U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 1998
[ ] Transition report under Section 13 or 15 (d) of the Exchange Act
For the Transition period from ________ to __________
Commission file number 0-92402
ON STAGE ENTERTAINMENT, INC.
-----------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
NEVADA 88-0214292
- --------------------------------- -------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
4625 W. NEVSO DRIVE, LAS VEGAS, NEVADA 89103
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (ZIP CODE)
(702) 253-1333
----------------------------------------------
Issuer's Telephone Number, Including Area Code
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
Class Outstanding at November 2, 1998
- ----------------------------- -------------------------------
Common Stock, $0.01 par value 7,452,350
<PAGE>
ON STAGE ENTERTAINMENT, INC. and SUBSIDIARIES
TABLE OF CONTENTS
PAGE NO.
Part I. Financial Information
Item 1. Consolidated Financial Statements
Balance Sheets....................................
Statements of Operations..........................
Statements of Cash Flows..........................
Notes to Financial Statements.....................
Item 2. Management's Discussion and Analysis
Of Financial Condition and Results of Operations..
Part II. Other Information
Item 1. Legal Proceedings....................................
Item 2. Changes in Securities................................
Item 3. Defaults Upon Senior Securities......................
Item 4. Submission of Matters to a Vote of Security Holders..
Item 5. Other Information....................................
Item 6. Exhibits and Reports on Form 8-K.....................
Signatures...........................................................
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
On Stage Entertainment, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
December 31, September 30,
1997 1998
-----------------------------
(Unaudited)
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents .................................................. $ 2,323,559 $ 783,370
Accounts receivable ....................................................... 455,340 1,194,241
Inventory .................................................................. 118,700 227,731
Deposits ................................................................. 342,096 455,248
Prepaid and other assets ................................................. 271,338 458,686
Pre-opening costs, net .................................................. -- 1,071,557
Notes receivable from officers, net 136,194 53,612
------------ -------------
Total current assets .............................................. 3,647,227 4,244,445
------------ -------------
Property, equipment and leasehold improvements (Note 5) .................... 5,008,835 24,152,219
Less: Accumulated depreciation and amortization ............................ (2,553,347) (3,256,717)
------------ -------------
Property, equipment and leasehold improvements, net ......................... 2,455,488 20,895,502
------------ -------------
Cost in excess of net assets acquired, net of accumulated
amortization of $7,370 and $18,083 ...................................... 116,415 105,703
Direct acquisition costs .................................................... 258,133 235,474
Deferred financing costs, net of amortization of $49,121 (Note 5) ........... - - 1,346,049
------------ -------------
$ 6,477,263 $ 26,827,173
============ =============
Liabilities and Stockholders Equity
Current Liabilities
Accounts payable and accrued expenses .................................... $ 880,286 2,058,374
Accrued payroll and other liabilities .................................... 698,499 1,638,662
Current maturities of long-term debt ..................................... 271,918 1,434,440
------------ -------------
Total current liabilities ........................................ 1,850,703 5,131,476
------------ -------------
Long-term debt, less current maturities (Note 5) ............................ 550,332 14,569,999
------------ -------------
Total liabilities ................................................... 2,401,035 19,701,475
------------ -------------
Stockholder's equity
Preferred Stock, par value $1 per share, 1,000,000 shares authorized; none
issued and outstanding .................................................. -- --
Common Stock, par value $0.01 per share; authorized 25,000,000
shares; 6,595,500 and 7,597,350 shares issued and outstanding ... 65,955 73,973
Additional paid-in capital ............................................. 7,340,013 11,200,307
Accumulated deficit .................................................... (3,329,740) (4,148,582)
------------ -------------
Total stockholder's equity .......................................... 4,076,228 7,125,698
------------ -------------
$ 6,477,263 $ 26,827,173
============ =============
</TABLE>
<PAGE>
On Stage Entertainment, Inc. and Subsidiaries
Consolidated Statements of Operations
Three months ended
September 30,
1997 1998
- --------------------------------------------------------------------------------
(Unaudited) (Unaudited)
Net revenues ...................................... $ 5,070,727 $ 8,059,669
Cost of revenues .................................. 3,470,812 6,051,417
----------- -----------
Gross profit ...................................... 1,599,915 2,008,252
Selling , general and administrative .............. 1,375,325 1,271,355
Depreciation and amortization ..................... 282,707 690,557
----------- -----------
Operating income loss ............................ (58,117) 46,340
Interest expense, net ............................. 681,084 314,693
Other income ...................................... -- (1,383)
Net loss before income taxes ...................... (739,201) (266,970)
Income taxes ...................................... 3,644 10,058
----------- -----------
Net loss .......................................... $ (742,845) $ (277,028)
=========== ===========
Basic loss per share .............................. $ (0.13) $ (0.04)
Diluted net loss per share ........................ (0.13) (0.04)
Basic average number of common shares outstanding . $ 5,675,235 $ 7,397,350
=========== ===========
Diluted average number of common shares outstanding $ 5,675,235 $ 7,397,350
=========== ===========
<PAGE>
On Stage Entertainment, Inc. and Subsidiaries
Consolidated Statements of Operations
<TABLE>
Nine months ended
September 30,
1997 1998
- ----------------------------------------------------------------------------- ------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C>
Net revenues ................................................................ $ 11,769,189 $ 22,509,621
Cost of revenues ............................................................ 7,943,564 16,973,103
------------ ------------
Gross profit ................................................................ 3,825,625 5,536,518
Selling , general and administrative ........................................ 3,322,328 4,092,430
Depreciation and amortization ............................................... 601,816 1,209,117
------------ ------------
Operating income (loss) ..................................................... (98,519) 234,971
