<PAGE>


                                      FORM 10-K

                          SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549

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

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

For the transition period from April 1, 1996 to December 31, 1996

Commission file number 0-23782

                        RENAISSANCE ENTERTAINMENT CORPORATION
             -----------------------------------------------------------
             (Name of Small Business Issuer as Specified in its Charter)

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

4410 Arapahoe Avenue, Suite 200, Boulder, Colorado                       80303
------------------------------------------------                      ----------
(Address of principal executive offices)                              (Zip Code)

Issuer's telephone number, including area code:     (303) 444-8273

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


    Common Stock, $.03 par value                   Philadelphia Stock Exchange
    Class A Common Stock Purchase Warrants         Philadelphia Stock Exchange
    Class B Common Stock Purchase Warrants         Philadelphia Stock Exchange

             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
 Units, each Unit consisting of one (1) Share of Common Stock, one (1) Class A
Common Stock Purchase Warrant and one (1) Class B Common Stock Purchase Warrant

    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


                                         -1-


<PAGE>

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.                        [     ]

As of  March 31, 1997, 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 NASDAQ National Market held by non-affiliates of
the Registrant was approximately $55,285,358.  As of March 31, 1997, 10,787,387
shares of the Common Stock of the Registrant were outstanding.


                         DOCUMENTS INCORPORATED BY REFERENCE

    None.

                                        PART I

                                  ITEM 1:  BUSINESS

OVERVIEW

Renaissance Entertainment Corporation ("the Company") operates five Renaissance
Faires in the United States, and is engaged in a strategy to develop and acquire
additional Renaissance Faires nationwide.  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.  With its five
Faires currently drawing close to 750,000 visitors annually, the Company
believes that it is the largest operator of Renaissance Faires and Renaissance
entertainment events in the United States.  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.

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STRATEGIC PLAN

The Company's long-term strategic plan is to grow internally as well as through
the acquisition of additional Renaissance Faires located throughout the United
States.  At this time, the Company has no agreements or commitments to acquire
additional Renaissance Faires or faire sites.

The Company estimates that there are currently 20 major Renaissance Faires
produced in various locations throughout the country each year which are owned
by approximately 13 different owner/entities.  These Faires are predominantly in
major metropolitan areas and in many cases have a history of decades of
profitable operation.  Because of the fragmented nature of the industry, the
Company believes that it has an opportunity to acquire existing major Faire
productions as well as develop productions in areas which are not currently
serviced.

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

BRISTOL RENAISSANCE FAIRE.  The Bristol Renaissance Faire is conducted at the
Kenosha, Wisconsin site owned by the Company.  It has been in existence for  10
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 attracts approximately 190,000 patrons each year.

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 the first
quarter of fiscal 1996, the Company refinanced both 80 acre parcels with one
loan.  The new loan, in the original principal amount of $l million, bears
interest at the rate of 9 1/2% per annum, and calls for annual principal
reduction payments of $100,000 each September through 1997, and, assuming the
Company is current in its obligations to the bank, principal reduction payments
of $50,000 per quarter beginning in March 1998, with the remaining principal
balance of $550,000, together with interest due in December 1998.  The loan
balance at December 31, 1996 was $800,000.

As the site of the Bristol Renaissance Faire is owned, the structures and
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


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substantial sums of money in the construction of these shops, which represent
permanent improvements and value added to the Company's real estate.

While the Company believes that the property is amenable to some
income-producing off-season activity, historically, the Company has only
utilized the site for the Renaissance Faire, and the property has been vacant
during the off-season.  The Company is considering year-round uses which could
include campgrounds, a micro-brewery, 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 income-producing, off-season
activities.

NORTHERN CALIFORNIA RENAISSANCE PLEASURE FAIRE.  The Northern Renaissance
Pleasure Faire has been held in the San Francisco Bay area for the past 30
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.  The Faire typically attracts 200,000 patrons.

