<PAGE>

                                   FORM 10-KSB
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                [ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   for the fiscal year ended December 31, 1998

                                       OR

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

                         Commission file number 0-23782

                      RENAISSANCE ENTERTAINMENT CORPORATION

                           --------------------------

                (Name of Registrant as Specified in its Charter)

                   Colorado                                  84-1094630
      ---------------------------------                 ---------------------
         (State or other jurisdiction                      I.R.S. Employer
      of incorporation or organization)                 Identification number

275 Century Circle, Suite 102, Louisville, Colorado               80027
-----------------------------------------------------        ---------------
     (Address of principal executive offices)                  (Zip Code)

Issuer's telephone number, including area code: (303) 664-0300

              Securities registered under Section 12(b) of the Act:

                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $.03 par value
                     Class A Common Stock Purchase Warrants
                     Class B Common Stock Purchase Warrants

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
                                                             ----    ----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not 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-K
or any amendment to this Form 10-K. [ ]


<PAGE>

The issuers revenues for the year ended December 31, 1998 were $15,219,412.

As of March 17, 1999, the aggregate market value of the Common Stock of the 
Registrant based upon the average of the closing bid and asked prices of the 
Common Stock as quoted on the OTC Bulletin Board Market held by 
non-affiliates of the Registrant was approximately $1,207,656. As of March 
17, 1999, 2,146,563 shares of the Common Stock of the Registrant were 
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

None.

                                       2
<PAGE>

                                     PART I

This report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended, and is subject to the safe harbors created
by those sections. These forward-looking statements are subject to significant
risks and uncertainties, including those identified in the section of this Form
10-K entitled "Factors That May Affect Future Operating Results," which may
cause actual results to differ materially from those discussed in such
forward-looking statements. The forward-looking statements within this Form 10-K
are identified by words such as "believes," "anticipates," "expects," "intends,"
"may," "will" and other similar expressions. However, these words are not the
exclusive means of identifying such statements. In addition, any statements
which refer to expectations, projections or other characterizations of future
events or circumstances are forward-looking statements. The Company undertakes
no obligation to publicly release the results of any revisions to these
forward-looking statements which may be made to reflect events or circumstances
occurring subsequent to the filing of this Form 10-K with the Securities and
Exchange Commission ("SEC"). Readers are urged to carefully review and consider
the various disclosures made by the Company in this report and in the Company's
other reports filed with the SEC that attempt to advise interested parties of
the risks and factors that may affect the Company's business.

                                ITEM 1: BUSINESS

OVERVIEW

Renaissance Entertainment Corporation operates five Renaissance Faires in the
United States. The newest Faire opened on May 4, 1996 in Fredericksburg,
Virginia, a project which was designed and constructed by the Company. On
February 5, 1996, the Company acquired Creative Faires, Ltd., the owner and
operator of the New York Renaissance Faire. The Renaissance entertainment
industry consists of over 100 separate events of varying size with a Renaissance
theme and has an estimated attendance in excess of 4,000,000 visitors annually.

The Renaissance Faire is a recreation of a Renaissance village, a fantasy
experience transporting the visitor back into sixteenth century England. This
fantasy experience is created through authentic craft shops, food vendors and
continuous live entertainment throughout the day, both on the street and the
stage, including actors, jugglers, jousters, magicians, dancers and musicians.

WEB SITE. The Company maintains a home page at www.recfair.com and financial
information at www.moneynet.com/inclink/fairc/inclink and
http://investorcare.renfair.com/.

EXISTING RENAISSANCE FAIRES AND SITES

The Company presently owns and produces five Renaissance Faires: the Bristol
Renaissance Faire in Kenosha, Wisconsin, serving the Chicago/Milwaukee
metropolitan region; the Northern California Renaissance Pleasure Faire, serving
the San Francisco Bay area; the Southern California Renaissance Pleasure Faire
in Devore, California serving the greater Los Angeles metropolitan area; the New
York Renaissance Faire serving the New York City metropolitan area; and the

                                       1
<PAGE>

Virginia Renaissance Faire in Fredericksburg, Virginia, serving the Washington,
D.C. and Richmond metropolitan areas.

The following table shows the attendance, number of vendors and net operating
income for the Company's Faires during the 1998 and 1997 faire seasons.

<TABLE>
<CAPTION>
                                                      Approximate
                                                       Number of
                           Attendance                   Vendors            Net Operating Income
                     ---------------------        ------------------     ------------------------
                       1998          1997          1998        1997          1998           1997
                     -------       -------        ------      ------     ----------    ----------
<S>                  <C>           <C>            <C>         <C>        <C>           <C>
Bristol              181,350       167,166         180         150       $  916,543    $  655,762
Northern CA          163,239       182,600         180         150          917,276       455,824
Southern CA          162,316       172,050         150         150          696,038       165,597
New York             133,933       131,701         125         100          533,528      (119,600)
Virginia              57,738        49,574          60          50         (445,187)     (549,143)
                     -------       -------                               ----------    ----------
   Total             698,576       703,091                               $2,618,198    $  608,440
</TABLE>


BRISTOL RENAISSANCE FAIRE. The Bristol Renaissance Faire is conducted at the
Kenosha, Wisconsin site leased by the Company. It has been in existence for 12
years. The Bristol Renaissance Faire is presented annually for nine weekends
beginning the last weekend in June and ending the third weekend in August.

The Bristol Renaissance Faire was originally located on 80 acres. In May 1995,
the Company purchased an adjacent 80 acres of real estate which in the past it
had used under lease, for a purchase price of $850,000. During November 1997,
the Company sold this site and leased it back for a period of 20 years. See
"Property." Improvements which have been constructed on the site, including the
vendor booths, are permanent. Craft shops and vendor booths are built by the
individual craft vendors at their cost. In many cases, vendors invest
substantial sums of money in the construction of these shops.

Historically the Company has only utilized the site for the Renaissance 
Faire, and the property has been vacant during the off-season. During the 
1998 operating season two additional events were introduced. Under a joint 
arrangement with Educational Travel Tours, Inc. the Company operated two 
School Day events in May and a Wild West rodeo in October. The Company 
believes that the property is amenable to additional income-producing 
off-season activity. The Company is considering year-round uses which could 
include campgrounds, an Octoberfest and music festivals. To date, however, 
there exist no agreements, arrangements or other understandings with respect 
to alternate year-round uses, and there can he no assurance that the Company 
will be successful in developing any additional income-producing, off-season 
activities.

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<PAGE>

NORTHERN CALIFORNIA RENAISSANCE PLEASURE FAIRE. The Northern Renaissance
Pleasure Faire has been held in the San Francisco Bay area for the past 32
years. This Faire is conducted annually for six to seven weekends, typically
beginning Labor Day weekend and running through the first or second weekend of
October. In 1998 the Faire ran for seven weekends beginning the last weekend in
July through the Labor Day weekend. In 1999 the Faire is expected to return to a
Labor Day through October operating season.

The Northern California Faire historically operated on leased property in
Novato, California. The lease for this property expired after the 1998 faire
season. The Company has a contingent lease for a new site for the Faire which,
if completed, may be available for the 1999 faire season. The lease is
contingent upon the Company obtaining the necessary permits to operate the faire
and the lessor closing on the purchase of the property. However, there can be no
assurance that the Company will be successful in securing a lease or that it
will be on terms acceptable to the Company. The Company estimates that it will
be required to spend approximately $500,000 to $1,000,000 for the development of
the new site prior to the opening of the Faire at the site.

Historically all structures, including the gates, stages, booths, shops and
arenas utilized in the Northern California Renaissance Pleasure Faires had to be
mobile. These props were loaded into the Company's semi-tractor/trailers and
transported between the Northern and Southern California Renaissance Faires and,
during the off-season, were stored at the Northern Renaissance Faire site. The
booths and craft shops utilized and owned by the individual vendors were moved
onto the site for the Faire and then removed by them. The Company's pending
lease agreement, if completed, would allow these structures to remain in place
year-round and provide the opportunity for additional income-generating events
other than the Renaissance Faire.

SOUTHERN CALIFORNIA RENAISSANCE PLEASURE FAIRE. The Southern California
Renaissance Pleasure Faire has been conducted for the past 36 years in the Los
Angeles metropolitan area. This Faire is held annually for eight or nine
weekends beginning the last week of April and ending Mid-June. In 1999 the Faire
is expected to run eight weekends beginning the first week of May and ending the
third weekend of June. The Company, for the first time, is sponsoring a School
Day Event in conjunction with Events Group Corporation to be held on the faire
site in May of 1999.

The Southern Renaissance Pleasure Faire is held in Glen Helen Regional Park
located near Devore, California. The site is leased from the San Bernardino
County Parks and Recreation Department, under a one year lease for the 1999
Faire. Rental under the lease is equal to 4.0% of gross revenues with a
guaranteed minimum of $165,000. The Company believes it has the option of
leasing the San Bernardino site in the future.

The Southern Renaissance Pleasure Faire site is only occupied during the Faire
season and must be vacated following completion of the Faire. Accordingly, all
structures are mobile and transported to the Northern Renaissance Faire site for
storage during the off-season.

Although the Company has operated that Faire during the past several years at a
profit, management believes that it should either relocate the Faire or obtain a
long-term lease for the current faire site in order to improve its profitability
in the future. The owner of the existing site has indicated that it is willing
to enter into a long-term lease for the faire site. With a long-term



                                       3
<PAGE>

lease, the Company would be able to make permanent improvements to the site and
reduce its annual set-up cost for the faire. The Company has not, as of the date
of this report, entered into a long-term lease for the existing faire site and
there can be no assurance that it will be able to obtain a long-term lease for
this site.

NEW YORK RENAISSANCE FAIRE. The Company acquired Creative Faires, Ltd., the
owner and operator of the New York Renaissance Faire in February of 1996. The
New York Renaissance Faire opened in July 1978 and recreates a 16th century
English country Faire on 65 leased acres in Sterling Forest, Tuxedo, New York.
Creative Faires, Ltd. also produces Sterling Forest's Forest of Fear. The
Company issued 108,000 shares of the Company's Common Stock in consideration for
all of the outstanding shares of Creative Faires, Ltd. Effective November 19,
1998 Creative Faires, Ltd. merged with Renaissance Entertainment Corporation.

The Faire is held annually for eight weekends beginning the first weekend of
August and ending the third weekend of September. The Forest of Fear is held
annually beginning the first weekend of October and ending on Halloween. In
1998, under a joint arrangement with Educational Travel Tours, Inc., the Company
operated two School Day events in May and June.

In 1996, the Company signed a five year lease with Sterling Forest Corp. to
operate the New York Faire in Sterling Forest. The lease term expires after the
faire season in 2000. The Company is currently negotiating with Sterling Forest
Corp. to remain in Sterling Forest and investigating alternative locations for
the Faire.

VIRGINIA RENAISSANCE FAIRE. The Company's newest Faire is located in
Fredericksburg, Virginia on 250 acres of land purchased by the Company in July
of 1995 for $925,000. Like the Bristol Faire, this is a permanent facility. The
Faire generally runs for seven weekends beginning in late April or early May.
All buildings on the property, including performance stages, restaurants, ale
stands and craft shops, were designed in a unified style appropriate to the
Renaissance period and were constructed by the Company during the year prior to
opening. This is the first time the Company has developed a Faire on its own,
since all other Faires owned by the Company represented acquisitions of existing
businesses. The Virginia Faire, as is typical of new Faires, operated at a loss
in 1996, its first year of operation, and incurred an operating loss in the 1997
and 1998 faire seasons. These losses may continue for one or more future faire
seasons until the Company is able to establish a regular customer base and
increase the awareness of the faire.

The construction of the Faire was financed with a $1.5 million mortgage,
repayable over 15 years at an initial interest rate of 8.65% annually, plus the
use of corporate funds. The Company also borrowed $250,000 to finance the
construction of buildings for crafts vendors, with repayment over five years at
an interest rate of 9.5% annually. Some vendors have paid for their buildings
outright, others have utilized the financing provided by the Company, while
others rent space with an option to purchase. The Company arranged for vendor
financing in order to attract desirable vendors to the new Faire, and to develop
a permanent contingent of Faire participants.

Entertainment at the Virginia Faire is managed, in part, by employees of the
Bristol Faire. The Company is developing other income-producing activities for
this site. In 1998, under a joint arrangement with Educational Travel Tours,
Inc. the Company operated a School Day event in



                                       4
<PAGE>

May. The Company co-sponsored a Wine Fest and opened a Halloween event, Fear
Fest in October. The winter festival was held in December 1998. Of these
additional events, all are scheduled to operate in 1999 except the winter
festival. The Company continues to investigate other potential uses for this
site including music festivals, or other special events.

VENDORS

Approximately 13% of the revenues realized from presenting the Company's 
Renaissance Faires are generated from the Company's relationships with 
vendors and craftspersons who sell food and crafts, and offer games and 
rides. During the 1998 faire season, there were approximately 180 vendors at 
the Bristol and Northern California Faires', 150 at the Southern California 
Faire, 125 at the New York Faire and 60 vendors at the Virginia Faire. 
Typically, there is little turnover in vendors from one faire season to the 
next. The loss of any one or more vendors would not have a material adverse 
effect upon a particular faire.

At the Bristol Renaissance Faire site, the vendors and craftspersons are 
required to construct their shops and booths at their own cost and then 
occupy the structures on a year-to-year basis for an annual fee of $900.

At the Virginia Renaissance Faire site, shops and booths are constructed by the
vendors. All buildings so constructed become a permanent part of the Faire and
are the property of the Company. All vendors at the Virginia Renaissance Faire
pay the Company a fee of 5% to 17% of gross revenues and many pay a flat fee in
addition to the percentage of revenues.

At the Northern and Southern California Renaissance Pleasure Faires, craft shops
and booths are owned by the vendors and transported onto the site for the
duration of the Faire and then removed. In lieu of a flat fee to participate,
vendors at the California Faires pay the Company a fee equal to 5%-19% of their
gross revenues.

The decision to charge a flat fee or a percentage of revenues is based on
several factors, including the custom of a particular faire and the extent to
which vendors must invest in the construction of their booths. The advantage to
the Company of the flat fee method is that it is easier to monitor and is more
predictable. The advantage to the Company of the percentage method is that the
Company may participate to a greater extent as attendance at the faire
increases. Vendors occupy their booths and shops pursuant to written lease
agreements with the Company which have a term of one year, and require renewal
by both the vendor and the Company each year. Under these agreements, each
vendor agrees to indemnify and hold harmless the Company from any liability
which may arise by virtue of the vendors' activities at the Faire. Nevertheless,
the Company maintains general public liability insurance which also provides
coverage for such risks.

REVENUE SOURCES

A Renaissance Faire generates revenues from numerous sources, including gate
admissions, beverage sales, parking fees, food sales, craft fees, game fees,
camping fees, souvenir sales and sponsorship fees. The following table shows the
Company's revenues during the 1998 and 1997 faire seasons from each of these
activities.