Interest expense, net ....................................................... 855,095 760,174
Other income ................................................................ -- (84,190)
Subsidiary income for period not owned ...................................... -- 366,516
Net loss before income taxes ................................................ (953,614) (807,529)
Income taxes ................................................................ 5,963 11,313
------------ ------------
Net loss .................................................................... $ (959,577) $ (818,842)
============ ============
Basic loss per share ........................................................ $ (0.20) $ (0.12)
Diluted net loss per share .................................................. $ (0.20) $ (0.12)
Basic average number of common shares outstanding ........................... $ 4,807,972 $ 7,100,870
============ ============
Diluted average number of common shares outstanding ......................... $ 4,807,972 $ 7,100,870
============ ============
</TABLE>
<PAGE>
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
Nine months ended
September 30,
----------------------------
1997 1998
(Unaudited) (Unaudited)
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net loss ..................................................................... $ (959,577) $ (818,842)
------------ ------------
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization ............................................... 511,990 773,203
Interest paid in Common Stock .................................................... 194,228 --
Issuance of Common Stock to CFO .................................................. 162,129 --
Non-cash interest ........................................................... 444,000 --
Forgiveness of note receivable from stockholder ............................. 221,521 --
Increase (decrease) from changes in operating assets and liabilities ....... -- --
Accounts receivable ......................................................... (184,334) (738,911)
Inventory ................................................................... (23,008) (11,053)
Deposits .................................................................... (231,078) (113,152)
Pre-opening costs ........................................................... (452,131) (1,071,557)
Prepaid and other assets .................................................... (296,728) (29,832)
Accounts payable and accrued expenses ....................................... 182,329 86,692
Accrued Payroll and other liabilities ....................................... 21,726 940,183
Litigation settlement accrual ............................................... (100,000) -
------------ -----------
Total adjustments ............................................................. 450,644 (139,231)
------------ ------------
Net cash used in operating activities ........................................... (508,933) (958,173)
------------ ------------
Cash investing activities
Advances on note receivable from stockholder ................................. (221,521) 82,582
Capital expenditures ......................................................... (506,235) (886,424)
Direct acquisition costs ....................................................... -- 678,844
Payment for acquisitions, less cash received ................................... -- (14,602,829)
------------ ------------
Net cash used in investing activities ......................................... (727,756) (14,727,827)
------------ ------------
Cash used in financing activities:
Borrowing under line of credit ............................................. -- 1,000,000
Proceeds from long-term borrowing ................................................ -- 13,727,237
Repayments on long-term borrowing ........................................... (750,000) (581,426)
Proceeds from bridge notes .................................................. 875,000 --
Payments of bridge notes .................................................... (875,000) --
Net proceeds from sale of common stock and warrants ......................... 5,289,215 --
------------ ------------
Net cash provided by financing activities ........................................ 4,539,215 14,145,811
------------ ------------
Net increase in cash and cash equivalents ........................................ 3,302,526 (1,540,189)
------------ ------------
Cash and cash equivalents at beginning of period ................................. 290,751 2,323,559
------------ ------------
Cash and cash equivalents at end of period ....................................... 3,593,277 783,370
============ ============
Supplemental disclosure of cash flow information Cash paid during the period
for:
Interest ................................................................. $ 218,879 $ 675,984
Taxes ..................................................................... $ 5,963 $ 11,313
============ ============
</TABLE>
Supplemental schedule of non-cash investing and financing activities
During the nine months ended September 30, 1997 and 1998, $704,000 and
$1,082,236 of lease assets and other obligations, principally pre-opening costs,
were capitalized, respectively.
In connection with mortgage financing related to the Gedco Acquisition
(as defined in Note 5 of Part I), the Company issued 575,000 warrants to
purchase the Company's Common Stock to the lender and an affiliate of the
lender, which were valued at $500,000 and accounted for as an original issue
discount.
<PAGE>
On Stage Entertainment, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 1998
(1) Basis of Presentation
The financial statements included herein include the accounts of On
Stage Entertainment, Inc., a publicly traded Nevada corporation (the "Company"
or "OSE") and its subsidiaries, Legends in Concert, Inc., a Nevada corporation
("LIC"); On Stage Marketing, Inc., a Nevada corporation ("Marketing"); On Stage
Theaters, Inc., a Nevada corporation ("Theaters"); Wild Bill's California, Inc.,
a Nevada corporation ("Wild Bills"); Fort Liberty, Inc., a Nevada corporation
("Ft. Liberty"); Blazing Pianos, Inc., a Nevada corporation ("Blazing"); King
Henry's Inc., a Nevada corporation ("King Henry's"); On Stage Merchandise, Inc.,
a Nevada corporation ("Merchandise'); On Stage Events, Inc., a Nevada
corporation ("Events"); On Stage Casino Entertainment, Inc., a Nevada
corporation ("Casino"); On Stage Productions, Inc., a Nevada coporation
("Productions"); On Stage Theaters North Myrtle Beach, Inc., a Nevada
corporation ("North Myrtle"); On Stage Theaters Surfside Beach, Inc., a Nevada
corporation ("Surfside"); and Interactive Events, Inc., a Georgia corporation
(collectively, the "Subsidiaries"). In the opinion of the Company's management,
all adjustments considered necessary for fair presentation have been reflected
in the financial statements. These adjustments are of a normal, recurring
nature. Operating results for the nine months ended September 30, 1998, are not
necessarily indicative of those expected for the full year. Certain prior period
amounts have been adjusted and reclassified to conform to this period
presentation.