The Northern California Faire is located on leased property in Novato,
California.  The lease is currently on a year-by-year basis, and the Company is
in the final stages of negotiations of the lease to cover the 1997 Faire.  The
rent was $350,000 in 1996 and is expected to be approximately $300,000 for the
1997 Faire.  While the Company believes that its lease for the site will be
renewed for another year, there is no assurance that the lease will be renewed.
If the lease is not renewed, and since it is extremely unlikely that an
alternative site could be prepared in time, it is doubtful that the Company
would conduct a Faire in Northern California in 1997.  This would have a
material adverse effect on the Company's results of operations in 1997.  The
Company is investigating a new site for the Faire which, if acceptable and
available, will not be available until at least 1998.  The Company estimates
that it will be required to spend approximately $300,000 for an environmental
impact study and other site consideration expenses before necessary governmental
approvals can be obtained.  There is no assurance that, if the Company incurs
these and other site consideration expenses, it will be successful in obtaining
all necessary approvals for the site to be available for the Faire in 1998 or
any subsequent period.  In addition, the Company estimates that it will be
required to spend from $500,000 to $1,000,000 for development of the site prior
to the opening of the Faire at the new site.

In contrast to the permanent structures constructed at the Bristol Renaissance
Faire, all structures, including the gates, stages, booths, shops and arenas
utilized in the California Renaissance Pleasure Faires are mobile.  These props
are loaded into the Company's semi-tractor/trailers and transported between the
Northern and Southern California Renaissance Faires and, during the off-season,
are stored at the Northern Renaissance Faire site.  The booths and craft shops
utilized by vendors are owned by the individual vendors and moved onto the site
for the Faire and then removed by them.  The Faire is constructed and removed
much in the same way as a circus or traveling carnival.

SOUTHERN CALIFORNIA RENAISSANCE PLEASURE FAIRE.  The Southern California
Renaissance Pleasure Faire has been conducted for the past 34 years in the Los
Angeles metropolitan area.  This Faire typically attracts 200,000 patrons and is
held annually for eight weekends beginning the last week of April and ending
Mid-June.


                                         -4-


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The Southern Renaissance Pleasure Faire is held in Glenn 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 1997
Faire.  Rental under the lease is equal to 3.5% of gross revenues.  The Company
has the option of leasing the San Bernardino site in the future, but is
currently investigating new sites for the Southern Renaissance Pleasure Faire.

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 two years at a
small profit, management believes that it will have to relocate the Faire in
order to improve its profitability in the future.  The Company has recently
entered into a non-binding letter of intent with the owner of a site in Pomona,
California which contemplates that the Company will commence operation of the
Southern California Faire at that site starting in 1998.  The letter of intent
calls for the Company to construct a new village for the Faire.  The Company
estimates that the cost of such construction would be approximately $2,000,000.
The Company will need additional funds from one or more third parties to finance
such construction.  If such funds are not available, the Company would, in all
likelihood, continue to operate the Faire at its current location in 1998 and
possibly beyond.

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 as well as
other arts and crafts shows in the New York tri-state area.  The Company issued
540,000 shares of the Company's Common Stock in consideration for all of the
outstanding shares of Creative Faires, Ltd.

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,
which opened for business on May 4, 1996 and operated for seven weekends.  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 Fair, as is typical of new faires, operated at a loss
in 1996, its first year of operation, and is expected to incur a small operating
loss in the 1997 faire season.

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


                                         -5-


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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.

Some of the management of the Virginia Faire is handled by employees of the 
Bristol Faire, including such areas as entertainment and public relations.  
Although there are currently no other activities scheduled on the property 
for 1997 other than the Virginia Renaissance Faire, the Company expects to 
develop other income-producing activities, which may include a Halloween 
forest of fright, music festivals, Christmas activities and other special 
events.  To date, however, there exist no agreements, arrangements or other 
understandings with respect to alternate year-round uses.

VENDORS

Approximately 13% of the revenues realized from presenting the Company's
Renaissance Faires are generated from the Company's relationships with vendors
and craftsmen who sell food and crafts, and offer games and rides.