                                       5
<PAGE>

<TABLE>
<CAPTION>
                                             1998                 1997
                                        -----------           -----------
<S>                                     <C>                   <C>
Gate Admissions                          $7,064,819            $6,287,093
Beverage Revenue                          3,051,353             2,826,241
Parking Revenue                             864,938               876,557
Food Revenue                                636,899             1,191,705
Craft Fees                                1,724,922             1,246,980
Game Fees                                   237,867               230,642
Souvenir Revenue                            942,485               827,907
Sponsorship Fees                            235,556               252,292
Camping Fees                                311,004               261,136
Miscellaneous Fees                          149,562               158,037
                                        -----------           -----------
     Total                              $15,219,405           $14,158,590
</TABLE>


GATE ADMISSIONS. Gate admissions are set generally from $11.00 to $17.50 for
adults, $5.50 to $7.50 for children, with children under the age of three to
five admitted free. Discounts for senior's and in some cases, students and
military personnel range from $1.00 to $2.50. Off premises discount ticket sales
are available at Cub Foods, Sentry Foods, Super Saver, Shoprite, Springfield
Mall, Hannaford's Food, 7-11 and CalaBell. Discount coupons are available at
retail outlets operated by the Company's sponsors, including McDonalds, Subway,
White Castle, Wendy's, Blockbuster Video, Target, and Amoco Stations. The
Company has a large group sale and advance sale program that provides discounted
tickets. Admission provides the guest with all-day continuous entertainment on
multiple stages. Major entertainment acts include full contact jousting,
falconry, variety acts, sword duels, Shakespearean vignettes and authentic
belly-dancing.

BEVERAGE INCOME.  The Company sells beer, wine and soft drinks at each Faire.

PARKING INCOME. The California Faires charge $6.00 per car for regular parking
and $10 for preferred close-in parking. The Bristol and New York Faires have
preferred parking for $2.00 and $5.00. The Virginia Faire does not charge for
parking.

FOOD REVENUE. At the California and New York Faires, all food concessions are
run by independent vendors. These vendors pay the Company a commission equal to
approximately 15% of their gross revenues. At the Bristol Faire, the Company
owns certain high volume food items such as turkey legs, pizza, roast beef and
brats (sausages). These items comprise approximately 50% of the total food
sales. Additional food items are sold by independent food vendors who pay the
Company approximately 15% of their gross revenues. At the Virginia Faire, the
Company currently owns all of the food concessions.

CRAFT FEES. Each Faire has from 60 to 180 independent craft vendors who sell
their goods to Faire patrons. Most of the craft items are handmade by the
artists who often demonstrate the making of their wares at the Faire. The
glassblowers and lace-makers are generally very popular. The craft vendors in
California pay the Company a fee of approximately 15% of their gross revenue. At
the Bristol, New York and Virginia Faires, craft vendors are required to build
their own booth or shop, and either pay a flat annual fee or a percentage of
their gross income.



                                       6
<PAGE>

GAME FEES. Many games and rides are operated by independent contractors. The
Company receives 15% of the gross revenues from these games and rides.

SOUVENIR REVENUE. The sale of souvenir tee-shirts, sweatshirts, beer mugs, books
and other high quality merchandise appropriate to the Renaissance era is
believed by the Company to represent an area of excellent future opportunity. It
is intended that the Company's products will also be sold through other outlets,
such as catalogues, department stores, and on-line via the Company's Internet
Web site. There can, however, be no assurance that the Company will be
successful in marketing its products and memorabilia through alternative means
in the future.

SPONSORSHIP FEES. The Company solicits sponsorship arrangements with major
sponsors including Coca-Cola Company, Anheuser-Busch, Inc., Miller Brewing
Company, Eastman Kodak Company, Pepsi Cola Company, Grand Pacific Resorts, Trend
West Resorts, Earth Grains Bread Company, Bolla Wine, Fuji Film, and Guinness
Import Co. The sponsors also participate in joint advertising campaigns.

CAMPING FEES. The Company allows employees and independent vendors limited
camping at the Faire sites during the Faire season. The Company provides
portable rest room facilities, showers and security for campers. The campers are
charged and pay a fee for these services.

MARKETING

The Company markets its Faires as entertainment events for the whole family,
which also include shopping and food. Marketing is accomplished through local
television and radio stations which, from time-to-time, and, often in
conjunction with other advertisers, conduct live broadcasts from the Faires.
Supplementing this television and radio advertising, newspapers and billboards
provide essential information to the general public regarding the cost of
admission, location and times of operation. Artistic brochures and fliers are
directed toward groups for advance sales campaigns.

The Company has also undertaken a "Sponsorship" campaign. Major sponsors have
included Eastman Kodak Company, Coca-Cola Company, Miller Brewing Company, Amoco
Petroleum Company, Evian Water, Canandiagua Wine, Mindspring Software, Shell
Development and Sentry Foods, Inc. Agreements with such sponsors have included
joint advertising, sponsorship fees, and product giveaways.

During the 1998 faire season, the Company conducted matinee programs with
Educational Travel Tours, Inc. for school children at three of its faire sites.
The program is designed to provide an educational experience with lively
entertainment. 15,300 school children attended these programs during 1998 and
25,000 are expected at four faire sites in 1999.

SEASONALITY AND WEATHER

The Company generates its revenue primarily from the production of Renaissance
Faires. Since, at this point, they are exclusively outdoor events, each Faire is
scheduled for the time of year most likely to minimize the risks and hazards of
inclement weather. With a total of five Faires in various U.S. locations, the
Company has been able to extend the period of revenue generation from late



                                       7
<PAGE>

April (the start of the Southern California and Virginia Faires) through early
October (the end of the Northern California Faire), with the Bristol Renaissance
Faire being held during July and August, and the New York Faire during August
and September. The spread of Faires over a six-month period, and the geographic
spread across the West coast, the East coast and the mid-West, helps to assure
that inclement weather in one particular geographic area at any particular time
does not adversely threaten the Company's entire source of revenue. It is
normal, however, for adverse weather, or even the forecast of adverse weather,
to harm the financial results during certain weekends of any particular Faire.

During the period from the middle of October through April, the Company
currently has no material income-generating activity and must meet its working
capital requirements from cash flow earned during the Faire season augmented by
short-term debt. The Company plans to continue producing the previously
mentioned special events and to continue researching additional events at
certain of the Company's other Faire sites.

Each Faire is scheduled for a finite period which is determined substantially in
advance in order to facilitate advertising and other promotional efforts. Since
attendance at each Faire is dependent upon the weather, poor weather conditions
can result in substantial declines in attendance and loss of revenues. The
Bristol, New York and Virginia Faires are open "rain or shine." The Northern and
Southern California sites, which have temporary buildings, are closed on rain
days. The Company is also vulnerable to severe climatic events which are
similarly beyond its control but nevertheless could have a direct and material
impact upon the Company's relative success or failure.

COMPETITION

As a promoter and operator of family entertainment events, the Company faces
significant competition from other more traditional entertainment alternatives,
including amusement parks, theme parks, local and county fairs, and specialty
festivals. At each of the markets in which the Company competes, there are many
entertainment events which compete for the consumers' entertainment dollars.
Many of these entertainment events have attendance and revenues substantially
greater than the Company's Faires in such markets. The Company competes on the
basis of entertainment value and uniqueness of the Renaissance event. The
Company emphasizes its Faires as an activity which appeals to the whole family.

While there are more than 100 annual entertainment events produced in the 
country with a Renaissance theme, there are approximately 20 major 
Renaissance Faire productions operated in major metropolitan areas throughout 
the country. As families typically do not travel to distant metropolitan 
areas in order to attend a Renaissance Faire, the Company does not experience 
direct competition with those other major productions. More significant 
competition comes from other entertainment alternatives and smaller fair 
events.

Further, by the very nature of Renaissance Faires and the lack of protection
afforded by trademark, service mark and unfair competition laws, there exist few
barriers to entry into the industry, and there can be no assurance that other
companies with substantially greater resources will not develop competing Faires
in the metropolitan areas where the Company has established productions.



                                       8
<PAGE>

INTELLECTUAL PROPERTY

Because of the number of existing Faire productions with Renaissance themes, it
is unlikely that the Company will be able to rely upon trademark or service mark
protection for the name "Renaissance Faire" in connection with its business.
However, the Company did obtain in connection with its acquisition of Living
History Center assets an assignment of a California registration of the mark
"Renaissance Pleasure Faire" which applies only to the state of California. The
Company also has a Virginia service mark for the "Virginia Renaissance Faire."
Further, it is possible that the Company could apply for and obtain trademark or
service mark registrations on a state level for its other individual Faires,
such as "Bristol Renaissance Faire" and other name-specific marks associated
with the "Renaissance Faire" description as those names are acquired or
developed. While the Company may be able to protect a site-specific name for its
productions, the Company does not consider this protection a significant
deterrent to the entry of competitors into existing markets, given the limited
barriers to such entry.

PUBLIC LIABILITY AND INSURANCE

As a producer of public entertainment events, the Company has exposure for
claims of personal injury and property damages suffered by visitors to the
Company's Renaissance Faires. To date, however, the Company has experienced only
minimum claims which have been resolved quickly without litigation. The Company
maintains comprehensive public liability insurance in the amount of $1,000,000
per occurrence and $2,000,000 in the aggregate, which it considers to be
adequate against this exposure. Independent vendors operating food concessions,
games and rides are required to obtain liability insurance protection, and to
provide the Company with proof of such coverage.

GOVERNMENT REGULATION

Since food and alcoholic beverages are sold at the various Faire sites, the
Company, its vendors and/or subsidiaries must comply with all applicable rules,
regulations and/or ordinances pertaining to the handling and sale of such items.
Any material violation of these regulations would subject the Company, its
vendors and/or its subsidiaries to the possibility of having necessary food
service permits and liquor licenses revoked. Material violations may also result
in penalties and fines being assessed against the Company. The Company must also
comply with all state and federal labor laws and regulations, including all
minimum wage and overtime provisions.

The Company believes that it is in compliance with all such laws, and does not
anticipate that any existing law will have a material adverse impact upon the
proposed business and operations of the Company. Although future compliance
cannot be assured in the event of future changes in such laws or the addition of
regulations governing the proposed business and operations of the Company, the
Company will, at all times, endeavor to take all feasible and required actions
necessary to maintain compliance with such laws.



                                       9
<PAGE>

EMPLOYEES

At March 31, 1999, the Company had 11 full-time employees working in its
Colorado headquarters. Each Faire has its own full-time staff as well as
seasonal and part-time employees who are engaged during the Faire presentation.
At March 31, 1999 the Bristol Faire had 10 full-time employees, the California
Faires had 19 full-time employees, the New York Faire had 6 full-time employees
and the Virginia Faire had 10 full-time employees.

During Faire presentations, there are over 100 street actors interacting with
Faire patrons at any given time, with over 1,000 seasonal employees and
volunteers. The Company trains its professional street actors, who perform under
contract with the Company for a fixed fee. In addition, the Company invites
numerous apprentice actors and actresses to its training programs to perform
during the Faire on a volunteer basis. Only after an actor or actress has gained
a particular proficiency are they invited to become a fully-paid contract actor
for the Company.

                                ITEM 2: PROPERTY

The Company's corporate headquarters are located at 275 Century Circle, Suite
102, Louisville, Colorado. This property measures 2,789 square feet and is
currently leased at $3,603 per month, with annual increases based on increases
in the Consumer Price Index. The lease is for a term of five years expiring in
2003, with two five-year renewal options. The Company considers these offices to
be suitable for its current needs.

The Company leases approximately 160 acres in Kenosha County, Wisconsin, which
is home to the Bristol Renaissance Faire. The lease is for a period of 20 years
with lease payments of $400,000 per year during each of the first two years
beginning in November 1997 and increasing to $543,333 per year in years 13
through 20. The Company has the right to acquire the property during the term of
the lease at an aggregate price of $4,433,333 during the first three years,
increasing to $4,900,000 during years 13 through 20. The Company has made a
security deposit of $666,667, $333,333 of which is to be released in three years
and the balance released in seven years.

The Company recently obtained a lease, subject to certain contingencies, for the
Northern California Renaissance Pleasure Faire. This lease is contingent upon
the Company obtaining the necessary permits and the lessor closing on the
purchase of the property. See "Business--Existing Renaissance Faires and
Sites--Northern California Renaissance Faire."

The New York Faire is operated on 65 acres of leased land in Tuxedo, New York.
This lease expires December 31, 2000.

On July 27, 1995, the Company acquired approximately 250 acres of land in
Stafford County, Virginia, for a purchase price of $925,000. The funds for this
purchase were provided from the proceeds of a sale of the Company's Common Stock
early in 1995. This property houses the Virginia Renaissance Faire. The
construction of the Faire was financed with a $1.5 million mortgage (balance at
December 31, 1998 - $564,448), repayable over 15 years at an initial interest
rate of 8.65% annually, plus the use of corporate funds. The Company also
borrowed $250,000 to



                                       10
<PAGE>

finance the construction of buildings for crafts vendors, with repayment over
five years at an interest rate of 9.5% annually. The loan for $250,000 has been
repaid. In March, 1999 the company obtained a second mortgage on this property
in the amount of up to $750,000. (See "Management's Discussion and Analysis of
Financial Condition and Results of Operation-Liquidity").

                            ITEM 3: LEGAL PROCEEDINGS

From time to time, the Company is a party to legal proceedings arising in the
ordinary course of business. On June 25, 1998, Dawn Morgan, a former employee of
the Company, commenced an action against the Company (on all allegations) and a
former officer of the Company in Superior Court of the State of California in
and for the County of Marin alleging breach of contract, breach of the implied
covenant of good faith and fair dealing, promissory estoppel, negligent
misrepresentation, unlawful discrimination based on age, physical disability
discrimination and negligent infliction of emotional distress. This suit has
been settled, based on the Company's agreement to pay Ms. Morgan $50,109.

            ITEM 4: SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

The Company did not submit any matters to a vote of its securityholders during
the fourth quarter of its fiscal year ended December 31, 1998.

                      ITEM 5: MARKET FOR THE COMMON EQUITY
                         AND RELATED STOCKHOLDER MATTERS

PRICE RANGE OF COMMON STOCK

     On December 21, 1998 the Company's Common Stock and Class A and Class B 
Warrants were delisted from the Nasdaq Small Cap Market. Since December 21, 
1998 the Company's Common Stock has been traded on the OTC Bulletin Board 
under the symbol FAIRC. From August 21, 1997 to December 21, 1998, the 
Company's Common Stock traded in the Nasdaq Small Cap Market and from 
September 1, 1995 to August 21, 1997, it traded on the Nasdaq National 
Market. From December 9, 1996, to January 27, 1998, the Company's Common 
Stock was also traded on the Philadelphia Stock Exchange. The following table 
reflects the high and low prices of the Company's Common Stock for each 
quarterly period of the two most recent calendar years and the subsequent 
interim quarters retroactively adjusted for a 1-for-5 reverse stock split in 
February 1998. The prices reflect the high and low sales prices. The 
quotations represent prices between broker-dealers and do not include retail 
mark-ups and mark-downs or any commission to the broker-dealer and may not 
reflect prices in actual transactions.