The accompanying unaudited interim consolidated financial statements
have been prepared in accordance with the instructions to Form 10-QSB and the
rules and regulations of the Securities and Exchange Commission. These
consolidated financial statements have been prepared under the presumption that
users of the unaudited interim consolidated financial information have either
read or have access to the Company's audited financial statements and footnotes
thereto for the year ended December 31, 1997, included in the Company's Form
10-KSB, as amended filed with the Securities and Exchange Commission.
Accordingly, footnote disclosures, which would substantially duplicate the
disclosures contained in the Company's December 31, 1997 audited financial
statements, have been omitted from these interim consolidated financial
statements. Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to such
instructions, rules and regulations. These unaudited interim consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements and the footnotes thereto for the year ended December 31,
1997, included in the Company's Form 10-KSB as amended.
(2) Subsquent Events
Additional ICCMIC Financing
On October 7, 1998, the Company's first mortgage lender, Imperial
Credit Commercial Mortgage Investment Corp. ("ICCMIC") loaned the Company an
additional $550,000, secured by a first deed of trust on the Company's Legends
in Concert Theater in Surfside Beach, South Carolina. In connection with this
additional financing, the Company modified the Common Stock purchase warrant
that the Company issued to ICCMIC on March 13, 1998 (and the corresponding
warrant agreement) by reducing the exercise price of ICCMIC's 325,000 warrants
to purchase shares of the Company's Common Stock from $4.44 per share to $1.00
per share.
DY/DX Corp. Common Stock Purchase Agreement
On October 2, 1998, the Company entered into a stock purchase agreement
with DY/DX Corp., an Illinois corporation, to sell up to 500,000 shares of the
Company's Common Stock at an aggregate purchase price of $500,000. As of
November 4, 1998, DY/DX Corp. had purchased 55,000 shares of the Company's
Common Stock pursuant to this agreement.
<PAGE>
Election of Board Members
On July 15, 1998, the Company's Board of Directors elected Mel Woods,
President of Fox Family Worldwide, as a director on its board, to fill the
vacancy created by Nelson Foster's resignation from his post as a director of
the Company on June 26, 1998.
On September 8, 1998, the Company's underwriter, Whale Securities Co.,
LP ("Whale") exercised its right to appoint a designee to the Company's board of
directors. In order to create a vacancy for Whale's designee, director Jules
Haimovitz resigned his post as a director of the Company on September 8, 1998.
Whale named Matt Gohd as its designee, who was subsequently elected to the board
of directors on September 9, 1998
(3) Loss Per Share
On March 3, 1997, the FASB issued Statement of Financial Accounting
Standard No. 128. Earnings per share (SFAS 128). This pronouncement provides a
different method of calculating earnings per share than is currently used in
accordance with APB 15, Earnings per Share. SFAS 128 provides for the
calculation of Basic and Diluted earnings per share. Basic earnings per share
includes no dilution and is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution of securities
that could share in the earnings of the entity, similar to fully diluted
earnings per share. Except where the provisions of the Securities and Exchange
Commission's Staff Accounting Bulletin No. 98 are applicable, potential dilutive
securities have been excluded in all years presented in the Statements of
Operations when the effect of their inclusion would be anti-dilutive.
For the nine months ended September 30, 1997, potential dilutive
securities representing 421,094 outstanding options and 2,077,000 outstanding
warrants are not included, since their effect would be anti-dilutive. For the
nine months ended September 30, 1998, potential dilutive securities representing
773,853 outstanding stock options and 4,480,956 outstanding warrants are not
included, since their effect would be anti-dilutive.
(4) Commitments and Contingencies
The Company is a party to various legal proceedings in which the
adverse parties are seeking damages from the Company. While there can be no
assurance that any of the instituted or threatened lawsuits will be settled or
decided in favor of the Company, the management of the Company does not believe
the final resolution of these matters will have a material adverse effect upon
the Company's financial condition and results of operations.
(5) Business Acquisition
Gedco USA, Inc. Acquisition
On March 13, 1998, the Company completed its acquisition of certain
assets from Gedco USA, Inc. and its affiliates for a purchase price of
$14,000,000, consisting of $11,500,000 in cash and 595,238 shares of Common
Stock valued at $2,500,000 (the "Gedco Acquisition").
Included in the Gedco Acquisition were 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 Theater, each
of which is located in greater Orlando, Florida, and a second Wild Bill's Dinner
Theater located in Buena Park, California. Gerard O'Riordan, President of Gedco
USA, Inc., joined the Company as President of On Stage Theaters, Inc., a wholly
subsidiary of the Company that manages the acquired dinner theaters and piano
bar as well as other selected theaters.
The Company funded the cash portion of the purchase price and
transaction fees and expenses with $12.5 million of mortgage financing from
Imperial Credit Commercial Mortgage Investment Corp. ("ICCMIC"). ICCMIC has
committed a total of $20,000,000, of which $7,500,000 is remaining to finance
the Company's future real estate related acquisitions. In connection with the
loan agreement entered into between the Company and ICCMIC on March 13, 1998
(the "Loan Agreement"), the Company granted ICCMIC the right to provide the
Company with up to an additional $30 million of similar mortgage financing. In
connection with the financing, the Company issued ICCMIC and Imperial Capital
Group LLC (an affiliate of ICCMIC), an aggregate of 575,000 warrants immediately
exercisable into shares of Common Stock at an exercise price of $4.44, which
price was adjusted on October 7, 1998. See "Additional ICCMIC Financing" in Note
2 above. In addition, concurrently with the ICCMIC financing, Mark Karlan, the
President of ICCMIC, was named a member of the Company's Board of Directors,
filling a vacancy created by the resignation of Kenneth Berg.
