansion  program,  the Company plans to
lease or purchase some, if not all, of the theaters for its new Legends or other
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 the
Company to obtain and  maintain  certain  local  licenses  and  permits  (as the
Company  was  required to obtain for the  opening of its Myrtle  Beach  show,  a
"four-wall" production).  Such licenses and permits could include, among others,
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 the Company's  expansion plans. In addition,  the suspension of,
or  inability  to  renew,  a  license  needed to  operate  any of the  Company's
currently  running  productions  would  adversely  affect the  operations of the
Company.
<PAGE>


Employees

     As of March 16, 1998, the Company employed  approximately (i) 269 full-time
employees, including 47 singer/dancers,  20 musicians, 53 operational personnel,
27 administrative  personnel,  42 marketing personnel,  74 box office/concession
personnel and its 6 executive  officers;  and (ii) 277 part-time  employees.  In
addition,  the Company retains impersonators and certain other principal acts on
an  independent  contractor  basis as needed  for its  productions.  None of the
Company's  current employees are covered by a collective  bargaining  agreement.
The Company believes that its relationship with its employees is good.

ITEM 2.  Description of Property

     The Company's corporate headquarters consist of approximately 16,000 square
feet of office and warehouse space located in Las Vegas,  Nevada. The lease will
expire in February  1999.  The table  provided  below lists certain  information
regarding the Company's other facilities.
<TABLE>

                                  Square            Type of
          Location                Footage         Possession               Lease Expiration       Principal Function
----------------------------- ---------------- ------------------ ----- ------------------------ ----------------------
<S>                           <C>              <C>                      <C>                      <C>
       Las Vegas, NV               5,376             Lease                       07/98                 Warehouse
                                   4,669             Lease                       11/98                 Warehouse

     Atlantic City, NJ             2,000             Lease                       09/99                  Office
                                    (1)              Lease                       06/98                Residential

      Myrtle Beach, SC            16,171             Lease                       12/04              Theater/Office

     Daytona Beach, FL            30,000             Lease                       11/98                  Theater

        Branson, MO               27,500             Lease                       12/98              Theater/Office

      Toronto, Ontario             9,410             Lease                       02/03                  Theater
                                    627              Lease                  Month-to-Month              Office

        Atlanta, GA                6,000             Lease                       10/98             Office/Warehouse

       Buena Park, CA             27,599             Lease        (2)            06/10                  Theater

        Orlando, FL               10,000             Lease        (3)            10/00                Office/Bar

        Orlando, FL                3,640             Lease                       06/02                 Warehouse

       Kissimmee, FL              31,350              Own         (4)             N/A                   Retail
                                  18,221              Own         (5)             N/A                   Theater

        Orlando, FL               15,500              Own         (6)             N/A                   Theater
<FN>
(1)  Consists of seven  condominium  units for use by the  Company's  performers
     when they are  performing  in the  Company's  Legends  show at Bally's Park
     Place in Atlantic  City,  New Jersey.  The Company  leases these units from
     John W. Stuart, the Chief Executive Officer of the Company, and his wife.

(2)  The Company's wholly-owned  subsidiary,  On Stage Theaters, Inc. ("On Stage
     Theaters"),  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)  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.

(4)  This property is owned by Fort Liberty, Inc., a wholly-owned  subsidiary of
     On Stage Theaters.

(5)  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.

(6)  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.
</FN>
</TABLE>

The Company believes that its existing  facilities are suitable and adequate for
its current operations.
<PAGE>


ITEM 3.  Legal Proceedings

     In May 1996, a former performer in the Company's Legends  production aboard
a vessel  owned and  operated  by Premier  Cruise  Lines  filed a lawsuit in the
Circuit  Court of the  Seventeenth  Judicial  Circuit  of the  State of  Florida
against the Company  alleging  bodily injury,  pain and  suffering,  disability,
disfigurement,  mental  anguish and pain,  loss of earnings,  loss of ability to
earn money,  and  reimbursement  for medical expenses and treatment and care for
any amount in excess of $15,000 as a result of an injury  suffered in the course
of his performance. The case was dismissed for improper venue and was refiled by
the  plaintiffs in the Circuit Court of the Thirteenth  Judicial  Circuit of the
State of Florida. The Company has filed an answer to the plaintiff's  complaint.
The matter is currently in the discovery stage of litigation.