                                       11
<PAGE>

<TABLE>
<CAPTION>
Calendar Years Ended December 31                            High             Low
--------------------------------                            ----             ---
<S>                                                       <C>             <C>
          1997
First Quarter ended March 31                              $34.38          $25.31
Second Quarter ended June 30                               25.00            5.00
Third Quarter ended September 30                            6.25            2.50
Fourth Quarter ended December 31                            6.56            1.40

          1998
First Quarter ended March 31                               1.625           0.625
Second Quarter ended June 30                                1.12           0.375
Third Quarter ended September 30                            1.46           0.437
Fourth Quarter ended December 31                           0.937            0.15

         1999
First Quarter ended March 31                                1.00            0.23
</TABLE>

     As of February 28, 1999 there were approximately 128 shareholders of
record. The Company estimates that there are approximately 1,600 beneficial
owners of its Common Stock.

DIVIDENDS

The Company has never paid cash dividends on its Common Stock, and does not
anticipate the payment of such dividends in the foreseeable future.

                 ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements, including the footnotes for the fiscal period
ended December 31, 1998. On June 21, 1996, the Company changed its fiscal year
end from March 31 to December 31.

The Company operates five Renaissance Faires in the United States. The Company's
newest Faire opened on May 4, 1996 in Fredericksburg, Virginia, a project
designed and constructed by the Company. On February 5, 1996, the Company
acquired Creative Faires, Ltd., the owner and operator of the New York
Renaissance Faire. The Renaissance Faire is a re-creation of a Renaissance
village, a fantasy experience transporting the visitor back into sixteenth
century England.

Although the Company was profitable in its fiscal year ended March 31, 1995, it
incurred a net loss of ($1,273,671) in the fiscal year ended March 31, 1996, a
net loss of ($1,851,725) for the nine months ended December 31, 1996, a net loss
of ($2,567,097) for the fiscal year ended December 31, 1997 and a net loss of
($203,080) for the fiscal year ended December 31, 1998. The Virginia Faire has
operated at a decreasing loss since opening in 1996. It is typical for a new
faire such as



                                       12
<PAGE>

the Virginia Faire to operate at a loss for two or more years until it is able
to build a significant customer base and awareness of the faire. Although the
New York Faire operated at a loss in 1996 and 1997 it was profitable in 1998. In
1997 the Company hired a new manager for this Faire, introduced several new
entertainment acts and implemented additional promotional efforts. These changes
were key in returning this faire to a profitable status.

While the Company has a contingent lease for a new site for the Northern 
California Faire, the Company may not be able to complete all arrangements 
for this site for the 1999 or following faire seasons. The Company is also 
negotiating with the owner of the Southern California Faire site for a 
long-term lease for this site. The ability to enter into a long-term lease 
for this site would increase its value to the Company, as the Company could 
construct structures on the site and significantly reduce setup costs for the 
Faire.

The Company had a working capital deficit of $147,726 as of December 31, 
1998. During the first four months of fiscal 1999, the Company obtained 
$500,000 of additional capital through short-term loans and $500,000 (which 
could be increased to $750,000 upon the completion of the lease for the 
Northern California Faire) by obtaining a second mortgage on the Virginia 
property. While the Company believes that it has adequate capital to fund 
anticipated operations for the balance of 1999, it believes it must obtain 
additional capital for future fiscal periods. See "LIQUIDITY AND CAPITAL 
RESOURCES."

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997. Revenues
increased $1,060,822 or 7% from $14,158,590 in 1997 to $15,219,412 in 1998. This
increase was primarily the result of increased revenue of approximately $194,000
at the Virginia Faire, $137,000 for the Southern California Faire, $351,000 for
the Wisconsin Faire, $247,000 for the New York Faire and $132,000 for the
Northern California Faire. The increased revenue for the Virginia, Wisconsin,
and New York Faires was primarily due to increased overall attendance. The
increased revenue for the Southern California Faire was due to an increase in
paid attendance, as well as being open one more weekend in 1998 than in 1997.
The increased revenue for the Northern California Faire is primarily a result of
increased paid attendance.

Faire operating expenses increased $72,062 or 2% from $4,606,602 in 1997 to
$4,678,664 in 1998. Overall cost of sales inherently increases with revenue.
Cost of sales as a percent of revenue actually decreased 1.8% from 1997 to 1998
indicating improved efficiency in the utilization of resources within this
expense category.

Operating expenses (year-round operating costs and corporate overhead) decreased
$1,506,577 or 13%, from $11,840,179 in 1997 to $10,333,602 in 1998. The
Company's management has spent a considerable amount of time reviewing operating
expenses categorically and implementing plans and systems to lower operating
expenses.



                                       13
<PAGE>

Of the operating expenses, salaries decreased 7%, from $4,745,507 in 1997 to
$4,398,917 in 1998, reflecting a continued reduction in personnel expense for
the 1998 period as compared to the 1997 period.

Advertising expense decreased $554,329, or 23%, from $2,435,229 in 1997 to
$1,880,900 in 1998. This decrease was due to the continued utilization of more
cost efficient methods of advertising.

Depreciation and amortization decreased 16%, from $701,599 in 1997 to $585,977
in 1998. This decrease was primarily the result of the Company's utilization of
accelerated methods of depreciation resulting in more depreciation in the
earlier years of an asset's life and less later.

Other operating expenses (all other general and administrative expenses of the
Company) showed a decrease of $490,036 or 12%, from $3,957,844 in 1997 to
$3,467,808 in 1998. Numerous cost savings plans were implemented again this year
targeted at reducing this category of expenses.

As a result of the foregoing, net operating income (before interest charges and
other income) increased $2,495,337 from a loss of ($2,288,191) for the 1997
period to income of $207,146 for the 1998 period.

A 74% increase in interest expense from $370,813 in 1997 to $644,227 in 1998
resulted from the accounting treatment of the sale-leaseback of the Wisconsin
property effected in November, 1997. Due to the structuring of this transaction,
FASB 98 required that this transaction be treated as a financing arrangement
resulting in interest expense as opposed to operating lease payments. Except for
the above-mentioned item, the Company's borrowing level and associated interest
expense has decreased over the past one year period.

Other income increased $124,588, from $30,876 in 1997 to $155,464 in 1998. This
line item is a collection of income and expense items that do not specifically
relate to the general operations of the business in the current period. These
items are variable and often non-recurring events such as the receipt of income
as the result of an easement grant on Company held property.

Combining net operating income with other income/expense resulted in a
$2,364,017 decrease in net loss, from a loss of ($2,567,097) for the 1997 period
to a loss of ($203,080) for the 1998 period. Net loss to common stockholders
decreased $2,364,017, from a loss of ($2,567,097) for the 1997 period to a loss
of ($203,080) for the 1998 period. Finally, net loss per common share decreased
from a loss of ($1.32) for the 1997 period to a loss of ($0.10) for the 1998
period, based on 1,949,217 weighted average shares outstanding during the 1997
period and 2,095,785 weighted average shares outstanding during the 1998 period.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO NINE MONTHS ENDED DECEMBER 31, 1996.
Revenues decreased approximately $394,987 or 3% from $14,543,577 in 1996 to
$14,158,590 in 1997. This decrease was primarily the result of a decrease in
revenues for the Virginia Faire of approximately $150,000 and a decrease in
revenues for the Bristol and Southern California faires of approximately
$200,000 each. These decreases were offset by increases of approximately
$200,000 and $50,000 for the Northern California and New York faires,
respectively. The decreased revenues for the Virginia Faire were due to
unusually inclement weather - six of the



                                       14
<PAGE>

seven faire weekends had substantial rain which severely impacted attendance.
The decreased revenues for the Southern California Faire were due to being open
one less weekend in 1997 than in 1996. The decreased revenues for the Bristol
faire was due to less favorable weather in 1997 than in 1996. Although revenues
were down in Virginia, the operating loss was reduced by approximately $100,000,
from a loss of approximately $650,000 for the 1996 period to a loss of
approximately $550,000 for the 1997 period, through expense control.

Operating expenses (year-round operating costs and corporate overhead) increased
$345,722 or 3%, from $11,494,457 in 1996 to $11,840,179 in 1997. The primary
causes for the increase is the three months of additional expense included in
the 1997 period. This increase was partially offset by the $380,000 of goodwill
writedown, unusual expenses of a one time nature of approximately $400,000
applicable to the initial start-up of the Virginia Faire included in 1996
results, and a $450,000 accrual in the fourth quarter of 1996 relating to
expenses expected to be incurred in connection with the relocation of the
Northern California faire.

Of the operating expenses, salaries and wages increased 17%, or $696,904 in 1997
primarily due to the full 12 months of expenses in the 1997 period compared to 9
months in the 1996 period.

Advertising expense decreased $76,744, or 3%, from $2,511,973 in 1996 to
$2,435,229 in 1997. This decrease was due to spending more in 1996 for
advertising the first year of the Virginia Faire as well as the utilization of
more cost efficient methods of advertising in 1997.

Depreciation and amortization increased $67,780 or 11%. This increase reflects
the 12-month period in 1997 compared to 9 months in 1996. This increase would
have been greater had the Company not standardized the depreciable lives used
for buildings from a range of between 7 to 30 years in 1996 to 15 years for
temporary buildings and 30 years for permanent buildings in 1997.

Other operating expenses (all other general and administrative expenses of the
Company) decreased $342,218 or 8%, from $4,300,062 in 1996 to $3,957,844 in
1997. The decrease would have been larger except for the fact that the 1997
period included expenses for 12 months compared to only 9 months for the 1996
period. Included in this decrease is the $400,000 of one-time expenses discussed
above, incurred in 1996 in connection with the initial start-up of the Virginia
Faire. The balance of the decrease is due to management's implementation of a
variety of cost saving measures.

As a result of the foregoing, net operating income (before interest charges and
other income) decreased $534,695 from a loss of ($1,753,496) for the 1996 period
to a loss of ($2,288,191) for the 1997 period. This decrease is due to the 1997
period including a full 12 months of operations compared to only 9 months in
1996. The first three months of the calendar year, which were not included in
the 1996 period, is the worst quarter for the Company as it has no significant
revenues during this quarter. If this quarter was included in the 1996 period,
it would have shown a loss of approximately ($3,220,000) or an increased loss of
approximately ($930,000) compared to 1997.

A 46% increase in interest expense from $253,740 in 1996 to $370,813 in 1997
reflects the three additional months in the 1997 period and an increase in the
Company's borrowing levels throughout the 1997 period as compared to the 1996
period.



                                       15
<PAGE>

Other income/expense decreased $56,064, from other income of $86,940 in 1996 to
other income of $30,876 in 1997. The primary cause for the decrease was due to
the write-off in 1997 of approximately $73,000 of expenses relating to the
development of a potential new site for the Southern California faire which had
been capitalized in 1996.

Combining net operating income with other income/expense resulted in a
($715,372) increase in net loss before taxes, from a loss of ($1,851,725) for
the 1996 period to a loss of ($2,567,097) for the 1997 period. Again, if the
first quarter of the calendar year had been included in the 1996 period, net
income before taxes would have shown a reduction of approximately ($784,000) in
the net loss in 1997 compared to the net loss for the full 12-month period in
1996.

NINE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO NINE MONTHS ENDED DECEMBER 31,
1995. On June 21, 1996, the Board of Directors of the Company approved a change
in the Company's fiscal year from April 1 to March 31 to January 1 to December
31. As a result, the fiscal period ended December 31, 1996 is for a nine-month
period, rather than for a full twelve months. In order to make the comparison of
the fiscal period ended December 31, 1996 with the prior fiscal year more
meaningful, the following discussion compares the results of operations for the
fiscal period ended December 31, 1996 to the results of operations for the nine
months ended December 31, 1995, rather than to the full fiscal year ended March
31, 1996. See "Selected Financial Data," for information regarding the unaudited
results of operations for the nine months ended December 31, 1995, as well as
information for the audited fiscal periods ended March 31, 1995 and 1996 and
December 31, 1996.

The results of operations of the Company for the nine-month period ended
December 31, 1996 reflect the nineteen-day run of the Southern California Faire,
the eighteen-day run of the Wisconsin Faire, the fifteen-day run of the Northern
California Faire, the seventeen-day run of the New York Faire and the
fifteen-day run of the Virginia Faire. The comparable period of 1995 included
the same number of days for the Southern California, Wisconsin, and Northern
California Faires, but did not include the New York or Virginia Faires. The New
York Faire was acquired on February 5, 1996, and although accounted for as a
pooling of interests and therefore included in the Company's fiscal year ended
March 31, 1996, due to the different fiscal periods for the Company and the New
York Faire, the entire twelve-month results of operations for the New York Faire
for the year ended December 31, 1995 (the New York Faire's fiscal period) were
reflected in the Company's operating results for the January 1, 1996 through
March 31, 1996 quarter (the Company's fiscal year end prior to its change on
June 21, 1996) and not in the nine-month period ended December 31, 1995. The
Virginia Renaissance Faire, which was under construction as of December 31,
1995, did not generate any revenues during the nine-month period ended December
31, 1995. Thus, these financial statements include the results of five operating
Faires for the period in 1996, but only three Faires for the same period in
1995.

Revenue increased from $10,469,824 for the nine-month period ended December 31,
1995 to $14,553,577 for the nine-month period ended December 31, 1996, an
increase of $4,083,753 or 39%. The increase in revenues resulted from the
additional revenues of $949,304 and $2,360,941 for the Virginia and New York
Faires, respectively, for the period ended December 31, 1996, as compared to the
same period of 1995. The increased revenues from the new Faires were partially



                                       16
<PAGE>

offset by a decrease of approximately $500,000 in revenues for the Southern
California Faire as compared to the same period of 1995. Management believes
that unusually inclement weather in Virginia, New York and Southern California
reduced the expected revenues from these faire operations. In addition, the
Virginia Faire, as is typical of new Faires, operated at a loss in 1996, its
first year of operation, and is expected to incur an operating loss in the 1997
faire season. During the 1996 season the Bristol Renaissance Faire revenues
increased approximately $500,000 over the 1995 season due, in part, to good
weather during each of the nine weekends of this faire. This was the eighth
consecutive year that attendance increased at the Bristol faire.