<PAGE>
The components of the purchase price and its allocation to the assets
and liabilities are as follows:
Purchase Price:
Liabilities assumed ........................................... $ 986,044
Issuance of 595,238 restricted shares of common stock ......... 2,500,000
3,486,044
Cost of acquisition incurred .................................. 1,645,874
Cash paid ..................................................... 11,500,000
-----------
$16,631,918
===========
Cash paid for the purchase of Gedco, USA, Inc. Net of cash received is as
follows:
Cash paid to sellers ................................ $ 11,500,000
Acquisition costs ................................... 1,645,874
------------
13,145,874
Less cash received .................................. (383,444)
------------
$ 12,762,430
============
The costs of acquisition increased primarily relates to the lenders
origination fee of $750,000, legal fees of $240,000, financing fees of $100,000,
recording fees of $100,000, and accounting fees of $125,000.
The acquisition was accounted for as a purchase and the assets acquired
were recorded at a fair market value. The building and equipment are being
depreciated over twenty and three years, respectively, under the straight-line
method. The costs of acquisition incurred primarily relates to the lenders
origination fee of $750,000, legal fees of $240,000, financing fees of $100,000,
recording fees of $100,000, and accounting fees of $125,000. The allocation of
the purchase price was as follows:
Cash ....................................................... $ 383,444
Inventory .................................................. 120,084
Prepaid Expenses ........................................... 157,516
Land ....................................................... 11,275,507
Building ................................................... 3,214,740
Equipment .................................................. 730,627
Deferred financing acquisition expenses .................... 750,000
-----------
Deferred financing acquisition expenses .................... $16,631,918
===========
The assets acquired and liabilities assumed were transferred to either
the Company's wholly-owned subsidiary, On Stage Theaters, Inc., or a wholly
owned subsidiary of On Stage Theaters, Inc., concurrent with the acquisition.
The Company has elected to consolidate the operations of the assets
acquired in the Gedco Acquisition retroactively to January 1, 1998. Therefore,
the pre-acquisition gain of $366,516 has been added to the consolidated
statement of operations for the nine months ended September 30, 1998. The effect
of this consolidation of operations prior to acquisition was an increase in net
sales of approximately $3,099,071.
Calvin Gilmore Productions, Inc.
On June 30, 1998, the Company completed its acquisition of certain
assets from Calvin Gilmore Productions, Inc. ("CGP"), an affiliate of Fox Family
Worldwide, for a purchase price of $1,000,000 in cash and 206,612 shares of
Common Stock valued at $723,142 (the "Fox Acquisition").
Included in the Fox Acquisition were substantially all of CGP's income
producing assets and associated real and personal property in the greater Myrtle
Beach, South Carolina area, consisting of the fee simple purchase of The
Surfside Beach Theater, which the Company had leased from CGP for its
presentation of its flagship Legends in Concert production since 1995, and a
leasehold interest in The Eddie Miles Theater. In connection with the Fox
Acquisition, Mel Woods, the Chief Operating Officer of Fox Family Worldwide, was
subsequently elected as a member of the Company's Board of Directors, filling a
vacancy created by the resignation of Nelson Foster.
The Company funded the cash portion of the purchase price and
transaction fees and expenses with $1,100,000 million of mortgage financing from
ICCMIC.
<PAGE>
On Stage Entertainment, Inc. and Subsidiaries
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This document contains certain forward-looking statements that are
subject to risks and uncertainties. Forward-looking statements include certain
information relating to 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. Such statements use
forward-looking terminology such as "believes", "expects", "may", "will",
"should", "seeks", "pro forma", "anticipates", "intends", or the negative of any
therof, or of other variations thereon or comparable terminology, or by
discussion of strategy or intentions. 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.
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 _____ of Amendment No. 5 to the Company's
Registration Statement on Form SB-2 filed with the Commission on June 12, 1998
(Registration No. 333-56785), as amended as well as the following: (i) the
Company's dependence on its flagship productions Legends in Concert, Wild Bill's
Dinner Extravaganza, Blazing Pianos, King Henry's Feast 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.
<PAGE>
Results of Operations
The following table sets forth, the results of operations by the Company for the
period indicated:
<TABLE>
Three months ended September 30, 1997
--------------------------------------------------------------------------------------------------------
Sub-Total
Operating Total
Casinos Events Merchandise Theaters Corporations Production OSE Consolidated
- -------------------------- ----------- ----------- ----------- ----------- ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues ........... $ 1,736,111 $ 568,899 $ 165,761 $ 2,599,956 $ 5,070,727 $ -- $ -- $ 5,070,727
Cost of revenues ...... 1,073,185 284,816 43,008 2,028,898 3,429,907 40,905 -- 3,470,812
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Gross profit ........... 662,926 284,083 122,753 571,058 1,640,820 (40,905) -- 1,599,915
Selling, general
& administrative ..... 86,391 142,448 665 127,524 357,028 15,751 1,002,546 1,375,325
Depreciation &
amortization ......... 33,844 597 -- 118,596 153,037 -- 129,670 282,707
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating income (loss) 542,691 141,038 122,088 324,938 1,130,755 (56,656) (1,132,216) (58,117)
Interest expense, net -- (31) -- -- (31) -- 681,115 681,084
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss) before
income taxes ......... 542,691 141,069 122,088 324,938 1,130,786 (56,656) (1,813,331) (739,201)
Income taxes ........... -- 1,306 -- -- 1,306 -- 2,338 3,644
=========== =========== =========== =========== =========== =========== =========== ===========
Net income (loss) ...... $ 542,691 $ 139,763 $ 122,088 $ 324,938 $ 1,129,480 $ (56,656) $(1,815,669) $ (742,845)
=========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
Three months ended September 30, 1998
----------------------------------------------------------------------------------------------------------
Sub-Total
Operating Total
Casinos Events Merchandise Theaters Corporations Production OSE Consolidated
- ------------------------ ----------- ---------- ----------- ----------- ------------ ----------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues ........... $ 1,355,908 $ 774,688 $ 785,830 $ 5,143,243 $ 8,059,669 $ -- $ -- $ 8,059,669
Cost of revenues ...... 908,706 529,616 467,911 4,095,460 6,001,693 49,724 -- 6,051,417
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Gross profit ........... 447,202 245,072 317,919 1,047,783 2,057,976 (49,724) -- 2,008,252
Selling, general &
administrative ....... 40,506 216,655 -- 327,932 585,093 112,736 573,526 1,271,355
Depreciation & .........