     In July 1996, an impersonator  of Hank Williams,  Sr. who performed for the
Company,  filed suit against the Company in the Circuit  Court of Taney  County,
Missouri.  The plaintiff  asserts that during one of his  performances  with the
Company,  a  photograph  was taken of him by the  Company  while in costume  and
surrounded by dancers and that the picture has been  reproduced and published in
a Company scrapbook along with other photographs of the Company's impersonators.
The  plaintiff  alleges  that the Company  misappropriated  his name,  image and
likeness for  commercial  purposes by publishing and selling the booklets and is
claiming  damages in the amount of  $2,000,000.  The Company  believes  that the
plaintiff's  claim is without merit since the Company  utilized the  plaintiff's
photograph  in its booklets  for ten years with the  plaintiff's  knowledge  and
without  objection.  The Company intends to defend this action by asserting that
the appropriation was de minimis in that the picture is only  approximately 2" x
4" in size, contains two of the Company's showgirls, identifies the plaintiff as
an impersonator of Hank Williams,  Sr. and is only one of approximately 50 other
photographs  contained in the brochure.  The Company has filed its answer to the
plaintiff's  complaint.  The  matter  is  currently  in the  discovery  stage of
litigation.

     In March  1997,  a complaint  was filed by a  shareholder  of Grand  Strand
Entertainment,  Inc. ("Grand Strand"), a South Carolina corporation in which Mr.
Stuart is a majority  shareholder,  against the  Company,  John Stuart and Grand
Strand,  alleging  misappropriation  of  corporate  opportunity  and  breach  of
contract.  Grand Strand, which was formed solely for the purpose of establishing
a Legends production in Myrtle Beach,  South Carolina,  was granted a license by
the Company to use the "Legends in Concert"  trademark in  connection  with such
production.  The license was  contingent  upon Grand Strand  raising  sufficient
capital to fund  pre-production  costs associated with  establishing the Legends
production  which was scheduled to take place at the Surfside  Theater in Myrtle
Beach.  However,  since the  contingency  was not met in a timely manner and the
Company was responsible for the lease of the property, the Company rescinded the
license and funded and operated the  production on its own. The plaintiff  seeks
for (i) a receiver to manage the Legends show produced by Grand Strand;  (ii) an
accounting  of all assets and profits of Grand  Strand;  (iii) the Company to be
prevented  from  diverting  profits to itself or from  diminishing  the value of
Grand Strand's property or other contractual  rights; (iv) the Company to pay to
Grand Strand all sums found to be due from an  accounting of the profits and the
losses of Grand Strand caused by the Company's  actions;  and (v) actual damages
for loss of earnings.  The Company filed an answer to the plaintiff's complaint,
as well as a motion to stay and a motion to compel arbitration. On June 2, 1997,
the Court of Common Pleas for Horry County, South Carolina granted such motions.
The  Plaintiff  subsequently  made a demand for  arbitration  with the  American
Arbitration Association, which determined that the administration of this matter
be conducted by its Regional  Office in Los Angeles.  While the Company has been
notified that the American  Arbitration  Administration has transferred its file
to the Los Angeles office,  no further action has been taken. Mr. Stuart, at the
request of the Underwriter,  has entered into an Indemnification  Agreement with
the Company and Grand Strand dated  February 27, 1997,  whereby Mr. Stuart shall
indemnify  the Company  against any  liability  for any  judgments or settlement
payments,  expenses and or legal fees in connection with any proceeding relating
to the grant of the license to Grand Strand.  Mr. Stuart has also entered into a
Security and Pledge  Agreement  with the Company dated February 27, 1997 whereby
he has pledged and granted a security  interest to the Company in 400,000 of his
shares of Common  Stock to secure his  obligations  and  performances  under the
Indemnification Agreement.

     Although the Company 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 such actions will be resolved  favorably
to the Company or that such  litigation  will not have an adverse  effect on the
Company's liquidity, financial condition and results of operation.

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

     There were no matters  submitted to a vote of security  holders  during the
year ended December 31, 1997.
<PAGE>

                                     PART II


ITEM 5.  Market for Common Equity and Related Stockholder Matters

     The Common Stock trades on the SmallCap  Market segment of the Nasdaq Stock
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 Stock Market.


Period                                                  High     Low
------------                                            ----------------

Fiscal 1997:
     Third Quarter (beginning on August 14, 1997) ..   $5 5/8   $4 1/2
     Fourth Quarter ................................    6 1/2    3 13/16

     As of March 20,  1998 there were 68 holders of record of the Common  Stock.
On March 20, 1998, the closing sale price of the Common Stock as reported by the
Nasdaq Stock Market was $4 5/8.

     The Company has never  declared or paid any cash  dividends  on its capital
stock.  The Company  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.

     In  accordance  with  Item  701(f)  of  Regulation  S-B,  the  Company  has
disclosed, in its quarterly report on Form 10-QSB for the period ended September
30, 1997, the full application of the offering  proceeds  received in connection
with the initial public offering of its Common Stock and redeemable warrants.

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
o f the Company's 1997 Annual Report to Stockholders filed as Exhibit 13 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 the Company's 1997 Annual Report to  Stockholders  filed as
Exhibit 13 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.