Faire operating expenses (expenses directly related to faire operations, such as
rent, grounds maintenance, contract services, contract entertainment, food,
beverage and merchandise costs) increased $1,607,464 or 50%, from $3,205,152 in
the 1995 period to $4,812,616 in the 1996 period. This increase in expenses
resulted from the additional operation of the Virginia and New York Faires for
the period ended December 31, 1996, as compared to the same period in 1995, plus
higher overall costs related to faire operations. The gross profit, representing
operating income from faire operations before overhead expenses, increased 34%
from $7,264,672 in 1995 to $9,740,961 in 1996. This increase is attributable to
the increased revenues from the Virginia and New York Faires, partially offset
by the higher overall costs related to all faire operations.

Operating expenses (year-round operating costs and corporate overhead) increased
$4,340,783 or 61%, from $7,153,674 in 1995 to $11,494,457 in 1996. Of these
amounts, salaries increased 34% from $3,030,208 in 1995 to $4,048,603 in 1996,
representing the expansion of staffing levels resulting from the two additional
Faires. Depreciation and amortization expense increased 88% from $337,208 in
1995 to $633,819 in 1996. This increase is primarily the result of depreciation
on the approximately $3,200,000 investment in buildings and improvements to the
Virginia property, as well as the New York Faire, both of which were not
included in the same period of 1995. Advertising expenditures increased 142%
from $1,036,508 in 1995 to $2,511,973 in 1996, again reflecting the necessary
advertising for the two additional Faires as well as moderate increases in
advertising and rates for the other three Faires. Additionally, due to
contracting out certain advertising activities previously done by faire
personnel, additional advertising expenses of approximately $136,000 were
charged to advertising expenses during the 1996 period.

The Company wrote down goodwill applicable to the Southern California Faire by
$380,000 in 1996, based on this Faire's disappointing performance over the past
two operating seasons. The Company recognized as expense in the nine-month
period ended December 31, 1996, $450,000 of costs originally expected to be
incurred in 1997, which costs are the result of the decision made in 1996 to
examine an alternative site for the Company's Northern California Faire. See
"GENERAL" above regarding the possible relocation of the Northern California
Faire.

Other operating expenses (all other general and administrative expenses of the
Company) increased $720,808 or 26%, from $2,749,254 in 1995 to $3,470,062 in
1996. This increase is primarily the result of increased operating expenses
(approximately $570,000) resulting from the two additional Faires, and also
greater overhead costs (approximately $100,000 in the aggregate) at each faire
site plus an increase in other corporate activities (approximately $50,000)
which support faire operations and pursue new ventures. As a result of the
foregoing, net operating income (before



                                       17
<PAGE>

interest charges and other income) decreased $1,864,495, from $110,999 in 1995
to a loss of ($1,753,496) in 1996.

A 27% decrease in interest income from $94,090 in 1995 to $68,571 in 1996
resulted from a more than 40% decrease in the Company's cash balances during the
1996 period. A 153% increase in interest expense from $100,266 in 1995 to
$253,740 in 1996 resulted from increases in the Company's borrowing levels
throughout the 1996 period as compared to 1995. Combined net interest expense
(interest expense less interest income) reflected an increase of $178,993 for
the period, from $6,176 in 1995 to $185,169 in 1996. Miscellaneous expenses
decreased from $224,612 in 1995 to $86,940 in 1996. Combining net operating
income with other income resulted in a $2,161,159 decrease in net income before
taxes, from income of $309,434 in the 1995 period to a loss of $1,851,725 in the
1996 period.

Although the Company incurred a net loss for the entire fiscal year ended March
31, 1996, for the nine-month period ended December 31, 1995, a provision for
income tax in the amount of $45,470 was recorded. As a result of the Company's
loss for the nine-month period ended December 31, 1996, no income tax expense
was recorded.

Net income to common stockholders decreased $2,115,689, from $263,964 net income
for the 1995 period to a loss of $1,851,725 for the 1996 period. Finally, net
income per common share decreased from $0.03 during the 1995 period to a loss of
$.21 for the 1996 period, based on 7,643,702 weighted average number of shares
outstanding during the 1995 period and 8,907,049 weighted average number of
shares outstanding during the 1996 period.

LIQUIDITY AND CAPITAL RESOURCES

The Company's working capital deficit narrowed slightly during 1998 from
($204,821) at December 31, 1997 to ($147,726) at December 31, 1998. This
improvement resulted from a number of cost reductions implemented by management
in order to reduce the Company's working capital requirements.

The Company's working capital requirements are greatest during the period from
January 1 through April 30, when it is incurring start-up expenses for its first
Faires of the Faire season, the Southern California and Virginia Faires. During
the first four months of fiscal 1999 the Company raised $500,000 of short-term
capital. These funds were provided by Charles S. Leavell ($100,000), Chairman of
the Board of Directors, two directors and two officers of the Company (an
aggregate of $225,000) and three other investors. The loans allow interest at
4.5% per quarter and are secured by existing monies and future revenues from the
Company's Faires. The investors also were granted a five-year warrant to
purchase one share of common stock for each $5.00 loaned to the Company at an
exercise price equal to the average closing bid price for the Company's common
stock for the five business days immediately preceding the Closing of each loan.
These loans mature August 31, 1998.

During March of 1999, the Company secured a second mortgage on its Virginia 
real estate. The total amount of the loan is $750,000, of which $500,000 was 
funded at closing and $250,000 will be funded at such time as the Company has 
completed the lease for the Northern California Faire

                                       18
<PAGE>

site. This loan is secured by a Second Deed of Trust on the Virginia property.
Further, until a lease for the Northern California Faire site is obtained or
repayment of $250,000 of the amount originally disbursed under the note, the
loan is also secured by the Company's existing cash and future income. This loan
allows interest at 13% per annum. Payments are interest only 4/1/99 through
6/1/99; principal and interest on a 5-year amortization of the amount of debt
remaining unpaid on 6/1/99 from 7/1/99 through 1/1/2000; interest only 2/1/2000
through 6/1/2000; principal and interest on a 5-year amortization of the amount
of debt remaining unpaid on 6/1/2000 from 7/1/2000 through 11/1/2000; and
remaining principal and interest is due in full on 12/31/2000. Additionally, if
the lease of the Northern California Faire site is not completed on or before
8/1/99, $250,000 becomes due and payable. The investor also was granted an
option to purchase one share of the Company's common stock for each $10.00
loaned to the Company at an exercise price of $0.81 per share. These options
expire on the earlier of 12/31/2005 or the third anniversary of the payment in
full of the loan.

While the Company believes it has adequate capital to fund anticipated
operations for fiscal 1999, it believes it must obtain additional working
capital for future periods.

Reviewing the change in financial position over the years, current assets,
largely comprised of cash and prepaid expenses, decreased from $1,235,606 at
December 31, 1997 to $771,045 at December 31, 1998, a decrease of $464,561 or
38%. Of these amounts, cash and cash equivalents decreased from $590,022 at
December 31, 1997 to $379,336 at December 31, 1998. Accounts receivable
decreased from $21,710 at December 31, 1997 to $18,509 at December 31, 1998.
Prepaid expenses decreased from $480,320 at December 31, 1997 to $237,021 at
December 31, 1998.

Current liabilities decreased from $1,440,427 at December 31, 1997 to $918,771
at December 31, 1998, a decrease of $521,656 or 36%. This decrease is primarily
due to a reduction during the twelve-month period in accounts payable and
accrued expenses of $578,355. Unearned income, which consists primarily of the
sale of admission tickets to upcoming Faires, and deposits received from craft
vendors for future Faires, increased from $142,503 at December 31, 1997 to
$161,010 at December 31, 1998. Notes payable, current portion, increased from
$115,135 at December 31, 1997 to $153,327 at December 31, 1998.

Total assets decreased from $9,877,683 at December 31, 1997 compared to
$8,806,809 at December 31, 1998. Property, plant and equipment (net of
depreciation) decreased by $276,406 or 4% from $6,886,872 at December 31, 1997
to $6,610,466 at December 31, 1998 as a result of depreciation of assets for the
period. Goodwill, which arose from the purchase of the two California Faires and
is being amortized over 15 years, decreased from $570,150 at December 31, 1997
to $519,474 at December 31, 1998 as the result of normal amortization. Other
miscellaneous assets (organizational costs and vendor deposits) increased from
$845,977 at December 31, 1997 to $900,828 at December 31, 1998.

Total liabilities decreased from $6,303,925 at December 31, 1997 to $5,377,508
at December 31, 1998, a decrease of $926,417 or 15%. Total liabilities at
December 31, 1998 include $918,771 in current liabilities (discussed above),
plus $477,853 from the long-term portion of debt primarily resulting from the
mortgage on the Virginia Faire site and the $3,942,359 lease obligation with



                                       19
<PAGE>

respect to the sale/leaseback of the Bristol Faire site described above. In
November 1998, the Company had approximately $325,000 of certificates of deposit
mature which were previously held as additional collateral by the lending bank
of the Virginia loan. The Company elected to apply this amount to the existing
loan and reduce the mortgage on the Virginia property.

Stockholders' Equity decreased from $3,573,758 at December 31, 1997 to
$3,429,301 at December 31, 1998, a decrease of $144,457 or 4%. This decrease
resulted primarily from the net loss of ($203,080). As of December 31, 1998, the
Company had outstanding 2,139,891 shares of common stock, 334,716 Class A
Warrants representing the right to purchase common stock at $10.00 per share,
and 393,395 Class B warrants representing the right to purchase common stock at
$13.125 per share.

Although inflation can potentially have an effect on financial results, during
1997 and 1998, it caused no material effect on the Company's operations, since
the change in prices charged by the Company and by the Company's vendors has not
been significant.

The Company had no significant commitment for capital expenses during the fiscal
year ending December 31, 1998.

INFORMATION SYSTEMS AND THE YEAR 2000 ISSUE

The Company has completed an analysis of the effect of Year 2000 issues on its
operations. As a result of this analysis it is believed that these effects
should not have a material effect on the Company. The Company has determined
that critical computer hardware, including personal computers and network server
equipment are compliant. Software used by the Company in its accounting and
payroll function has been warranted by the manufacturers to be compliant.

The Company does not rely heavily on any specific vendor or group of vendors and
therefore believes that exposure in this area is minimal. Even so, there can be
no assurance that the systems of other companies that interact with the Company
will be sufficiently Year 2000 compliant so as to avoid an adverse impact on the
Company's operations, financial condition and results of operation. In addition
the Company may be adversely affected by potential interruptions of utility,
communications or transportation systems as a result of Year 2000 issues.

The Company does not open its first Renaissance Faire until approximately May of
each year. Although there is an approximate two month pre-faire gear-up period,
it is believed that any difficulties encountered as a result of Year 2000 could
be resolved before impacting the Company's operations.

The Company does not presently anticipate that the costs to address the Year
2000 issue will have a material adverse effect on the Company's financial
condition, results of operations or liquidity.




                                       20
<PAGE>

                FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

In addition to the other information contained in this report, prospective
investors should carefully consider the following factors in evaluating the
Company and its business.

     RECENT LOSSES. The Company has incurred substantial operating losses 
since fiscal 1995. In addition, although significantly lower than previous 
years, the Company incurred a loss in fiscal 1998. There is no assurance that 
the Company will return to profitability in any subsequent period. The New 
York and Virginia Faires each operated at a loss during 1996 and 1997. In 
fiscal 1998, the Virginia Faire operated at a significantly lower loss, 23% 
less as compared to the prior year. The New York Faire operated at a profit 
in 1998. If the performance of the Virginia Faire does not continue to 
improve, the Company's ability to achieve and sustain profitability in 
subsequent periods will be adversely affected.

     NEED FOR ADDITIONAL CAPITAL. The Company had a working capital deficit of
$147,726 as of December 31, 1998. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS." While the Company believes that
it has adequate capital to fund anticipated operations for the balance of fiscal
year 1999, it will need additional capital to sustain operations after that
time. Additional capital may be sought through borrowings or from additional
equity financing. Such additional equity financing may result in additional
dilution to investors. In any case, there can be no assurance that any
additional capital can be satisfactorily obtained if and when required.

     POSSIBLE SUSPENSION OF NORTHERN CALIFORNIA FAIRE. Historically, the 
Company has operated its Northern California Faire during the fall of each 
year at a site in Novato, California. While the Company had a lease for this 
site in 1998, it was known that the owners of the property were seeking to 
develop the land. Subsequent to the conclusion of the 1998 season, the 
Company moved its Northern California operations from this location. The 
Company has obtained a lease, subject to certain contingencies, for a new 
site for this Faire. The lease is contingent upon the Company obtaining the 
necessary permits to operate the Faire and the lessor closing on the purchase 
of the property. There is no assurance that the contingencies will be 
satisfied and that the Company will be successful in completing this lease. 
Should the Company be unable to operate a Northern California Renaissance 
Faire in 1999, it could have a material adverse impact on the Company's 
business, results of operations and financial condition. The Company 
estimates that it could be required to spend from $500,000 to $750,000 for 
construction of structures prior to the opening of the Faire at a new site. 
Should the chosen site require development of an infrastructure, water, 
electricity, etc., the cost to the Company could increase substantially.

     POSSIBLE RELOCATION OF SOUTHERN CALIFORNIA FAIRE. Since April 1994, the
Company has operated its Southern California Faire in Devore, California. The
Company has secured a lease for this site in 1999. The Company is currently
negotiating with the owners of the Devore property regarding both short and
long-term use of this property. The Company believes that it either needs to
obtain a long-term lease for the current site or relocate the Faire to another
site for which a long-term lease would be available. This would allow the
Company to construct permanent structures on the site and significantly reduce
setup costs for this Faire. As of the date



                                       21
<PAGE>

of this report, the Company has not entered into a long-term lease for the
current site and there can be no assurance that it will be able to do so.

     COMPETITION. The Company faces significant competition from numerous
organizations throughout the country which offer Renaissance Faires and other
entertainment events, including amusement parks, theme parks, local and county
fairs and festivals, some of which possess significantly greater resources than
the Company, and in many cases, greater expertise and industry contacts. The
Company estimates that there are currently 20 major Renaissance Faires produced
each year. In addition, the Company estimates that there are 100 minor
Renaissance Faire events held throughout the United States each year, ranging in
duration from one day to two weekends.

     LACK OF TRADEMARK PROTECTION. Because of the large number of existing
Renaissance Faires, the Company is not able to rely upon trademark or service
mark protection for the name "Renaissance Faire." As a result, there is no
protection against others using the name "Renaissance Faire" for the production
of entertainment events similar to those produced by the Company. The Company's
own Faires could be negatively impacted by association with substandard
productions.

     PUBLIC LIABILITY AND INSURANCE. As a producer of a public entertainment
event, the Company has exposure for claims of personal injury and property
damage suffered by visitors to the Faires. To date, the Company has experienced
only minimal claims, which it has been able to resolve without litigation. The
Company maintains comprehensive liability insurance which it considers to be
adequate against this risk; however, there can be no assurance that a
catastrophic event or claim which could result in damage or liability in excess
of this coverage will not occur.