amortization ......... 90,507 12,646 1,565 517,461 622,179 22,265 46,113 690,557
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating income (loss) 316,189 15,771 316,354 202,390 850,704 (184,725) (619,639) 46,340
Interest expense, net .. -- (3) 75 255,655 255,727 -- 58,966 314,693
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Other income ........... (1,383) (1,383) (1,383)
Net income (loss) before
income taxes ....... 316,189 15,774 316,279 (51,882) 596,360 (184,725) (678,605) (266,970)
Income taxes ........... -- -- -- -- -- -- 10,058 10,058
=========== =========== =========== =========== =========== =========== =========== ===========
Net income (loss) ...... $ 316,189 $ 15,774 $ 316,279 $ (51,882) $ (596,360) $ (184,725) $ (688,663) $ (277,028)
=========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
<PAGE>
Results of Operations
The following tables set forth, the results of operations by the Company for the
period indicated:
<TABLE>
Nine months ended September 30, 1997
-----------------------------------------------------------------------------------------------------------
Sub-Total
Operating Total
Casinos Events Merchandise Theaters Corporations Production OSE Consolidated
- ------------------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues ........... $ 5,068,327 $ 1,707,262 $ 319,672 $ 4,673,928 $ 11,769,189 $ -- $ -- $ 11,769,189
Cost of revenues ...... 3,058,872 1,047,288 82,986 3,653,376 7,842,522 101,042 -- 7,943,564
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Gross profit ........... 2,009,455 659,974 236,686 1,020,552 3,926,667 (101,042) -- 3,825,625
Selling, general &
administrative ....... 228,681 447,893 665 226,379 903,618 51,780 2,366,930 3,322,328
Depreciation & .........
amortization ......... 102,133 745 -- 132,560 235,438 -- 366,378 601,816
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Operating income (loss) 1,678,641 211,336 236,021 661,613 2,787,611 (152,822) (2,733,308) (98,519)
Interest expense, net .. -- (277) -- -- (277) -- 855,372 855,095
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Net income (loss) before
income taxes ....... 1,678,641 211,613 236,021 661,613 2,787,888 (152,822) (3,588,680) (953,614)
Income taxes ........... -- 3,029 -- -- 3,029 -- 2,934 5,963
============ ============ ============ ============ ============ ============ ============ ============
Net income (loss) ...... $ 1,678,641 $ 208,584 $ 236,021 $ 661,613 $ 2,784,859 $ (152,822) $(3,591,614) $ (959,577)
============ ============ ============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
Nine months ended September 30, 1998
--------------------------------------------------------------------------------------------------------
Sub-Total
Operating Total
Casinos Events Merchandise Theaters Corporations Production OSE Consolidated
- ------------------------- ----------- ----------- ------------ ----------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues ............ $ 4,415,580 $ 2,184,450 $ 1,001,519 $14,908,072 $22,509,621 $ -- $ -- $ 22,509,621
Cost of revenues ....... 2,913,506 1,434,141 541,171 11,908,301 16,797,119 175,984 -- 16,973,103
----------- ----------- ------------ ----------- ----------- ------------ ------------ ------------
Gross profit ............ 1,502,074 750,309 460,348 2,999,771 5,712,502 (175,984) -- 5,536,518
Selling, general &
administrative ........ 138,336 633,795 4,702 1,370,436 2,147,269 121,144 1,824,017 4,092,430
Depreciation &
amortization .......... 172,174 27,027 3,809 772,355 975,365 22,324 211,428 1,209,117
----------- ----------- ------------ ----------- ----------- ------------ ------------ ------------
Operating income (loss) . 1,191,564 89,487 451,837 856,980 2,589,868 (319,452) (2,035,445) 234,971
Interest expense, net ... -- (36) 75 594,826 594,865 -- 81,119 675,984
----------- ----------- ------------ ----------- ----------- ------------ ------------ ------------
Other income
Subsidiary operations for
period not owned ...... 366,516 366,516 366,516
Net income (loss) before
income taxes .......... 1,191,564 89,523 451,762 (104,362) 1,628,487 (319,452) (2,116,564) (807,529)
-- -- -- -- -- 11,313 11,313
=========== =========== ============ =========== ========== ============ ============ ===========
Net income (loss) ....... $ 1,191,564 $ 89,523 $ 451,762 $ (104,362) $1,628,487 $ (319,452) $ (2,127,877) $ (818,842)
=========== =========== ============ =========== ========== ============ ============ ===========
</TABLE>
<PAGE>
Three Months Ended September 30, 1997 versus Three Months Ended September 30,
1998
Net Revenues. Revenues increased by 58.9% to $8,060,000 for the three
months ended September 30, 1998 compared to $5,071,000 for the three months
ended September 30, 1997. The Company's revenue is derived from four principal
operating corporations: Casinos, Events, Merchandise and Theaters.
Casinos revenues were approximately $1,356,000 for the three months
ended September 30, 1998 compared to $1,736,000 for the three months ended
September 30, 1997, a decrease of $380,000, or 21.9%. The decrease was primarily
attributable to decrease in revenue generated from limited run casino shows and
the Legends's show at the Imperial Palace Hotel and Casino.