<PAGE>

                                    PART III

ITEM 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act

     Information with respect to this Item will be contained in the Registrant's
Proxy  Statement  for the  1998  Annual  Meeting  of  Stockholders  (the  "Proxy
Statement"), which is hereby incorporated herein by reference.

ITEM 10.  Executive Compensation

     Information  with  respect  to this  Item  will be  contained  in the Proxy
Statement, which is hereby incorporated herein by reference.

ITEM 11.  Security Ownership of Certain Beneficial Owners and Management

     Information  with  respect  to this  Item  will be  contained  in the Proxy
Statement, which is hereby incorporated herein by reference.

ITEM 12.  Certain Relationships and Related Transactions

     Information  with  respect  to this  Item  will be  contained  in the Proxy
Statement, which is hereby incorporated herein by reference.

ITEM 13.  Exhibits & 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.  Where so indicated by footnote,  exhibits which were previously
filed are incorporated by reference. For exhibits incorporated by reference, the
location  of the exhibit in the  previous  filing is  indicated  parenthetically
except  for in those  situations  where the  exhibit  number was the same as set
forth below.



<PAGE>


<TABLE>

   Exhibit
   Number                                    Description
   -------                                   ------------
   <S>               <C>
     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            Lease between the Registrant and Great American Entertainment Company (2)
    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)
               (b)   First Addendum to Show Production Agreement between the Registrant and Kurz Management+
               (c)   Second Addendum to Show Production Agreement between the Registrant and Kurz
                     Management+
               (d)   Third Addendum to Show Production Agreement between the Registrant and Kurz Management+
    10.18            Lease between the Registrant and Burgoyne Properties, Limited (3) (Exhibit No. 10.20)
    13               Portions of 1997 Annual Report to Stockholders+
    21               Subsidiaries of the Registrant+
    27               Financial Data Schedule+

<FN>
+    Filed herewith.

(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).

</FN>
</TABLE>
   (b)   Reports on Form 8-K
             The company did not file any reports on Form 8-K during the quarter
             ended December 31, 1997.

<PAGE>





ON STAGE ENTERTAINMENT, INC.

List of Financial Statements



The  following  financial  statements  of  On  Stage  Entertainment,  Inc.  (the
"Company")  and  the  report  of the  Company's  independent  auditors  thereon,
included  in the  1997  Annual  Report  to  Stockholders,  are  incorporated  by
reference in Item 7:


Report to BDO Seidman LLP, Independent Auditors

Balance Sheets at December 31, 1997 and 1996

Statements of Operations for the years ended December 31, 1997 and 1996

Statements of  Stockholder's  Equity  (Deficit) for the years ended December 31,
1997 and 1996

Statements of Cash Flows for the years ended December 31, 1997 and 1996

Notes to Financial Statements



<PAGE>



                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                    ON STAGE ENTERTAINMENT, INC.
                                    (Registrant)


Dated: March 30, 1998           By: /s/ John W. Stuart
                                    --------------------------------------------
                                    John W. Stuart, Chairman of the Board and
                                    Chief Executive Officer


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
      Signature                                       Title                                     Date
---------------------------------------------------------------------------------------------------------
<S>                                  <C>                                                  <C>

/s/ John W. Stuart                   Chairman and Chief Executive Officer and              March 30, 1998
---------------------------          Director (principal executive officer)
John W. Stuart

/s/ David Hope                       President, Chief Operating Officer and                March 30, 1998
---------------------------          Director
David Hope

/s/ Kiranjit S. Sidhu                Chief Financial Officer (principal financial          March 30, 1998
---------------------------          and accounting officer) and Treasurer
Kiranjit S. Sidhu

/s/ Neil H. Foster                   Executive Vice President, Chief Operating             March 30, 1998
---------------------------          Officer and Director
Neil H. Foster

/s/ Mark S. Karlan                   Director                                              March 30, 1998
---------------------------
Mark S. Karlan

/s/ Jules Haimovitz                  Director                                              March 30, 1998
---------------------------
Jules Haimovitz

/s/ James L. Nederlander             Director                                              March 30, 1998
---------------------------
James L. Nederlander

/s/ Mark Tratos                      Director                                              March 30, 1998
---------------------------
Mark Tratos
</TABLE>
<PAGE>



<TABLE>


                                 EXHIBIT INDEX

   Exhibit
   Number                                    Description
   -------                                   ------------
   <S>               <C>

    10.17      (b)   First Addendum to Show Production Agreement between the Registrant and Kurz Management+
               (c)   Second Addendum to Show Production Agreement between the Registrant and Kurz
                     Management+
               (d)   Third Addendum to Show Production Agreement between the Registrant and Kurz Management+
    13               Portions of 1997 Annual Report to Stockholders+
    21               Subsidiaries of the Registrant+
    27               Financial Data Schedule+

</TABLE>