     DEPENDENCE UPON VENDORS. A substantial portion of the Company's revenues
generated at each Faire is derived from arrangements that the Company has with
vendors who construct elaborate booths at the Faires and sell a variety of food,
crafts and souvenirs. This arrangement consists of either a fixed rental paid by
the vendors to the Company, or a percent of revenues. In either case, the
success of a Faire is dependent upon the Company's ability to attract
responsible vendors who sell high quality goods.

     SEASONALITY. The Company's Renaissance Faires are located in traditionally
seasonal areas which attract the greatest number of visitors during the warm
weather months in the spring, summer, and early fall. Unless the Company
acquires or develops additional Faire sites in areas which are counter-seasonal
to the present sites located in temperate climates, the Company's revenues and
income will be highly concentrated in the six months ended September 30th of
each year.

     DEPENDENCE UPON WEATHER. Each Renaissance Faire operated by the Company is
scheduled for a finite period, typically consecutive weekends during a seven to
nine-week period, which are determined substantially in advance in order to
facilitate advertising and other promotional efforts. The success of each Faire
is directly dependent upon public attendance, which is directly affected by
weather conditions. While each of the Company's Faires, other than the Northern
and Southern California Faires, are open, rain or shine, poor weather, or even



                                       22
<PAGE>

the forecast of poor weather, can result in substantial declines in attendance
and, as a result, loss of revenues. The Northern and Southern California Faires
are closed if it is raining. Further, as the Renaissance Faires are outdoor
events, they are vulnerable to severe weather conditions that can cause damage
to the Faire's infrastructure and buildings, as well as injuries to patrons and
employees. Risks associated with the weather are beyond anyone's control, but
have a direct and material impact upon the relative success or failure of a
given Faire.

     LICENSING AND OTHER GOVERNMENTAL REGULATION. For each Faire operated by the
Company, it is necessary for the Company to apply for and obtain permits and
other licenses from local governmental authorities controlling the conduct of
the Faire, service of alcoholic beverages, service of food, health, sanitation,
and other matters at the Faire sites. Each governmental jurisdiction has its own
regulatory requirements which can impose unforeseeable delays or impediments in
preparing for a Faire production. While the Company has been able to obtain all
necessary permits and licenses in the past, there can be no assurance that
future changes in governmental regulation or the adoption of more stringent
requirements may not have a material adverse impact upon the Company's future
operations.

     FAIRE SITES. The Company currently has a lease, subject to certain
conditions, for the Northern California Faire site. The Southern California
Faire, Bristol Renaissance Faire, and the New York Faire are all operated on
leased sites. It is expected that future Faires that may be developed by the
Company, if any, will also be presented on leased sites. The terms and
conditions of each lease will vary by location, and to a large extent, are
beyond the control of the Company. Further, there can be no assurance that the
Company will be able to continue to lease existing Faire sites on terms
acceptable to the Company, or be successful in obtaining other sites on
favorable locations. The Company's dependence upon leasing Faire sites creates a
substantial risk of fluctuation in the Company's operations from year to year.

               ITEM 7: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following financial statements are filed as part of this report:

     1.   Report of Independent Certified Public Accountants;

     2.   Consolidated Balance Sheets as of December 31, 1997 and 1998,
          (audited);

     3.   Consolidated Statements of Operations for the Fiscal Years Ended
          December 31, 1997 and December 31, 1998 (audited);

     4.   Consolidated Statements of Changes in Stockholders' Equity for the
          Fiscal Years December 31, 1997 and December 31, 1998 (audited);

     5.   Consolidated Statements of Cash Flows for the Fiscal Years Ended
          December 31, 1997 and December 31, 1998 (audited); and

     6.   Notes to the Consolidated Financial Statements.



                                       23
<PAGE>

              ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

                                     PART II

             ITEM 9: DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
                COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Name, position with the Company, age of each Director or officer, and the period
during which each Director has served are as follows:

<TABLE>
<CAPTION>
                                                                         Director
    Name                    Age   Position                                Since
    ----                    ---   --------                                -----
    <S>                     <C>   <C>                                    <C>
    Charles S. Leavell      57    Chairman of the Board of Directors,      1993
                                  Chief Executive Officer and Chief
                                  Financial Officer

    Sanford L. Schwartz     49    Director                                 1993

    Robert M. Geller        46    Director                                 1994

    Charles J. Weber        53    Director                                 1997

    J. Stanley Gilbert      61    President and Chief Operating             --
                                  Officer

    Howard Hamburg          62    Vice President                            --

    Gloria Constantin       48    Secretary                                 --

    Sue Brophy              43    Controller and Chief Accounting           --
                                  Officer
</TABLE>

     CHARLES S. LEAVELL was elected Chief Executive Officer effective June 20,
1996. From April 1993 to March 31, 1995, he was Chief Executive Officer, and
from April 1, 1995 to present he has served as Chairman of the Board of the
Company. From 1988 to present, Mr. Leavell has served as President and Chairman
of the Board of Leavell Management Group, Inc. and Ellora Corporation. In that
capacity, he has acquired, developed, and managed numerous ventures, including
the Bristol Renaissance Faire; the 4UR Guest Ranch in Creede, Colorado, a 3,000
acre luxury ranch; and South Meadow, an exclusive 96 unit single family
development in Boulder, Colorado. Prior to his affiliation with Leavell
Management Group and Ellora Corporation, Mr.



                                       24
<PAGE>

Leavell worked with Columbia Pictures in Los Angeles, California, where he 
was producer of the feature film, "The Quick and the Dead," about Grand Prix 
automobile racing, and was the executive producer of another film, "Evil 
Ways," about street gangs in East Los Angeles. Mr. Leavell also produced a 
rock musical for the stage entitled "Goosebumps." Mr. Leavell currently sits 
on the Board of Directors of CK Properties, L.C., of El Paso, Texas, which is 
a real estate development and management corporation with extensive holdings 
in apartments and office buildings. Mr. Leavell's former affiliations include 
Board of Directors of the Denver International Film Festival, Denver, 
Colorado, and Vice-Chair of Colorado Venture Capital Corporation, a regional 
investment firm. Mr. Leavell graduated from Stanford University in 1965 with 
a Bachelor of Arts degree in history.

     SANFORD L. SCHWARTZ has been a Director of the Company since April, 1993.
Mr. Schwartz has been a founder, senior executive or director of nine
publicly-traded companies over the last twenty years. From 1992 to present, Mr.
Schwartz has been the Chairman of Creative Business Strategies, Inc. ("CBSI"), a
business consulting firm. Prior to starting CBSI, Mr. Schwartz was, from 1989 to
1991, Chief Executive Officer of HealthWatch, Inc., a publicly-traded medical
equipment manufacturer. Mr. Schwartz serves on the Board of Directors of
HealthWatch, Inc.

     ROBERT M. GELLER has been a Director of the Company since April 1, 1994. He
served as Chief Financial Officer of Online System Services, Inc., a provider of
internet services, from March 1995 to October 1996. Mr. Geller has also served
as the President of The Growth Strategies Group, a consulting firm specializing
in executive/board services for emerging growth companies since August 1991.
From April, 1990 to July, 1991, he was Executive Vice-President for HealthWatch,
Inc., a publicly-traded medical equipment manufacturer. Mr. Geller is currently
a director of Armanino Foods of Distinction, Inc. and Online System Services,
Inc., publicly-held corporations, and Integral Peripherals, Inc., Requisite,
Inc., and Chernow Communications, Inc., all privately-held corporations. Mr.
Geller graduated from the University of Colorado Business School, summa cum
laude, with a Bachelor of Science degree in finance and organizational behavior
in 1976.

     CHARLES J. WEBER was elected a director of the Company in 1997. Mr. Weber
has been a successful key executive in the Entertainment/Communications Industry
since the early 1970's. During this time, he has also been Chairman and Chief
Executive Officer of Weber Communications, Inc., an international consulting
firm providing professional management, consulting, business development, and
financial services. He specializes in strategic alliances in the multimedia,
broadcasting, entertainment, and communications fields. In this capacity, Mr.
Weber has been instrumental in the production and financing of motion pictures,
public and private corporate financing, domestic and international distribution,
and mergers and acquisitions. He has also served in an executive role for
Fortune 500, real estate and entertainment companies and has executive produced
a number of feature films. In addition, from 1994-1995, he was President and
Chief Executive Officer of Canwest International Corp.; from 1995-1996 he was
President and Chief Executive Officer of the Producer's Entertainment Group;
from 1996-1997 he was President and Chief Executive Officer of Greenlight
Entertainment, Inc. Mr. Weber graduated from Manhattan College in New York in
1965, with a



                                       25
<PAGE>

B.B.A. degree in Accounting. He received an M.B.A. degree in Finance and
Management from Hofstra University in New York in 1967.

     J. STANLEY GILBERT became President and Chief Operating Officer in January,
1997. In 1996 Mr. Gilbert was a Vice President of the Company and he managed the
Bristol Renaissance Faire from 1988 until 1996. Prior to that he worked in the
commercial banking field in senior management. Prior to that, he was senior vice
president of Cinema America, a film and video production company. Mr. Gilbert is
the president of Just in Jest, Inc., an art studio featuring Renaissance and
fantasy handmade sculptures, whose works have been displayed in galleries and
museums, including the Delaware Museum of Fine Art. Mr. Gilbert has served as a
board member of the Kenosha Area Convention and Business Bureau. He holds a
degree in Business Administration.

     HOWARD HAMBURG was Chief Operating Officer of the Company from April 1,
1994 to June 20, 1996, at which time he was elected a Vice President of the
Company. From 1989 to March 31, 1994, Mr. Hamburg served as Treasurer and
Planning Director of the Living History Centre, Inc., a California non-profit,
public benefit corporation and producer of the California Renaissance Pleasure
Faires. In addition to his work with LHC, Mr. Hamburg served, from 1990 to 1993,
as Vice-President of the Patent Protection Institute, Inc., an intellectual
property licensing and royalty recovery corporation. Mr. Hamburg graduated from
New York City Community College in 1957 with an AA degree in Engineering. In
1969 Mr. Hamburg received a Bachelor of Arts degree in social science from
California State University at Sonoma.

     GLORIA CONSTANTIN has been Secretary of the Company since 1993. She has
also been in-house Investor Relations since 1993. From 1992 to 1993, she was
employed by Leavell Management Group, Inc. Ms. Constantin holds degrees in
English and Theatre, and is an honors graduate of the Denver Paralegal
Institute.

     SUE BROPHY has been Controller and Chief Accounting Officer of the Company
since August, 1995. From 1994 until 1995, Ms. Brophy was employed by Clifton,
Gunderson & Co., a public accounting firm in accounting services. From 1990 to
1993, she was self-employed. Ms. Brophy holds a Bachelor of Arts degree in
Biology, a Master of Science degree in Accounting, and has been a licensed CPA
since 1995.

     Each Director is elected to serve for a term of one year and until the next
Annual Meeting of Shareholders or until a successor is duly elected and
qualified.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

On May 1, 1991, comprehensive new rules promulgated by the Securities and
Exchange Commission relating to the reporting of securities transactions by
directors and officers became effective. To the Company's knowledge, based
solely on a review of the copies of such reports furnished to the Company and
written representations that no other reports were required, during the fiscal
year ended December 31, 1998, all required reports were timely filed, except
that due to administrative oversight, Howard Hamburg reported one transaction
reportable on Form 5 late; and Charles S. Leavell, Robert M. Geller, Sanford L.
Schwartz, Charles J. Weber, J. Stanley



                                       26
<PAGE>

Gilbert, Sue Brophy and Gloria Constantin each reported two transactions
reportable on Form 5 late. In addition, Charles S. Leavell, Robert M. Geller,
Sanford L. Schwartz, and J. Stanley Gilbert each filed one Form 4, each of which
reported one transaction, late.

                         ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth certain information for the Company's fiscal
periods ended December 31, 1998 and December 31, 1997, regarding compensation
earned by or awarded to the Company's chief executive officer and the other
executive officers whose total annual salary and bonus exceeded $100,000 (the
"Named Executive Officers").

                                     TABLE I

                           SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                                                                       Long Term Compensation
                                                              ----------------------------------------
                                   Annual Compensation              Awards              Payouts
                                ----------------------------  ------------------   -------------------
                                                     Other                                       All
                                                     Annual   Restricted             LTIP       Other
Name and                                             Compen-     Stock              Options/    Compen
Principal                        Salary     Bonus    sation     Award(s)            Payouts     sation
Position               Year        ($)       ($)       ($)        ($)       SARs      ($)         ($)
------------------------------------------------------------------------------------------------------
<S>                    <C>      <C>         <C>      <C>      <C>           <C>     <C>         <C>
Charles S. Leavell,
Chairman and           1998     $120,000     -0-       -0-        -0-        -0-      -0-         -0-
CEO                    1997       90,000     -0-       -0-        -0-        -0-      -0-         -0-

Howard Hamburg, VP
                       1998     $115,978     -0-       -0-        -0-        -0-      -0-         -0-
                       1997     $112,516     -0-       -0-        -0-        -0-      -0-         -0-
</TABLE>


(1)  All executive officers of the Company participate in the Company's group
     health insurance plan. However, no Named Executive Officer received
     perquisites and other personal benefits which, in the aggregate, exceeded
     the lesser of either $50,000 or 10% of the total of annual salary and bonus
     paid during the respective years.



                                       27
<PAGE>

OPTIONS GRANTED DURING FISCAL 1998

The following table shows option grants during fiscal 1998 to the named
executive officers of the Company.

<TABLE>
<CAPTION>
                        Options Granted     Percent of Total    Exercise  Expiration
         Name           in Fiscal 1998       Options Granted     Price       Date
         ----           --------------       ---------------     -----       ----
<S>                     <C>                 <C>                 <C>       <C>
Charles S. Leavell          40,000                 14%            0.81       2005
                            16,000                  6%            0.81       2003
Howard Hamburg               5,000                  2%            0.31       2003
</TABLE>

AGGREGATED OPTION EXERCISES DURING FISCAL 1998 AND FISCAL YEAR-END OPTION VALUES

The following table provides information related to the number and value of
options held by the Named Executive Officers as of December 31, 1998. The
Company does not have any outstanding stock appreciation rights.

<TABLE>
<CAPTION>
                                                            Number of      Value of Unexercised
                                                           Unexercised            In-the-
                                                         Options/SARs at     Money Option/SARs
                                              Value        FY-end (#)        at FY-End ($)(1)
                         Shares Acquired     Realized     Exercisable/         Exercisable/
Name                     on Exercise (#)       ($)        Unexercisable        Unexercisable
-----------------------------------------------------------------------------------------------
<S>                      <C>                 <C>         <C>               <C>
Charles S. Leavell             -0-             $-0-         0/56,000               $0/$0

Howard Hamburg                 -0-             $-0-          0/5,000              $0/$638
</TABLE>

(1)  The value of unexercised options is determined by calculating the
     difference between the fair market value of the securities underlying the
     options at fiscal period end and the exercise price of the options.