Events revenues were $775,000 for the three months ended September 30,
1998 compared to $569,000 for the three months ended September 30, 1997, an
increase of $206,000 or 36.2%. This increase was mainly attributable to increase
in business.
Merchandise revenues were approximately $786,000 for the three months
ended September 30, 1998 compared to $166,000 for the three months ended
September 30, 1997, an increase of $621,000 or 374.1% . This increase was mainly
attributable to an increase in photo sales and the inclusion of Gedco
Acquisition properties.
Theaters revenues were approximately $5,143,000 for the three months
ended September 30, 1998 compared to $2,600,000 for the three months ended
September 30, 1997, an increase of $2,543,000, or 97.8%. This increase in
revenues was primarily attributed to new show openings in Branson, Missouri, and
Toronto, Canada and the inclusion of Gedco Acquisition properties.
Costs of Revenues. Total costs of revenues were $6,051,000 for the
three months ended September 30, 1998 compared to $ 3,471,000 for the three
months ended September 30, 1997, an increase of $2,580,000, or 74.4%. Costs of
revenues increased to 75.1% of net revenues for the three months ended September
30, 1998, as compared to 68.4% for the three months ended September 30, 1997.
This increase in cost of revenues as a % of net revenues was primarily
attributable to a change in the mix of the Company's revenues from primarily
theater shows to theater and dinner theater shows.
Selling, General and Administrative. Selling, general and
administrative costs were approximately $1,271,000 for the three months ended
September 30, 1998 as compared to $1,375,000 for the three months ended
September 30, 1997, a decrease of $104,000, or 7.6%. Selling, general and
administrative costs decreased to 15.8% of net revenues for the three months
ended September 30, 1998, as compared to 27.1% for the three months ended
September 30, 1997, which was primarily attributable to staff reductions.
Operating Income. The Company's operating income was
approximately $46,000 for the three months ended September 30, 1998, compared to
an operating loss of $58,000 for the three months ended September 30, 1997, an
increase of $104,000.
Depreciation and Amortization. Depreciation and amortization were
$576,000 for the three months ended September 30, 1998 increased by $408,000 or
144.3%, as compared to the three months ended September 30, 1997, and increase
of $293,000 or 103.6%. The increase was primarily due to capital additions to
current shows, new shows, and an increase in assets as a result of the Gedco
Acquisition.
Interest Expense, Net. Interest expense was $427,000 for the three
months ended September 30, 1998 decreased by $391,000, or 55.4%, as compared to
$681,000 for the three months ended September 30, 1997, a decrease of $279,00 or
39.4%. The decrease was primarily due to one-time interest expense related to
the conversion of debentures and the original issue discount of the bridge
financing, which was incurred in 1997, but not in 1998.
<PAGE>
Three Months Ended September 30, 1997 versus Three Months Ended September 30,
1998
Other Income. Other income for the three months ended September 30, 1998
was attributable to a sign-on bonus received from a new supplier.
Income Taxes. The Company is a Nevada corporation with a substantial
portion of revenue and income derived in Nevada. There are no state or local
income taxes in Nevada. The Company accrued no federal income tax for the three
months ended September 30, 1998 three months ended 1997. Income taxes for the
three months ended September 30, 1997 and 1998, relate to income taxes due in
those states other than Nevada in which the Company conducts business. At
September 30, 1997 and 1998, the Company had federal net operating loss
carryforwards of approximately $1,616,791 and $3,958,386, respectively. Under
Section 382 of the Internal Revenue Code, certain significant changes in
ownership that the Company is currently undertaking may restrict the future
utilization of these tax loss carryforwards. The net deferred tax assets have a
100% valuation allowance, as management cannot determine if it is more likely
than not that the deferred tax assets will be realized.
Nine months Ended September 30, 1997 versus Nine months Ended September 30, 1998
Net Revenues. Revenues increased by 91.3% to $22,510,000 for the nine
months ended September 30, 1998 compared to $11,769,000 for the nine months
ended September 30, 1997.
Theaters revenues were approximately $14,908,000 for the nine months
ended June, 1998 compared to $4,674,000 for the nine months ended September 30,
1997, an increase of $10,234,000, or 219.9%. The increase was attributable to
the inclusion of Gedco USA acquisition.
Events revenues were $2,184,000 for the nine months ended September 30,
1998 compared to $1,707,000 for the nine months ended September 30, 1997, an
increase of $477,000 or 28.0%. This increase was attributable to an increase in
business as a result of an increase in sales people.
Merchandise revenues were approximately $1,002,000 for the nine months
ended September 30, 1998 compared to $320,000 for the nine months ended
September 30, 1997, an increase of $682,000 or 213.3%. This increase was
attributable to an increase in business and the inclusion of the Gedco
Acquisition.
Casino revenues were approximately $4,415,000 for the nine months ended
September 30, 1998 compared to $6,068,000 for the nine months ended September
30, 1997, an decrease of $663,000, or 12.9 % . The decrease was primarily
attributable to a reduction in revenue generated from limited run casino shows.
Costs of Revenues. Total costs of revenues were $16,973,000 for the
nine months ended September 30, 1998 compared to $7,944,000 for the nine months
ended September 30, 1997, an increase of $9,030,000, or 113.7%. Costs of
revenues increased to 75.4% of net revenues for the nine months ended September
30, 1998, as compared to 67.5% for the nine months ended September 30, 1997.
This increase in cost of sales as percentage of revenues was primarily
attributable to a change in the mix of the Company's revenues from primarily
theater shows to theater and dinner theater shows.