At the Bristol Renaissance Faire site, the vendors and craftsmen 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.  Since the
structures are permanent, once built they become the property of the Company and
substantially increase the value of the Company's asset at that location.

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 6% to 15%.

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 15% of their
gross revenues.

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.


                                         -6-


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GATE ADMISSIONS.  Gate admissions are set from $14.00 to $17.50 for adults,
$5.95 to $6.95 for children, with children under the age of five admitted free.
Discounts for senior's and military personnel are $1.00 to $2.00. Off premises
discount ticket sales are available at Cub Foods, K-Mart, Sentry Foods, Shoprite
and Kits Camera.   Discount coupons are available at retail outlets operated by
the Company's sponsors, including McDonalds, Subway, White Castle, Vons super
markets 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.  Gate admissions represent
approximately 49% of the Faires' total revenues.

BEVERAGE INCOME.  The Company sells beer, wine and soft drinks at each Faire.
Beverage sales represent approximately 20% of Faire revenues.

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 charges $2 for
regular parking.  Parking revenue represents approximately 7% of Faire revenues.

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 40% 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.  In the aggregate, food
revenues represent approximately 9% of total Faire income.

CRAFT FEES.  Each Faire has over 150 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.
Craft fees represent approximately 9% of total Faire revenues.

GAME FEES.  Many games and rides are operated by independent contractors.  The
Company receives 15% of the gross revenues from these games and rides, which
represents, in the aggregate, approximately 1% of total Faire revenues.

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


                                         -7-


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its products and memorabilia through alternative means in the future.  Souvenir
sales to date represent approximately 4% of Faire income.

SPONSORSHIP FEES.  The Company solicits sponsorship arrangements with major
sponsors including Coca-Cola Company, Anheuser-Busch, Inc., Miller Brewing
Company, Amoco Oil Company, Eastman Kodak Company, Pepsi Cola  Company and
Guinness Import Co.  The sponsors also participate in joint advertising
campaigns.  In the past, sponsorship fees have represented approximately 1% of
Faire revenues.

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 advanced sales campaigns.

The Company has also undertaken a "Sponsorship"  campaign.  Major sponsors have
included  Eastman Kodak Company, Hyatt Hotels & Resorts, Inc., Coca-Cola
Company, Miller Brewing Company, Amoco Production Company and Sentry Foods, Inc.
Agreements with such sponsors have included joint advertising, sponsorship fees,
and product giveaways.

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
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 to harm the financial results during
certain weekends of any particular Faire.

During the period from the middle of October through the third week of 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.  Creative Faires, Ltd. operates craft shows and
the Forest of Fear on the New York site during the


                                         -8-


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fall and spring.  The Company plans to continue those events and also to develop
fall 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
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
competition from other more traditional entertainment alternatives, including
amusement parks, theme parks, local and county fairs, and specialty festivals.

While there are more than 100 annual entertainment events produced in the
country with a Renaissance theme, there are only 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.

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.

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PUBLIC LIABILITY AND INSURANCE

As a producer of public entertainment events, the Company naturally 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 only
experienced minimum claims which have been resolved quickly without litigation.
The Company maintains comprehensive public liability insurance 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.  Alternatively, an independent vendor can be added as an
additional insured under the Company's liability insurance policy for an
additional fee.

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.

EMPLOYEES

The Company presently has 16 full-time employees working for 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.  The Bristol
Faire has 6 full-time employees, the California Faires have 12 full-time
employees, the New York Faire has 6 full-time employees and the Virginia Faire
has 6 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.


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The Company has plans for acquisition and growth using the current staff and
management systems of the Faire as a management infrastructure.  The creation of
a year-round staff has increased expenses, but will, in management's opinion,
achieve economies of scale as the Company acquires and produces additional Faire
operations.  The Company believes that it currently has full-time management
sufficient to operate nine annual Faires.