REPRICING OF STOCK OPTIONS

During June 1998, the Board of Directors of the Company approved a repricing of
stock options that had been previously granted to certain employees, directors
and consultants of the Company, including Charles S. Leavell and Howard Hamburg.
The Board of Directors' decision to reprice such options was based on its view
that such options are an integral part of the Company's



                                       28
<PAGE>

compensation to such individuals. All of such options were repriced to $.81 per
share, the market price of the Company's common stock on the date of the
repricing.

EMPLOYMENT AGREEMENTS

Effective December 11, 1998 the Company entered into an Employment Agreement
with Charles S. Leavell, CEO, and J. Stanley Gilbert, President and COO. The
agreements became effective at such time as a change of control (as defined by
the acquisition by any individual, entity or group of 30% of more of the then
outstanding shares of common stock of the Company or the combined voting power
of the then outstanding voting securities of the Company) takes place. These
agreements have a term of three years beginning with a change in control of the
Company.

DIRECTOR COMPENSATION

During the fiscal year ended December 31, 1998, Directors, other than Mr. Geller
and Mr. Leavell, received no cash compensation for their services as such,
however they were reimbursed for their expenses associated with attendance at
meetings or otherwise incurred in connection with the discharge of their duties
as Directors of the Company. During July 1997, the Board of Directors authorized
the granting of options to outside directors representing the right to acquire
up to 8,000 shares (retroactively adjusted for the February 1998 one-for-five
reverse stock split) for each year that a director serves on the Board. These
options are to be granted in lieu of cash compensation. Directors who are also
executive officers of the Company receive no additional compensation for their
services as Directors.

GELLER AGREEMENT

Effective April 1, 1994, the Company appointed Robert M. Geller to serve on the
Board of Directors' of the Company. As a Director, Mr. Geller receives
compensation as outlined in the above section entitled Director Compensation. In
addition, Mr. Geller provides consulting services to the company. For these
services, Mr. Geller received cash compensation in the amount of $4,420 in
fiscal 1997 and $22,950 in 1998.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee consists of Messrs. Geller, Schwartz and Leavell. Mr.
Leavell, who is Chief Executive Officer and a director of the Company,
participates in all discussions and decisions regarding salaries, benefits and
incentive compensation for all employees of the Company, except discussions and
decisions relating to his own salary, benefits and incentive compensation.

     ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock, as of March 31 1999, by: (i)
each of the directors of the Company,



                                       29
<PAGE>

(ii) all officers and directors of the Company as a group, and (iii) holders of
5% or more of the Company's Common Stock. Each person has sole voting and
investment power with respect to the shares shown, except as noted.

<TABLE>
<CAPTION>
Name and Address                                                   Percent of
of Beneficial Owner                          Number of Shares      Class (1)
-------------------                          ----------------      ----------
<S>                                          <C>                   <C>
Charles S. Leavell                              457,874 (2)          21.3%
275 Century Circle, Suite 102
Louisville, Colorado 80027

Robert M. Geller                                104,333 (3)           4.8%
275 Century Circle, Suite 102
Louisville, Colorado 80027

Sanford L. Schwartz                              39,870 (4)           1.8%
275 Century Circle, Suite 102
Louisville, Colorado 80027

Charles J. Weber                                 24,000 (5)           1.1%
275 Century Circle, Suite 102
Louisville, Colorado 80027

All Directors & Officers as a Group             958,193 (6)          44.6%
(8 Persons)
</TABLE>

(1)  Shares not outstanding but deemed beneficially owned by virtue of the
     individual's right to acquire them as of March 31, 1999, or within 60 days
     of such date, are treated as outstanding when determining the percent of
     the class owned by such individual and when determining the percent owned
     by the group.

(2)  Includes 176,000 shares of Common Stock held of record by Leavell
     Management Group, Inc., a controlled corporation of Mr. Leavell who would
     be deemed to exercise the voting and investment power with respect to the
     securities held by LMG. 26,667 shares of Common Stock held of record by LMG
     are subject to an option granted in favor of Mr. Leavell. Mr. Leavell
     disclaims beneficial ownership of the securities held by LMG for purposes
     of Section 16 under the Exchange Act. Includes non-qualified options to
     purchase 126,000 shares, options to purchase 40,000 shares and warrants to
     purchase 40,000 shares.

(3)  Includes non-qualified options to purchase 82,333 shares of Common Stock
     and warrants to purchase 22,000 shares.

(4)  Includes 870 shares owned by Creative Business Strategies, Inc., a
     corporation of which Mr. Schwartz is an officer, director and shareholder.
     Includes non-qualified options to



                                       30
<PAGE>

     purchase 24,000 shares of Common Stock and warrants (owned by Creative
     Business Strategies) to purchase 15,000 shares.

(5)  Includes non-qualified options to purchase 24,000 shares of Common Stock.

(6)  Includes 160,000 shares issuable upon exercise of stock options exercisable
     within 60 days of March 31, 1999, and 86,600 shares issuable upon exercise
     of warrants exercisable within 60 days of March 31, 1999.

     ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CONVERTIBLE DEBENTURES

During May 1997, the Company raised $1,000,000 through the issuance of
convertible debentures, of which $250,000 principal amount was issued to Charles
S. Leavell, Chairman of the Board of Directors of the Company, and the balance
to Mr. Leavell's father and an unrelated party. The investments by Mr. Leavell
and his father were made through the conversion of short-term loans they had
made to the Company earlier in fiscal 1997. The debentures were secured by
mortgages on the Company's Wisconsin and Virginia faire sites and were
convertible into Common Stock at the lesser of $4.50 per share or 70% of the
fair market value of the Company's Common Stock at the time of conversion. The
debenture holders were also granted warrants to purchase an aggregate of 200,000
(pre-split) shares of the Company's Common Stock at the lesser of $3.00 per
share or 70% of the fair market value of the Company's Common Stock at the date
of exercise of the warrants. During November 1997, the debentures were paid and
the warrants were canceled.

CREATIVE FAIRES, LTD. AGREEMENT

On February 5, 1996, the Company, its newly-created and wholly-owned 
subsidiary Cfaires Acquisition Corp., Creative Faires, Ltd., and Barbara Hope 
and Donald C. Gaiti, the sole shareholders of Creative Faires, Ltd., entered 
into an Agreement and Plan of Merger pursuant to which Cfaires Acquisition 
Corp. was merged with and into Creative Faires, Ltd. In connection with the 
merger, Ms. Hope and Mr. Gaiti received an aggregate of 108,000 shares of the 
Company's Common Stock, and the Company became the sole shareholder of 
Creative Faires, Ltd. The Company employed Mr. Gaiti and Ms. Hope as officers 
through October 31, 1998. The market value for the 108,000 shares of Common 
Stock at the time of the transaction was $3,071,250. The shares were 
"restricted" shares as defined in Rule 144 promulgated by the Securities and 
Exchange Commission.

SHORT-TERM NOTES

During February and March 1998, eight private investors loaned the Company an
aggregate of $498,000 pursuant to short-term loans payable July 1, 1998 through
August 31, 1998. The loans were secured by substantially all of the Company's
assets other than its real estate and bear interest at 6% per quarter. In
addition, the lenders were granted a five-year warrant to purchase one share of
the Company's Common Stock at $1.50 per share for each $2.50 loaned to the



                                       31
<PAGE>

Company. Charles S. Leavell, Chairman of the Board of Directors, loaned $100,000
to the Company pursuant to this arrangement and two directors and two officers
of the Company loaned, in the aggregate, an additional $198,000 to the Company
pursuant to this arrangement.

During the first four months of fiscal 1999 the Company raised $500,000 of
short-term capital. These funds were provided by Charles S. Leavell ($100,000),
Chairman of the Board of Directors, two directors and two officers of the
Company (an aggregate of $225,000) and three other investors. The loans allow
interest at 4.5% per quarter and are secured by existing monies and future
revenues from the Company's Faires. The investors also were granted a five-year
warrant to purchase one share of common stock for each $5.00 loaned to the
Company at an exercise price equal to the average closing bid price for the
Company's common stock for the five business days immediately preceding the
closing of each loan.

The Company believes that the foregoing transactions were on terms as favorable
to the Company as could have been obtained from non-affiliated parties.

                                     PART IV
     ITEM 13: EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K

     EXHIBITS

     Exhibit No            Title

        3.0(i)    Amended and Restated Articles of Incorporation, incorporated
                  by reference from the Amendment No. 1 to Registrant's
                  Registration Statement on Form 8-A filed with the Commission
                  on April 12, 1994.
        3.0(ii)   By-Laws, incorporated by reference from the Amendment No. 1 to
                  Registrant's Registration Statement on Form 8-A filed with the
                  Commission on April 12, 1994.
*       3.1       Articles of Amendment to the Articles of Incorporation.
        4.1       Specimen Certificate of Common Stock, incorporated by
                  reference from the Amendment No. 1 to Registrant's
                  Registration Statement on Form 8-A filed with the Commission
                  on April 12, 1994.
*       4.2       Specimen Class A Warrant Certificate.
*       4.3       Specimen Class B Warrant Certificate.
*       4.4       Warrant Agreement.
*       4.5       Certificate of Designations, Preferences, and Rights of
                  Series A Convertible Preferred
                  Voting Stock of Renaissance Entertainment Corporation.
*       4.6       Renaissance Entertainment Corporation 1993 Stock Incentive
                  Plan.  (1)
*       10.1      Specimen Vendor and Exhibitor Agreement for the Bristol
                  Renaissance Faire.
*       10.2      Specimen Vendor and Exhibitor Agreement for the Northern and
                  Southern Renaissance Pleasure Faires.
*       10.3      Specimen Bristol Renaissance Faire Concession Agreement.
*       10.4      Specimen Bristol Renaissance Faire Games Concession Agreement.



                                       32
<PAGE>

        10.5      Lease Agreement between Creative Faires, Ltd. and Sterling
                  Forest Corporation dated June 12, 1996 incorporated by
                  reference from the Registrant's Annual Report on Form 10-KSB
                  for the year ended March 31, 1996.
        10.6      Form of Loan and Security Agreement for 1998, including form
                  of Stock-Term Notes and form of Warrant to purchase common
                  stock, incorporated by reference from the Registrants
                  Quarterly Report on Form 10-Q for the quarter ended March 31,
                  1998.
        10.7      Mortgage with Union Bank & Trust in the amount of $1,500,000
                  with respect to the Virginia property, incorporated by
                  reference from the Registrant's Annual Report on Form 10-KSB
                  for the year ended March 31, 1996.
**      10.8      Consulting and Warrant Compensation Agreement dated October
                  15, 1998 between the Company and Wall Street Financial.
        10.9      Purchase Agreement dated November 12, 1997 between Faire
                  Partners, LLC and Renaissance Entertainment Corporation,
                  including Lease Agreement and Warrant to Purchase Common Stock
                  as exhibits thereto, incorporated by reference from
                  Registrant's Registration Statement on Form S-1 (No.
                  333-43503).
        10.10     Lease dated January 21, 1998 by and between Attache Publishing
                  Services, Inc. and the Company, incorporated by reference from
                  the Registrants Quarterly Report on Form 10-Q for the quarter
                  ended March 31, 1998.
**      10.11     Employment Agreement dated December 11, 1998 with Charles S.
                  Leavell.
**      10.12     Employment Agreement dated December 11, 1998 with J. Stanley
                  Gilbert.
**      23.1      Independent Auditor's Consent.
**      27        Financial Data Schedule.

*    Incorporated by reference from the Company's Registration Statement on Form
SB-2, declared effective by the Commission on January 27, 1995, and the
Post-Effective amendments thereto.

**   Filed herewith.

REPORTS ON FORM 8-K

The Registrant filed no Current Reports on Form 8-K during the final quarter of
the fiscal period ended December 31, 1998.


                                       33
<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                              FINANCIAL STATEMENTS

                                      WITH

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

                     DECEMBER 31, 1997 AND DECEMBER 31, 1998



                                       F-1

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                              FINANCIAL STATEMENTS

                                      with

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

<TABLE>
<CAPTION>
                                                                Page
<S>                                                             <C>
Report of Independent Certified Public Accountants               F-3

Audited Financial Statements:

     Balance Sheets                                              F-4

     Statements of Operations                                    F-5

     Statement of Changes in Stockholders' Equity                F-6

     Statements of Cash Flows                                    F-7

     Notes to Financial Statements                               F-8

</TABLE>

                                       F-2

<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors
Renaissance Entertainment Corporation


We have audited the balance sheets of Renaissance Entertainment Corporation 
as of December 31, 1997 and 1998 and the related statements of operations and 
changes in stockholders' equity, and cash flows for the years ended December 
31, 1997 and 1998. These financial statements are the responsibility of the 
Company's management. Our responsibility is to express an opinion on these 
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform an audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement. An audit includes examining on a test basis, 
evidence supporting the amounts and disclosures in the financial statements. 
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation. We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of Renaissance Entertainment 
Corporation as of December 31, 1997 and 1998 and the results of operations, 
changes in stockholders' equity and cash flows for the years ended December 
31, 1997 and 1998 in conformity with generally accepted accounting principles.


Schumacher & Associates, Inc.
Certified Public Accountants
12835 E. Arapahoe Road
Tower II, Suite 110
Englewood, CO 80112

February 26, 1999

                                       F-3

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                                   BALANCE SHEETS

                                      ASSETS

<TABLE>
<CAPTION>
                                                                December 31,       December 31,
                                                                    1997               1998   
                                                                ------------       ------------
<S>                                                             <C>                <C>
Current Assets:
         Cash and equivalents                                       590,022        $   379,336
         Accounts receivable, net of allowance
          for doubtful accounts of $2,950 and $10,598
          at December 31, 1997 and 1998, respectively                21,710             18,509
         Inventory, at lower of cost or market                      143,554            136,179
         Prepaid expenses and other current assets                  480,320            237,021
                                                                -----------        -----------
  Total Current Assets                                            1,235,606            771,045

         Property and equipment, net of accumulated
           depreciation of $2,544,665 and $2,588,320
           at December 31, 1997 and 1998 respectively
           (Note 7)                                               6,886,872          6,610,466
         Goodwill, net of accumulated amortization
           of $257,095 and $307,771 at December 31,
           1997 and 1998 respectively (Note 5)                      570,150            519,474
         Covenant not to compete, net of accumulated
           amortization of $75,000 and $95,004 at
           December 31, 1997 and 1998 respectively
           (Note 5)                                                  25,000              4,996
         Restricted cash (Note 10)                                  314,078                  -
         Other assets                                               845,977            900,828
                                                                -----------        -----------
Total Assets                                                    $ 9,877,683        $ 8,806,809
                                                                -----------        -----------
                                                                -----------        -----------

                           LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
         Accounts payable and accrued expenses                  $ 1,182,789        $   604,434
         Notes payable, current portion (Note 3)                    115,135            153,327
         Unearned income                                            142,503            161,010
                                                                -----------        -----------
  Total Current Liabilities                                       1,440,427            918,771

         Lease obligation payable (Note 13)                       3,909,696          3,942,359
         Notes payable, net of current
          portion (Note 3)                                          918,277            477,853
         Other                                                       35,525             38,525
                                                                -----------        -----------
  Total Liabilities                                               6,303,925          5,377,508
                                                                -----------        -----------

         Commitments (Notes 3,4,8,11,13 and 14)                           -                  -

Stockholders' Equity (Notes 2,8 and 14):
         Preferred stock, $1.00 par value, 1,000,000
           shares authorized, none issued and
           outstanding                                                    -                  -
         Common stock, $.03 par value, 50,000,000
           shares authorized, 2,051,679 and 2,139,891
           issued and outstanding at December 31, 1997
           and 1998 respectively                                     61,550             64,196
         Additional paid-in capital                               9,372,500          9,428,477
         Accumulated (deficit)                                   (5,860,292)        (6,063,372)
                                                                -----------        -----------
  Total Stockholders' Equity                                      3,573,758          3,429,301
                                                                -----------        -----------
Total Liabilities and Stockholders' Equity                      $ 9,877,683        $ 8,806,809
                                                                -----------        -----------
                                                                -----------        -----------

</TABLE>

The accompanying notes are an integral part of the financial statements.