Selling, General and Administrative. Selling, general and
administrative costs were approximately $4,092,000 for the nine months ended
September 30, 1998 as compared to $3,322,000 for the nine months ended September
30, 1997, an increase of $770,000 or 23.2%. Selling, general and administrative
costs decreased to 18.2% of net revenues for the nine months ended September 30,
1998, as compared to 28.2% for the nine months ended September 30, 1997. The
decrease in total cost is primarily the result of head cost reductions.
Operating Income. The Company's operating income was
approximately $235,000 for the nine months ended September 30, 1998, compared to
an operating loss of $98,000 for the nine months ended September 30, 1997, an
increase of $333,000.
<PAGE>
Depreciation and Amortization. Depreciation and amortization for the
nine months ended September 30, 1998 increased by $607,000, or 100.9%, as
compared to the nine months ended September 30, 1997. The increase was primarily
due to capital additions to current shows, new shows, and an increase in assets
as a result of the Gedco Acquisition.
Interest Expense, Net. Interest expense for the nine months ended September 30,
1998 decreased by $120,000, or 13.6%, as compared to the nine months ended
September 30, 1997. The decrease was primarily due to one-time interest expense
related to the conversion of debentures and the original issue discount of the
bridge financing, which was incurred in 1997, but not 1998.
Other Income. Other income for the nine months ended September 30, 1998
was attributable to a sign-on bonus received from a new supplier.
Income Taxes. The Company is a Nevada corporation with a substantial
portion of revenue and income derived in Nevada. There are no state or local
income taxes in Nevada. The Company accrued no federal income tax for the nine
months ended September 30, 1998. Income taxes for the nine months ended
September 30, 1997 and 1998, relate to income taxes due in those states other
than Nevada in which the Company conducts business. At September 30, 1997 and
1998, the Company had federal net operating loss carryforwards of approximately
$1,616,791 and $3,958,386 respectively. Under Section 382 of the Internal
Revenue Code, certain significant changes in ownership that the Company is
currently undertaking may restrict the future utilization of these tax loss
carryforwards. The net deferred tax assets have a 100% valuation allowance, as
management cannot determine if it is more likely than not that the deferred tax
assets will be realized.
Liquidity and Capital Resources
General
The Company has historically met its working capital requirements
through a combination of cash flow from operations, equity and debt offerings
and traditional bank financing. The Company anticipates, based on its proposed
plans and assumptions relating to its operations (including assumptions
regarding the anticipated timetable of its new show openings and the costs
associated therewith), that the Company's current cash, cash equivalent
balances, anticipated revenue from operations and its working capital line will
be sufficient to fund its current operations and contemplated capital
requirements through December 31, 1998. However, the Company's acquisition
strategy also will require additional debt and/or equity financing. In the event
the Company's plans or assumptions change, prove to be incorrect, or if balances
and/or anticipated revenues otherwise prove to be insufficient, the Company
would need to revise its expansion strategy (which revision could include the
curtailment, delay or elimination of certain of its anticipated productions or
the funding of such productions through arrangements with third parties, which
would require it to relinquish rights to a substantial portion of its revenues)
and/or seek additional financing prior to the end of such period. The Company is
currently seeking private equity financing and has hired Imperial Capital, LLC.
For the nine months ended September 30, 1997, the Company had a net cash
deficit from operations of $509,000 in operations. As of September 30, 1997, the
Company had approximately $3,593,000 in cash and cash equivalents. For the nine
months ended September 30, 1998, the Company had a net cash deficit from
operations of $958,000 in operations. As of September 30, 1998, the Company
had $784,000 in cash and cash equivalents. The operating deficits for both
periods were primarily attributable to business seasonality and pre-opening
costs for new shows.
The net cash used in investing activities for the nine months ended
September 30, 1997 of $728,000. The net cash used in investing activities for
the quarter ended September 30, 1998 of $14,728,000, was primarily attributable
to direct acquisition costs related to acquisitions.
Net cash provided by financing activities for the nine months ended
September 30, 1997 of $4,539,000 was primarily attributable to proceeds from
sale of common stock. Net cash provided by financing activities for the nine
months ended September 30, 1998 of $14,146,000, was primarily attributable to
ICCMIC's funding of $12,500,000 for the Gedco Acquisition and $1,100,000 million
for the Fox Acquisition.
At September 30, 1997, the Company had working capital of approximately
$4,127,000, primarily attributable from proceeds of the sale of common stock. At
September 30, 1998, the Company had a working capital deficit of approximately
$887,031, primarily attributable to the pre-opening costs of new shows.
<PAGE>
Working Capital Line
In May 1997, First Security Bank of Nevada ("First Security") issued a
line of credit to the Company for up to $250,000. Borrowings under such facility
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. On March
28, 1998, First Security increased the line of credit from $250,000 to
$1,000,000 and extended the expiration date of the line to March 25, 1999. As of
September 30, 1998, the Company had drawn $1,000,000 on the line of credit.
Mortgage Financing Commitment
On March 13, 1998, the Company entered into the Loan Agreement with
ICCMIC pursuant to which ICCMIC agreed to provide the Company with up to
$20,000,000 of mortgage financing. On March 28, 1998, the Company used
$12,500,000 of said facility to fund the cash portion of the Gedco Acquisition
and related fees subsequently used $1,100,000 on June 30, 1998 to fund the cash
portion of the Fox Acquisition and $550,000 on October 7, 1998 to help the
Company with it's working capital needs. In connection with the Loan Agreement,
the Company provided ICCMIC with the right to provide the Company with up to an
additional $30,000,000 of mortgage related financing. In addition concurrent
with the ICCMIC financing, Mark Karlan, the President of ICCMIC, was named a
member of the Company's Board of Directors, filling a vacancy created by the
resignation of Kenneth Berg.