                                  ITEM 2:  PROPERTY

The Company's corporate headquarters are located at 4410 Arapahoe Avenue, Suite
200, in Boulder, Colorado.  This property measures 3,868 square feet and is
currently leased at $7,854 per month, with increases of 5% per annum each
November 1, expiring October 31, 2001.  The Company considers these offices to
be suitable for its needs for the duration of the lease term.  The Company has
an option to renew the lease for an additional five year period.

The Company owns approximately 160 acres in Kenosha County, Wisconsin, which is
home to the Bristol Renaissance Faire.  The land is subject to mortgages in the
original aggregate principal amount of $1.95 million.  On April 11, 1997, the
outstanding balance was $1.7 million.

The Company has leased the property where the Northern California Renaissance
Pleasure Faire is held, located at 1410 Highway 37, Novato, California 94945.
Office quarters for all California personnel is included in the overall lease
covering the Faire site, which expires April 30, 1997.  See Item 1 --
"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.  The Company also leases offices 
in New York City.

On July 27, 1995, the Company acquired approximately 250 acres of land in
Stafford County, Virginia, for a purchase price of $925,000.  This property
houses the Virginia Renaissance 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.

                              ITEM 3:  LEGAL PROCEEDINGS

From time to time, the Company is a party to legal proceedings arising in the
ordinary course of business.  The Company is not currently a party to any
material litigation; however, two former employees are alleging wrongful
termination.  The Company is not aware of any litigation threatened against it
that could have a material adverse effect on its business.

                                         -11-

<PAGE>

              ITEM 4:  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

The 1996 Annual Meeting of the Stockholders of the Company was held on November
26, 1996.  At that meeting, the following five directors, constituting all
members of the Board of Directors, were elected.


                        Votes Cast       Votes Cast                    Broker
Name                       For             Against     Abstentions    Non-Votes
----                        ---             -------     -----------    ---------

Charles S. Leavell      3,492,895            -0-         44,990          -0-
Sanford L. Schwartz     3,492,895            -0-         44,990          -0-
Robert Geller           3,492,895            -0-         44,990          -0-
Gregg Adam Thaler       3,326,228            -0-        211,657          -0-
Dean Petkanas           3,326,228            -0-        211,657          -0-


    At the 1996 Annual Meeting, the shareholders were also asked to ratify the
selection of Schumacher & Associates, Inc. as independent auditors for the
Company.  The vote for such ratification was:  3,514,385 FOR;  6,300 AGAINST,
and 17,200 ABSTENTIONS.


                                       PART II

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

PRICE RANGE OF COMMON STOCK

On September 1, 1995, the Company's Common Stock began trading on the NASDAQ
National Market.  From January 27, 1995 to August 31, 1995, it traded on the
NASDAQ Small-Cap Market and on the Boston Stock Exchange, and prior to that
time, the stock was traded over-the-counter on the OTC Electronic Bulletin
Board.  Since December 9, 1996, the Company's Common Stock has also been traded
on the Philadelphia Stock Exchange. The following table reflects the high and
low prices of the Registrant's Common Stock for each quarterly period of the two
most recent calendar years and the subsequent interim quarter retroactively
adjusted for a 2-for-1 stock split in October 1996.  From the fourth quarter of
1995 forward, the prices reflect the high and low sales prices.  For the first,
second and third quarters of 1995, the prices reflect the high and low bid
prices as quoted by the National Quotation Bureau, Inc.  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.

                                         -12-

<PAGE>

 CALENDAR YEARS ENDED DECEMBER 31         HIGH           LOW
---------------------------------         ----           ---
     1995
First Quarter ended March 31             $4.50          $3.38
Second Quarter ended June 30              4.88           3.63
Third Quarter ended September 30          4.69           3.88
Fourth Quarter ended December 31          6.44           4.00

     1996
First Quarter ended March 31              7.19           5.19
Second Quarter ended June 30              6.81           5.63
Third Quarter ended September 30          7.00           5.25
Fourth Quarter ended December 31          7.50           5.00

     1997
First Quarter ended March 31              6.88           5.06


    As of March 31, 1997, there were approximately 1,529 shareholders of
record.