                                       F-4

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                  Year Ended              Year Ended
                                                 December 31,            December 31,
                                                     1997                    1998    
                                                 ------------            ------------
<S>                                              <C>                     <C>
REVENUE:
      Sales                                      $ 14,158,590            $ 15,219,412
      Faire operating costs                         4,606,602               4,678,664
                                                 ------------            ------------
  Gross Profit                                      9,551,988              10,540,748
                                                 ------------            ------------

OPERATING EXPENSES:
      Salaries and wages                            4,745,507               4,398,917
      Depreciation and amortization                   701,599                 585,977
      Advertising                                   2,435,229               1,880,900
      Other operating expenses                      3,957,844               3,467,808
                                                 ------------            ------------
        Total Operating Expenses                   11,840,179              10,333,602
                                                 ------------            ------------
Net Operating Income (Loss)                        (2,288,191)                207,146
                                                 ------------            ------------
Other Income (Expenses):
      Interest income                                  61,031                  78,537
      Interest (expense)                             (370,813)               (644,227)
      Other income (expense)                           30,876                 155,464
                                                 ------------            ------------
        Total Other Income (Expenses)                (278,906)               (410,226)
                                                 ------------            ------------
Net (Loss)                                       $ (2,567,097)           $   (203,080)
                                                 ------------            ------------
                                                 ------------            ------------
Net (Loss) per Common Share                      $      (1.32)           $       (.10)
                                                 ------------            ------------
                                                 ------------            ------------
Weighted Average Number of
 Shares Outstanding                                 1,949,217               2,095,785
                                                 ------------            ------------
                                                 ------------            ------------

</TABLE>

The accompanying notes are an integral part of the financial statements.

                                       F-5

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                From December 31, 1996 through December 31, 1998

<TABLE>
<CAPTION>
                                                       COMMON STOCK                ADDITIONAL
                                              ----------------------------          PAID-IN          ACCUMULATED
                                               SHARES              AMOUNT           CAPITAL           (DEFICIT)          TOTAL
                                              ---------           --------        -----------       -------------     -----------
<S>                                           <C>                 <C>             <C>               <C>               <C>
Balance December 31, 1996                     1,846,754             55,403          8,293,244         (3,293,195)       5,055,452
Stock issued for services                        16,496                495            415,790               --            416,285
Conversion of notes payable to stock            125,397              3,762            180,153               --            183,915
Exercise of Class A warrants                     28,058                842            279,742               --            280,584
Exercise of Class B warrants                     13,600                408            176,890               --            177,298
Exercise of options                              21,374                640             26,681               --             27,321
Net loss for the year ended
December 31, 1997                                  --                 --                 --           (2,567,097)      (2,567,097)
                                              ---------           --------        -----------       -------------     -----------
Balance December 31, 1997                     2,051,679             61,550          9,372,500         (5,860,292)       3,573,758
Issuance of stock for services                   19,996                600             35,325               --             35,925
Conversion of notes payable to stock             68,216              2,046             20,652               --             22,698
Net loss for the year ended
December 31, 1998                                  --                 --                 --             (203,080)        (203,080)
                                              ---------           --------        -----------       -------------     -----------
Balance December 31, 1998                     2,139,891           $ 64,196        $ 9,428,477       $ (6,063,372)     $ 3,429,301
                                              ---------           --------        -----------       -------------     -----------
                                              ---------           --------        -----------       -------------     -----------

</TABLE>

The accompanying notes are an integral part of the financial statements.

                                       F-6

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                       Year Ended            Year Ended
                                                      December 31,          December 31,
                                                          1997                  1998   
                                                      ------------          ------------
<S>                                                   <C>                   <C>
Cash Flows from Operating Activities:
  Net Income (loss)                                   $(2,567,097)          $  (203,080)
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Common stock issued for services                    416,255                35,925
      Depreciation and amortization                       701,599               585,977
      (Increase) decrease in:
        Accounts receivable                                77,841                 3,201
        Prepaid expenses                                 (341,153)              243,299
        Inventory                                          41,141                 7,375
        Other assets                                     (206,406)              (54,851)
      Increase (decrease) in:
        Accounts payable and accrued expenses             114,761              (578,355)
        Unearned revenue and other                       (317,422)               21,508
                                                      -----------           -----------
Net Cash Provided by (Used in) Operating
  Activities                                           (2,080,481)               60,999
                                                      -----------           -----------
Cash Flows from Investing Activities:
  (Investment in) reduction of restricted cash            576,038               314,078
  Net acquisition of property and equipment,
    goodwill and covenant not to compete                 (341,040)             (238,891)
                                                      -----------           -----------
Net Cash Provided by Investing Activities                 234,998                75,187
                                                      -----------           -----------
Cash Flows from Financing Activities:
  Common stock issued and additional
    paid-in capital                                       669,118                22,698
  Proceeds from lease obligation payable                3,909,696                32,663
  Proceeds from notes payable                                   -                44,793
  Principal payments on notes payable                  (2,517,598)             (447,026)
                                                      -----------           -----------
Net Cash Provided by (Used in) Financing
  Activities                                            2,061,216              (346,872)
                                                      -----------           -----------
Net Increase (Decrease) in Cash                           215,733              (210,686)
Cash, beginning of period                                 374,289               590,022
                                                      -----------           -----------
Cash, end of period                                   $   590,022           $   379,336
                                                      -----------           -----------
                                                      -----------           -----------
Interest paid                                         $   370,813           $   644,227
                                                      -----------           -----------
                                                      -----------           -----------
Income tax paid                                       $         -           $         -
                                                      -----------           -----------
                                                      -----------           -----------

</TABLE>

The accompanying notes are an integral part of the financial statements.

                                       F-7

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         This summary of significant accounting policies of Renaissance
         Entertainment Corporation (Company) (REC) is presented to assist in
         understanding the Company's financial statements. The financial
         statements and notes are representations of the Company's management
         who is responsible for their integrity and objectivity. These
         accounting policies conform to generally accepted accounting principles
         and have been consistently applied in the preparation of the financial
         statements.

         (a)      GENERAL

         REC was incorporated under the laws of the State of Colorado on June
         24, 1988. On April 6, 1993, REC acquired one hundred percent of the
         common stock of Ellora Corporation, a Wisconsin corporation which owned
         and operated the Bristol Renaissance Faire located in Kenosha,
         Wisconsin. During the year ended March 31, 1994 REC formed a
         wholly-owned subsidiary called Heroes and Villains, Ltd. This entity
         was formed to provide entertainment services. During February, 1994 REC
         formed Renaissance Pleasure Faires, Inc. (RPFI) which acquired the
         assets and the business of two Renaissance Faires in California.

         The business combination with the California Faires was accounted for
         as a purchase by REC with the excess of cost over fair value of net
         assets acquired accounted for as goodwill. See Note 5 for additional
         information related to this business combination.

         Effective December 31, 1995 REC acquired 100% ownership of Creative
         Faires, Ltd. (CFL) in exchange for the issuance of restricted common
         shares of REC stock. The business combination with CFL was accounted
         for as a pooling of interests. The financial statements include the
         accounts of CFL.

         All references to the "Company" refer to REC and its subsidiaries. All
         intercompany transactions and account balances have been eliminated in
         the financial statements other than as noted above.

         All subsidiaries of the Company were merged into REC as of March 31,
         1996 with the exception of Creative Faires, Ltd. which was merged into
         REC during 1998.

         The Company uses a December 31 year end.

                                       F-8

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

         (b)      PER SHARE INFORMATION

         Per share information is determined using the weighted average number
         of shares outstanding during the periods after giving effect for the
         stock splits.

         (c)      PROPERTY AND EQUIPMENT

         Property and equipment is carried at cost, net of accumulated
         depreciation. Depreciation is computed using principally accelerated
         methods over the useful lives of the assets ranging from three to
         thirty years.

         (d)      REVENUE AND EXPENSE RECOGNITION AND COST OF SALES

         The Company recognizes revenues from the renaissance faires as earned
         during the period when the faires are in operation. These revenues
         consist principally of gate entrance fees, food and beverage
         concessions sales, lease revenue and fees charged to craft vendors. At
         various dates subsequent to the end of the operation of the prior years
         faires, and prior to the opening of the next years faires, the Company
         receives deposits from the craft vendors and others. These deposits are
         carried as unearned revenue until applied to fees charged and then
         earned on a pro-rata basis during the operation of the faire.

         Cost of sales as shown in the statement of operations includes all
         direct costs associated with the production of the Renaissance Faire,
         including cost of food, beverage and merchandise sold, labor costs for
         seasonal help and other direct costs of the production. All other
         expenses related to operation of the faire are shown as operating
         expenses in the statement of operations.

         Advertising costs are expensed over the term of the faire to which the
         expense applies. Direct costs related to the setting up of the faires
         are capitalized as prepaid expenses and expensed during the period of
         the operation of the applicable faires.

                                       F-9

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

         (e)      STOCK SPLIT

         Effective February 23, 1998, the Company effected a one for five
         reverse stock split. The financial statements were retroactively
         adjusted for the split.

         (f)      CONCENTRATIONS OF CREDIT RISKS

         Financial instruments that potentially subject the company to
         concentrations of credit risk consist principally of temporary cash
         investments and cash equivalents and trade accounts receivables. At
         December 31, 1998, the Company had approximately $237,649 of its cash
         and cash equivalents in financial institutions in excess of amounts
         insured by agencies of the U.S. Government. Most of the trade
         receivables are from customers in one geographic location, principally
         California. The Company does not require collateral for its trade
         accounts receivables.

         (g)      CASH EQUIVALENTS

         The Company considers all short term investments in securities that
         mature in 90 days or less to be cash equivalents.

         (h)      INVENTORY

         The Company's inventory consists principally of merchandise held for
         sale. The Company carries its inventory at the lower of cost or market.
         Cost is determined on an average cost basis.

         (I)      ALLOWANCE FOR BAD DEBTS

         The Company provides an allowance for bad debts based on prior
         collection experience.

         (j)      USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amounts of revenue
         and expenses during the reporting period. Actual results could differ
         from those estimates.

                                       F-10

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

         (k)      GEOGRAPHIC AREA OF OPERATIONS AND INTEREST RATES

         The Company owns and operates Renaissance Faires principally in five
         major metropolitan areas of the U.S.A. The potential for severe
         financial impact can result from negative effects of economic
         conditions within the markets or geographic areas. Since the Company's
         business is principally in five areas, this concentration of operations
         results in an associated risk and uncertainty.

(2)      COMMON AND PREFERRED STOCK

         The Articles of Incorporation of the Company authorize issuance of a
         maximum of 50,000,000 shares of $.03 par value common stock and
         1,000,000 shares of $1.00 par value preferred stock.

         During January, 1995 the Company sold in a public offering 1,035,000
         units of its securities. Each unit consisted of one share of common
         stock and one Class A warrant and one Class B warrant. Each Class A
         warrant entitles the warrant holder thereof to purchase one share of
         common stock at a price of $4.00 per share through January 27, 2000.
         Each Class B warrant entitles the holder thereof to purchase one share
         of common stock at a price of $5.25 per share through January 27, 2000.
         These warrants were changed based upon the forward two-for-one split
         effective October 17, 1996 and the reverse one-for-five stock split
         effective February 23, 1998, decreasing the number of warrants on a
         one-for-two and one-half basis and increasing the exercise price to
         $10.00 and $13.125 per share, respectively. These warrants were
         immediately exercisable. The warrants are redeemable by the Company at
         a price of $.05 per warrant upon 30 days' notice mailed within ten days
         after the closing bid price of the Company's common stock has equaled
         or exceeded 150% of the then current respective warrant exercise price
         for a period of 20 consecutive trading days. The holders of the
         warrants called for redemption are granted exercise rights until the
         close of business on the date preceding the date fixed for redemption.

         The Company incurred $646,056 of costs related to this offering. These
         offering costs were offset against the proceeds of the offering.

                                       F-11

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

(3)      NOTES PAYABLE

         Notes payable at December 31, 1998 are summarized as follows:

<TABLE>
<S>                                                                                 <C>
         Note payable to bank at 9.25%, monthly principal and interest 
         payment currently of $15,397, increasing over the term of the 
         loan through May, 2002 collateralized by land and improvements.            $ 564,448

         Note payable to financial institution collateralized by certain
         vehicles. Payable in monthly installments of principal and interest;
         final payments due in 2000, interest ranging from
         10% to 12%.                                                                    3,837

         Notes payable to equipment manufacturers collateralized by certain
         equipment, payable in monthly installments of principal and interest;
         final payments due in 2003, interest ranging from
         9.776% to 22%.                                                                62,895
                                                                                    ---------
         Total                                                                        631,180
         Less current portion                                                         153,327
                                                                                    ---------
         Long-term portion                                                          $ 477,853
                                                                                    ---------
                                                                                    ---------

</TABLE>

         Principal payments due on notes payable for each of the next five
         fiscal years ending December 31 and in the aggregate thereafter, are as
         follows:

<TABLE>
<S>                                                           <C>
                  1999                                        $   153,327
                  2000                                            172,458
                  2001                                            176,088
                  2002                                            113,747
                  2003                                              7,496
                  Thereafter                                        8,064
                                                              -----------
                                                              $   631,180

</TABLE>

                                       F-12
<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

(4)      LEASES

         Effective April 1, 1995 the Company entered into a five-year operating
         lease at 4440 Arapahoe in Boulder, Colorado for office facilities.
         Initial monthly rental payments are $3,066 with annual increases of 5%
         per annum. Effective January 1, 1997, the Company entered into a three
         year sublease agreement (the remaining term of the lease) to sublease
         its old office space at 4440 Arapahoe. The sublessee assumes every
         obligation of the Company under its lease. The Company remains liable
         under its lease.