New Accounting Pronouncements
Reporting on the Costs of Start-up Activities
Statement of Position 98-5, "Reporting on the Costs of Start-up
Activities," (SOP 98-5) issued by the American Institute of Certified Public
Accountants is effective for financial statements beginning after December 15,
1998. SOP 98-5 requires that the costs of start-up activities, including
organization costs, be expensed as incurred. Start-up activities are defined
broadly as those one-time activities related to opening a new facility,
introducing a new product or service, conducting business in a new territory,
conducting business with a new class of customers (excluding ongoing customer
acquisition costs, such as policy acquisition costs and loan origination costs)
or beneficiary, initiating a new process in an existing facility, or commencing
some new operation. The adoption of SOP 98-5 will require the Company to expense
all capitalized pre-opening costs. Such costs were $1,071,557 at September 30,
1998.
Diclosure About Segments of an Enterprise and Related Information
Statement of Financial Accounting Standards No. 131, "Disclosure About Segments
Of An Enterprise and Related Information," (SFAS No. 131) issued by the FASB is
effective for financial statemetns with fiscal years beginning after December
15, 1997. Earlier application is permitted. SFAS No. 131 requires that public
companies report certain information about operating segments, products,
services and geographical areas in which they operate and their major customers.
The Company adopted SFAS 131 as of January 1, 1998 and it had no effect on its
financial position or results of operations.
Accounting for Derivative Instruments and Hedging Activities
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" effective for financial statements with
fiscal years beginning After June 15, 1999. SFAS No. 133 provides a
comprehensive and consistent standards for the recognition and measurement of
derivatives and hedging activities and requires all derivatives to be recorded
on the balance sheet at fair value. The Company does not expect the adoption of
SFAS No. 133 to have a material impact, if any, on its results of operations,
financial position or cash flows.
<PAGE>
PART II . OTHER INFORMATION
Item 1. Legal Proceedings.
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 in and for the 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 Entertainment, Inc., 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 Company has filed an answer to this complaint.
This suit is currently in the discovery stage of litigation.
On August 20, 1998, a complaint was filed against the Company 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 an unauthorized third party who purchased the furniture while
purporting to be a representative of the Company. The Company believes it has a
valid defense for this claim based upon fraud and misrepresentation. The Company
has recently filed its Answer to this Complaint.
On September 25, 1998, the Company successfully defended all three
counts of the complaint filed in March 1997 by Benny R. Pittman, a shareholder
of Grand Strand Entertainment, Inc. This suit arose out of dispute as to whether
the Company wrongfully terminated a licensing agreement with Mr. Pittman for the
control of the Company's Legend in Concert production in Surfside Beach, South
Carolina. While the Company prevailed on all the counts alleged in the
complaint, the Company stipulated to allow the arbitrator to resolve an equity
claim of quantum meruit, so as to avoid the possibility of the suit being
re-filed against the Company alleging this cause of action, among others, which
claim was resolved by the arbitrator in the favor of the plaintiff for a total
of $15,400 in consideration for the substantial amount of work the plaintiff
provided on behalf of the Company to open the Legends production.
Item 2. Changes in Securities
Not applicable
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a vote of Security Holders
Not applicable
Item 5. Other Information
Country Tonite Acquisition
(a) On September 21, 1998, the Company signed an agreement to
purchase certain assets from Casino Resource Corporation and its
affiliates, for a purchase price of $13,800,000, consisting of
$12,500,000 in cash and a $1,300,000 promissory note (the
"Country Tonite Acquisition"). Included in the Country Tonite
Acquisition are all of the income producing assets of the Country
Tonite dinner theater business, as well as the Branson Theater in
Branson, Missouri. The Country Tonite Acquisition is subject to
the various conditions, including the Company's procurement of
financing and the approval of Casino Resource Corporation's
stockholders.
(b) Please see Note 2 to consolidated financial statements regarding
DXDX Common Stock Purchase Agreement
<PAGE>
(c) Letter of Agreement with Imperial Capital, LLC On September 10,
1998, the Company engaged Imperial Capital, LLC, a Beverly Hills
based investment bank, to advise the Company on potential
strategic financing alternative. On Stage's board of directors
has formed a special committee to work with Imperial Capital in
this regard.
Item 6. Exhibits & Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K. The Registrant was not required to file any
reports on Form 8-K for the three months ended September 30,
1998.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ON STAGE ENTERTAINMENT, INC.
Date: November 16, 1998 /s/ John W. Stuart
---------------------------------------------
John W Stuart, Chairman and
Chief Executive Officer
Date: November 16, 1998 /s/ Kiranjit S. Sidhu
----------------- ---------------------------------------------
Kiranjit S. Sidhu, Senior Vice President
Finance and Administration, and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATIN EXTRACTED FROM THE SEPTEMBER
30, 1998 FORM 10-QSB OF ON STAGE ENTERTAINMENT, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 783
<SECURITIES> 0
<RECEIVABLES> 1,194
<ALLOWANCES> 0
<INVENTORY> 228
<CURRENT-ASSETS> 4,244
<PP&E> 24,152
<DEPRECIATION> 3,257
<TOTAL-ASSETS> 26,827
<CURRENT-LIABILITIES> 5,131
<BONDS> 14,470
0
0
<COMMON> 74
<OTHER-SE> 7,052
<TOTAL-LIABILITY-AND-EQUITY> 26,827
<SALES> 22,510
<TOTAL-REVENUES> 22,594
<CGS> 16,973
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,302
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 760
<INCOME-PRETAX> (808)
<INCOME-TAX> 11
<INCOME-CONTINUING> (819)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (819)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