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:  SELECTED FINANCIAL DATA

The information set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements and related notes included elsewhere in this Form 10-K.
 
<TABLE>
<CAPTION>
                                                                                                   NINE-MONTHS
                                                          YEARS ENDED MARCH 31,                 ENDED DECEMBER 31,
                                                 ------------------------------------        -----------------------
INCOME STATEMENT DATA                            1994           1995           1996           1995           1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)         ----           ----           ----           ----           ----
<S>                                            <C>            <C>            <C>            <C>            <C>
Revenue                                        $ 1,973        $12,540        $12,811        $10,470        $14,554
Gross Profit                                     1,694          9,327          8,984          7,265          9,741
Net Operating Income (Loss)                        (39)           757         (1,475)           111         (1,753)
Net Income (Loss) before taxes                     (98)           576         (1,274)           309         (1,852)
Net Income (Loss) to Common
    Shareholders                                   (98)           533         (1,274)           264         (1,852)
Net Income (Loss) Per Common
     Share                                        (.05)           .11           (.16)           .03           (.21)

Weighted Average Common
Shares Outstanding                               1,901          4,801          7,824          7,644          8,907
</TABLE>


                                         -13-


<PAGE>

<TABLE>
<CAPTION>
                                                              MARCH 31,                            DECEMBER 31,
                                               -------------------------------------------------------------------
BALANCE SHEET DATA                              1994           1995           1996           1995           1996
(IN THOUSANDS)                                  ----           ----           ----           ----           ----
<S>                                            <C>            <C>            <C>            <C>            <C>
Working capital (deficiency)                   $  (524)       $ 3,123        $    15        $   768        $(1,506)
Total current assets                               167          4,012          2,120          1,308            931
Total assets                                     1,257          6,853         10,433          8,226          9,872
Total current liabilities                          691            889          2,105            539          2,438
Long-term debt (less current maturities)           434            451          2,531            846          2,379
Stockholders' equity                               132          5,513          5,797          6,841          5,055
</TABLE>

            ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements, including the footnotes.

PROSPECTIVE INFORMATION

This Annual report on Form 10-K contains certain forward-looking statements 
and information relating to the Company that are based on the beliefs and 
assumptions made by the Company's management as well as information currently 
available to management.  When used in this document, the words "anticipate," 
"believe," "estimate," "expect," and similar expressions, are intended to 
identify forward-looking statements.  Such statements reflect the current 
views of the Company with respect to future events and are subject to certain 
risks, uncertainties and assumptions.  Should one or more of these risks or 
uncertainties materialize, or should underlying assumptions prove incorrect, 
actual results may vary materially from those described herein as 
anticipated, believed, estimated or expected.  The Company does not intend to 
update these forward-looking statements.

RESULTS OF OPERATIONS - 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 Item 6 - Selected Financial Data, for information regarding the
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.


                                         -14-


<PAGE>

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 interest and therefore included in the fiscal year ended March 31,
1996, the entire twelve month results of operations for the calendar year ended
December 31, 1995 were reflected in the operating results for the January 1,
1996 through March 31, 1996 quarter 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 operations of the Virginia and New York Faires for the period ended
December 31, 1996, as compared to the same period of 1995.  The increased
revenues from the new faires were partially offset by a decrease in revenues for
the Southern California Faire as compared to the same period of 1995.  Unusually
inclement weather in Virginia, New York and Southern California reduced the
expected revenues from faire operations.  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 a small operating loss in the 1997 faire season.  During the
1996 season the Bristol Renaissance Faire revenues increased 20%.  This was the
eighth consecutive year that attendance increased at this 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 substantial 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


                                         -15-


<PAGE>

necessary advertising for the two additional faires as well as moderate
increases in advertising and rates for the other three faires.  Additionally, a
change in accounting procedures resulted in certain expenses being charged to
advertising this period which were not charged to advertising expense in the
same period of 1995.