         The Company also leases the New York Faire site with terms expiring
         through the year 2000. Annual lease payments on the New York Faire site
         are $311,325 for 1999 and $326,892 for 2000.

         Effective January 21, 1998, the Company entered into an operating lease
         at 275 Century Circle in Louisville, Colorado for office facilities.
         Initial monthly rental payments are $3,603 plus 27% of operating costs
         with annual increases tied to the CPI for a term of five years.

         Future minimum rentals under all operating leases with terms exceeding
         twelve months are as follows:

<TABLE>
<CAPTION>
           Year Ending
           December 31,
<S>                                          <C>
                  1999                         387,299
                  2000                         378,411
                  2001                          43,236
                  2002                          43,236
                                             ---------
                  Total                      $ 852,182
                                             ---------
                                             ---------

</TABLE>

         Future minimum sublease rentals are as follows:

<TABLE>
<CAPTION>
              Year ending
              December 31,
<S>                                          <C>
                  1999                          32,738
                  2000                           8,283
                                             ---------
                  Total                      $  41,021
                                             ---------
                                             ---------

</TABLE>

         Rent expense for the year ended December 31, 1998 and for the year
         ended December 31, 1997 totalled approximately $974,233 and $995,494,
         respectively. See Note 12 for subsequent event.

                                       F-13

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

(5)      GOODWILL AND COVENANT NOT TO COMPETE

         The cost of the acquisition of the California Faire assets and business
         as described in Note 1 in excess of the fair value of assets acquired
         has been recorded as goodwill in the accompanying financial statements.
         Goodwill is being amortized on a straight-line basis over fifteen
         years. Management reviews the carrying value of goodwill on a periodic
         basis, at least annually, to determine if there is any impairment in
         value. If management determines that the carrying value is not
         recoverable over the remaining amortization term, the excess balance,
         if any, will be expensed. During the period ended December 31, 1996,
         the Company determined that the goodwill was impaired and wrote off
         $380,000 as a charge to other operating expenses. As of December 31,
         1998 the Company's net carrying value for goodwill was $570,150 after
         amortization.

         In addition, the Company allocated $100,000 for certain covenants not
         to compete for certain officers and employees of The Living History
         Centre related to the asset and business acquisition. These covenants
         not to compete are being amortized on a straight-line basis over five
         years.

(6)      INCOME TAXES

         As of December 31, 1998, there are no current or deferred income taxes
         payable. As of December 31, 1998, the Company has total deferred tax
         assets of approximately $1,220,000 due to operating loss carryforwards
         and the depreciation timing differences described above. However,
         because of the uncertainty of potential realization of these tax
         assets, the Company has provided a valuation allowance for the entire
         $1,220,000. Thus, no tax assets have been recorded in the financial
         statements as of December 31, 1998.

         The Company has available at December 31, 1998, unused operating loss
         carryforwards of approximately $6,100,000 which may be applied against
         future taxable income, expiring in various years through 2013. The
         available net operating loss carryforwards may be reduced if there is a
         50% or more change in ownership.

                                       F-14

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

(7)      PROPERTY AND EQUIPMENT

<TABLE>
<S>                                                           <C>
         Land                                                 $ 3,491,630
         Buildings and Improvements                             3,228,053
         Office Furniture and Equipment                           477,545
         Costumes, Props and Other Assets                       2,001,558
                                                              -----------
                  Sub-total                                     9,198,786
         Less Accumulated Depreciation                         (2,588,320)
                                                              -----------
                  Total                                       $ 6,610,466
                                                              -----------
                                                              -----------

</TABLE>

(8)      WARRANTS AND OPTIONS

         The following is a summary of the options and warrants outstanding at
         December 31, 1998:

<TABLE>
<CAPTION>
                    NUMBER          EXERCISE PRICE            EXPIRATION DATE
<S>                                 <C>                       <C>
                    334,716             $10.00                January, 2000
                    393,395             $13.125               January, 2000
                      7,000             $ 1.125               June, 2001
                    120,000             $  .62                October, 2000
                    153,333             $ 5.00                November, 2003
                    199,200             $ 1.51                March, 2003
                     13,200             Market                January, 2000
                        500             $27.50                November, 1999
                     74,500             $  .31                November, 2003
                    212,333             $  .81                June, 2003
                  ---------
                  1,508,177
                  ---------
                  ---------

</TABLE>

         At December 31, 1998 the Company had 1,508,177 warrants and options 
outstanding with expiration dates through 2003 and with a weighted average 
exercise price of $6.55 per share. During the year ended December 31, 1997, 
22,343 options were exercised at a weighted average of $1.28 per share. 
During the year ended December 31, 1998, 286,833 options were granted of 
which 74,500 have exercise prices of $.31 expiring in November, 2003 and 
212,333 have exercise prices of $.81 expiring in June, 2003. The weighted 
average of options granted during 1998 was $.68 per share. The options 
granted during 1998 were principally granted to employees and directors of 
the Company. The exercise prices at the dates of grants approximated market 
value of the common stock. Therefore, no compensation expense was recorded in 
the financial statements related to the options since the estimated fair 
value would not be material.

                                       F-15

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

(9)      BUSINESS COMBINATION, CALIFORNIA FAIRES

         Effective April 1, 1994 the Company acquired the assets and certain
         liabilities of The Living History Centre, (LHC) a California,
         not-for-profit corporation. The Company issued 227,333 shares of its
         common stock and 175,000 shares of its preferred stock as consideration
         for the net assets acquired. The preferred stock was converted into
         common stock during January, 1995. In addition to acquiring certain
         assets and liabilities of LHC, the Company has acquired the rights to
         operate two California Renaissance Faires.

         See Note 1 financial statements for additional information related to
         the business combination. The transaction was accounted for as a
         purchase by REC.

(10)     RESTRICTED CASH

         Certificates of Deposit in the amount of $314,078 at December 31, 1997
         were collateral for a $990,297 loan maturing in 2011. The balance of
         the certificates of deposit matured in 1998 and were applied to the
         balance of the loan reducing the amount owed to $564,448.

(11)     COMMITMENTS

         Effective December 16, 1994 the Company entered into an agreement with
         a consulting firm to provide to the Company certain promotional
         services for the Company's faires. The Company has agreed to pay
         commissions to the consulting firm of 17.65% of the actual net billings
         by advertisers for media placed pursuant to plans approved by the
         Company. The Company has also granted an option to the consulting firm
         to allow the firm to acquire a minimum of 13,200 and a maximum of
         26,400 shares of the Company's common stock. The consulting firm has
         exercised 13,200 options. The balance of 13,200 options are priced at
         current market value and depend on the results of the services
         performed by the consulting firm.

(12)     FOURTH QUARTER 1997 ADJUSTMENTS

         The Company recognized as expense in the nine-month period ended
         December 31, 1996, $450,000 of costs estimated to be incurred in 1997,
         which costs are the result of changing conditions at the Company's
         Northern California Faire which became apparent to the Company in 1996.
         Early in 1997, it became apparent that $275,000 of these costs would
         not be incurred in 1997 and during the second quarter of 1997 this
         $275,000 accrual was reversed. During the fourth quarter of 1997, based
         on subsequent developments regarding the continued availability of this
         site, the Company reconsidered the potential requirements related to
         this matter and recorded the provision for $275,000. This adjustment,
         which was made in the fourth quarter, was material to fourth quarter
         operations.

                                       F-16

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

(13)     SALE LEASE BACK TRANSACTION

         During November, 1997, the Company sold its real property in Wisconsin
         to a related party for $4,000,000 and signed a 20 year non-cancelable
         lease back on this property with monthly lease payments in the initial
         amount of $33,333 increasing to $45,278 over the term of the lease. The
         Company has an option to reacquire the property during the twenty year
         lease period at fixed amounts as specified in the lease. Since the
         Company continues to have an economic interest in the property due to
         the option, the Company treated the transaction as a financing
         arrangement. As of December 31, 1998, the outstanding balance on the
         finance obligation was $3,942,359 using an effective interest rate of
         approximately 11%. The purchaser was deemed to be a related party as a
         relative of the Chairman of the Board of the Company is a minority
         interest investor in the Company which purchased this property.

(14)     SUBSEQUENT EVENTS

         The Company's lease for the site of its Northern California faire
         expired December 31, 1997. The Company had an agreement with the owner
         of the property to lease the site for the 1998 faire season. During
         March, 1999, the Company negotiated a ten year lease on a new site for
         the Northern California faire. The lease is subject to the Company
         obtaining permits to operate the faire on the site and is also subject
         to the lessor closing the purchase contract it has to acquire the site.

         During March, 1999, the Company obtained debt financing collateralized
         by a second deed of trust on the Virginia real estate and a security
         interest in the Company's receivables. The total potential loan is
         $750,000, $500,000 of which was funded at closing in March, 1999 and
         $250,000 of which will be funded at such time as the Company has
         entered into a fully executed lease for the Northern California Faire
         site. Payments are interest only 4/1/99 through 6/1/99; principal and
         interest on a 5-year amortization of amount of debt remaining unpaid on
         6/1/99 from 7/1/99 through 1/1/2000; interest only 2/1/2000 through
         6/1/2000; principal and interest on a 5-year amortization of the amount
         of debt remaining unpaid on 6/1/2000 from 7/1/2000 through 11/1/2000;
         and remaining principal and interest due in full on 12/31/2000.
         Additionally, if the lease of the Northern California Faire site is not
         obtained on or before 8/1/99, $250,000 becomes due and payable. The
         Company currently has a lease for a site for the Northern California
         Faire which is contingent on the Company obtaining the necessary
         permits and the lessor closing the purchase of the property. Interest
         on this loan accrues at 13% per annum. This agreement grants the lender
         an option to purchase one share of the Company's common stock for each
         $10.00 loaned at a price of $0.81 per share.

                                       F-17

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998

(14)     SUBSEQUENT EVENTS, CONTINUED
         During the first four months of 1999, the Company also obtained
         $500,000 of short-term financing payable to related parties. The loans
         bear interest at 18% per annum and include warrants granting the
         lenders the right to acquire 100,000 shares of the Company's common
         stock at the average of the trading price of the stock for the five
         days prior to making the loan to the Company.

                                       F-18
<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 annual report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                      RENAISSANCE ENTERTAINMENT CORPORATION




Date: April 9, 1999              /s/ Charles S. Leavell
                                 -------------------------------------------
                                 Charles S. Leavell, 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.

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


/s/ Charles S. Leavell      Chairman of the Board,            April 9, 1999
------------------------   Chief Executive and Chief
Charles S. Leavell            Financial Officers


/s/ Sue Brophy             Chief Accounting Officer           April 9, 1999
------------------------
Sue Brophy


/s/ Sanford L. Schwartz            Director                   April 9, 1999
------------------------
Sanford L. Schwartz


/s/ Robert M. Geller               Director                   April 9, 1999
------------------------
Robert M. Geller


/s/ Charles J. Weber               Director                   April 9, 1999
------------------------
Charles J. Weber



                                       34
<PAGE>



     Exhibit No                             Title

        3.0(i)    Amended and Restated Articles of Incorporation, incorporated
                  by reference from the Amendment No. 1 to Registrant's
                  Registration Statement on Form 8-A filed with the Commission
                  on April 12, 1994.
        3.0(ii)   By-Laws, incorporated by reference from the Amendment No. 1 to
                  Registrant's Registration Statement on Form 8-A filed with the
                  Commission on April 12, 1994.
*       3.1       Articles of Amendment to the Articles of Incorporation.
        4.1       Specimen Certificate of Common Stock, incorporated by
                  reference from the Amendment No. 1 to Registrant's
                  Registration Statement on Form 8-A filed with the Commission
                  on April 12, 1994.
*       4.2       Specimen Class A Warrant Certificate.
*       4.3       Specimen Class B Warrant Certificate.
*       4.4       Warrant Agreement.
*       4.5       Certificate of Designations, Preferences, and Rights of
                  Series A Convertible Preferred Voting Stock of Renaissance
                  Entertainment Corporation.
*       4.6       Renaissance Entertainment Corporation 1993 Stock Incentive
                  Plan.  (1)
*       10.1      Specimen Vendor and Exhibitor Agreement for the Bristol
                  Renaissance Faire.
*       10.2      Specimen Vendor and Exhibitor Agreement for the Northern and
                  Southern Renaissance Pleasure Faires.
*       10.3      Specimen Bristol Renaissance Faire Concession Agreement.
*       10.4      Specimen Bristol Renaissance Faire Games Concession Agreement.
        10.5      Lease Agreement between Creative Faires, Ltd. and Sterling
                  Forest Corporation dated June 12, 1996 incorporated by
                  reference from the Registrant's Annual Report on Form 10-KSB
                  for the year ended March 31, 1996.
        10.6      Form of Loan and Security Agreement for 1998, including form
                  of Stock-Term Notes and form of Warrant to purchase common
                  stock, incorporated by reference from the Registrants
                  Quarterly Report on Form 10-Q for the quarter ended March 31,
                  1998.
        10.7      Mortgage with Union Bank & Trust in the amount of $1,500,000
                  with respect to the Virginia property, incorporated by
                  reference from the Registrant's Annual Report on Form 10-KSB
                  for the year ended March 31, 1996.
**      10.8      Consulting and Warrant Compensation Agreement dated October
                  15, 1998 between the Company and Wall Street Financial,
                  incorporated by reference from Registrant's Registration
                  Statement on Form S-1 (No. 333-43503).
        10.9      Purchase Agreement dated November 12, 1997 between Faire
                  Partners, LLC and Renaissance Entertainment Corporation,
                  including Lease Agreement and Warrant to Purchase Common Stock
                  as exhibits thereto, incorporated by reference from
                  Registrant's Registration Statement on Form S-1 (No.
                  333-43503).
        10.10     Lease dated January 21, 1998 by and between Attache Publishing
                  Services, Inc. and the Company, incorporated by reference from
                  the Registrants Quarterly Report on Form 10-Q for the quarter
                  ended March 31, 1998.
**      10.11     Employment Agreement dated December 11, 1998 with Charles
                  S. Leavell.
**      10.12     Employment Agreement dated December 11, 1998 with J. Stanley
                  Gilbert.



                                       35
<PAGE>

**      23.1      Independent Auditor's Consent.
**      27        Financial Data Schedule.

*    Incorporated by reference from the Company's Registration Statement on Form
SB-2, declared effective by the Commission on January 27, 1995, and the
Post-Effective amendments thereto.

**   Filed herewith.





                                       36