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 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.

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 operating expenses resulting
from the two additional faires, and also greater overhead costs at each faire
site plus other corporate activities which support faire operations and pursue
new ventures.  As a result of the foregoing, net operating income (before
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 the substantially decreased cash position of the Company
throughout the 1996 period as compared to the same period of 1995.  A 153%
increase in interest expense from $100,266 in 1995 to $253,740 in 1996 resulted
from a large increase 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 shares outstanding
during the 1995 period and 8,907,049 weighted average shares outstanding during
the 1996 period.

RESULTS OF OPERATIONS - FISCAL 1996 COMPARED TO FISCAL 1995

Comparisons of the fiscal year ended March 31, 1996 with the fiscal year ended
March 31, 1995 include Creative Faires, Ltd. (owner of the New York Renaissance
Faire) acquired February 5, 1996.  The acquisition has been accounted for as a
pooling of interests, which means that the financial results of Creative Faires,
Ltd. have been retroactively merged into those of the Company.  Accordingly, the
Company's results of operations for fiscal 1995 and fiscal 1996 include the
results


                                         -16-


<PAGE>

of Creative Faires.  Because the Company's fiscal year previously ended on March
31 and Creative Faires' fiscal year ended on December 31, the income statements
of Creative Faires for the fiscal years ended December 31, 1994 and December 31,
1995 have been consolidated into the Company's income statements for the fiscal
years ended March 31, 1995 and March 31, 1996, respectively.  Results of
operations for Creative Faires, Ltd. includes three crafts shows and a Halloween
Forest of Fear in addition to the New York Renaissance Faire, although the Faire
represents most of its revenue.

The results of operations of the Company for the fiscal year ended March 31,
1996 reflect the nineteen-day run of the Los Angeles Faire, the eighteen-day run
of the Wisconsin Faire, the fifteen-day run of the San Francisco Faire, and the
seventeen-day run of the New York Faire.  The comparable period of fiscal 1995
included the same number of days for Los Angeles, Wisconsin and New York Faires,
but included an additional three days for the San Francisco Faire.  The Virginia
Renaissance Faire, under construction as of March 31, 1996, did not generate any
revenues during fiscal 1996.  Thus, these financial statements include the
results of four operating faires and one faire under construction during fiscal
1996, as against four operating faires during fiscal 1995.  As a further note,
as a result of the acquisition of the Los Angeles Faire on April 1, 1994, the
comparable figures for the 1995 fiscal year do not reflect advance ticket sales
and certain prepaid expenses of the Los Angeles Faire which were recognized by
the prior owner.

Revenue increased modestly from $12,539,653 for the fiscal year ended March 31,
1995 to $12,810,617 for the fiscal year ended March 31, 1996, an increase of
$270,964 or 2%.  During fiscal 1995 beverage operations for the Los Angeles and
San Francisco Faires were handled by an outside contractor, and accordingly only
the fee earned from that contractor was reported as revenue, whereas in fiscal
1996 the Company ran the beverage operation itself and recorded all revenue.

Faire operating expenses (expenses directly related to faire operations, such as
rent, grounds maintenance, contract services, contract entertainment, food,
beverage and merchandise costs) increased $614,377 or 19%, from $3,212,491 in
fiscal 1995 to $3,826,868 in fiscal 1996.  This increase is partially due to the
inclusion of beverage costs for the Los Angeles and San Francisco Faires, which
were not reported during the previous period when handled by an outside
contractor, plus higher overall costs related to faire operations.  The gross
profit, representing operating income from faire operations before overhead
expenses, decreased 4% from $9,327,162 in fiscal 1995 to $8,983,749 in fiscal
1996.  This decrease is attributable to the shorter run of the San Francisco
Faire in fiscal 1996 and growing operating costs which were not offset by
increased attendance.

Operating expenses (year-round operating costs and corporate overhead) increased
$1,888,568 or 22%, from $8,570,320 for fiscal 1995 to $10,458,888 for fiscal
1996.  Of these amounts, salaries increased 17% from $3,474,799 in fiscal 1995
to $4,082,271 in fiscal 1996, representing a modest expansion of staffing levels
Company wide.  Depreciation and amortization expense increased 42% from $351,215
in fiscal 1995 to $500,203 in fiscal 1996.  This increase is largely the result
of the Company's increased investment in property and equipment for the expanded
Wisconsin Faire, as well as investment in furniture and equipment for the
corporate office, which moved to new quarters in April 1995.  Substantial
investment in buildings and improvements to the Virginia property were not
subject to depreciation in fiscal 1996, because at March 31, 1996 the Virginia


                                         -17-


<PAGE>

Faire had not yet opened.  Under accounting rules those assets (categorized on
the balance sheet as construction-in-progress) were not yet depreciable.
Advertising expenditures increased 28% from $1,211,798 in fiscal 1995 to
$1,546,701 in fiscal 1996.

Other operating expenses (all other general and administrative expenses of the
Company) increased $797,205 or 23%, from $3,532,508 for fiscal 1995 to
$4,329,713 for fiscal 1996.  This increase is the result of greater overhead
costs at each faire site plus other corporate activities which support faire
operations and pursue new ventures.  For example, during the 1996 fiscal year,
approximately $225,000 was spent developing new products and distribution
opportunities.  Second, approximately $90,000 in product design costs, which had
been capitalized during the 1995 fiscal year, had to be expensed when changing
circumstances required a different accounting treatment of that transaction.
Third, approximately $160,000  in expenses were incurred searching for and
negotiating for the rights to new sites for the Los Angeles and San Francisco
Faires.  Management believes that those Faires have the potential to be more
profitable once they are located on long-term sites with permanent structures,
since the substantial costs of re-establishing the faires each season will be
eliminated and also, the opportunity for revenue enhancement will improve in
conjunction with additional improvements to the property.  Fourth, the Company
expensed approximately $300,000 in overhead costs during construction of the new
site in Virginia, including such costs as salaries, office rent and overhead
costs related to overseeing construction.  As a result of the foregoing, net
operating income (before interest charges and other income) decreased
$2,231,981, from $756,842 for fiscal 1995 to a loss of $1,475,139 for fiscal
1996.

A 128% increase in interest income from $48,132 in fiscal 1995 to $109,652 in
fiscal 1996 resulted from the investment of cash proceeds from the January 1995
stock offering.  Offsetting this was a 159% increase in interest expense from
$53,223 in fiscal 1995 to $138,036 in fiscal 1996.  The increase was due to a
new $1,500,000 mortgage and $250,000 note on the Virginia property, plus a
larger mortgage on the Wisconsin property.  Combining interest income with
interest expense resulted in an increase in net interest expense from $5,091 in
fiscal 1995 to $28,384 in fiscal 1996.  Miscellaneous expenses (primarily loss
on sale of assets) of $28,327 in fiscal 1995 changed to $36,049 in miscellaneous
income (rental income and vendor refunds) in fiscal 1996.  Combining net
operating income with other income resulted in a $2,190,898 decrease in net
income before taxes, from income of $723,424 for fiscal 1995 to a loss of
$1,467,474 in fiscal 1996.

Since the Company incurred a net loss for the 1996 fiscal year, it applied that
loss against taxable income during the previous fiscal year, resulting in a
credit of $193,803 in taxes previously booked.  The excess in operating losses
above what has been applied against the previous year (approximately $1,400,000)
was carried forward to reduce taxable income in future periods.  During the 1995
fiscal year, a year of net income, income tax expense of $147,000 was incurred.

Net income to common stockholders decreased $1,806,980, from $533,309 in fiscal
1995 to a loss of $1,273,671 for fiscal 1996.  Net income to common stockholders
for fiscal 1995 is net of $43,115 paid in dividends on preferred stock.  The
Company's preferred stock was fully redeemed on January 27, 1995 in conjunction
with the public offering, and there has been no preferred stock outstanding
since that date.  Finally, net income per common share decreased from $0.11
during fiscal 1995 to a loss of $0.16 during fiscal 1996, based on 4,801,044
weighted average shares


                                         -18-


<PAGE>

outstanding during fiscal 1995 and 7,824,182 weighted average shares outstanding
during fiscal 1996.


LIQUIDITY AND CAPITAL RESOURCES

The most significant events of the past year were the purchase of Creative
Faires, Ltd. (owner of the New York Renaissance Faire), the completion of
construction of the Virginia Renaissance Faire and the first year of operations
of those two faires under the Company's ownership and management.  As a result
of significant cost overruns in the construction of the Virginia Faire due to
extremely inclement weather during the construction period, overall
disappointing results from faire operations in 1996 and certain corporate
overhead expenses, the Company's working capital decreased from $768,213 at
December 31, 1995 to a working capital deficit of ($1,506,284) at December 31,
1996.  In order to reduce the Company's working capital requirements, management
has implemented a number of cost reductions which it estimates will reduce
operating expenses by approximately $1,300,000 during the fiscal year ending
December 31, 1997.

The Company's working capital requirements are greatest during the period 
from January 1 to April 30, when it is incurring start-up expenses for its 
first faires of the faire season, the Southern California and Virginia 
faires.  The Company has historically relied upon various revolving credit 
facilities to meet its working capital requirements during this period.  At 
December 31, 1996, the Company had outstanding $1,000,000 in short-term line 
of credit borrowings which was the maximum amount available under the lines 
and did not, therefore, have any unused credit available for the 1997 faire 
season.  Subsequent to year end, the Company has entered into a loan workout 
agreement with respect to the lines of credit which will permit the Company 
to pay these lines from 1997 operations. Since December 31, 1996, the Company 
has also raised $750,000 of working capital through issuance of convertible 
debt to an officer of the Company and a related party and obtained a 
commitment for $350,000 of working capital from the sale of convertible notes 
to a number of private investors.  The notes are to be secured by a mortgage on
the Company's Kenosha, Wisconsin faire site and will be convertible into 
shares of common stock of the Company at a maximum of $1.75 per share.  
Management believes that the Company needs to raise an additional $250,000 to 
fund the opening of the 1997 faire season.  In addition, management believes 
that the Company should raise additional working capital in order to more 
adequately fund its operations.  The Company is pursuing various funding 
alternatives.  However, there can be no assurance that such funds will be 
available to the Company or, if available, available on terms acceptable to 
the Company.

Although inflation can potentially have an effect on financial results, during
1996 it caused no material affect on the Company's operations, since the change
in prices charged by the Company and by Company's vendors has not been
significant.

Reviewing the change in financial position over the previous year, current
assets, largely comprised of cash and prepaid expenses, decreased from
$1,307,541 at December 31, 1995 to $931,451 at December 31, 1996, a decrease of
$376,090 or 40%.  Of those amounts, cash and cash equivalents decreased from
$745,021 at December 31, 1995 to $374,289 at December 31, 1996, due to cash


                                         -19-


<PAGE>

outflow from operations during the year, plus the use of cash for construction
of the Virginia Faire.  Accounts receivable decreased from $228,967 at December
31, 1995 to $133,749 at December 31, 1996.  Inventory, comprised of merchandise
sold at the faires and various food and beverage supplies, increased from
$96,034 at December 31, 1995 to $184,695 at December 31, 1996, largely
reflecting merchandise remaining from the previous season and the purchase of
new products for upcoming faires.  Prepaid expenses decreased from $237,519 at
December 31, 1995 to $139,167 at December 31, 1996.  These costs represent
expenses incurred on behalf of the Southern California and Virginia Faires,
which are expensed once those faires are operating.

Current liabilities increased from $539,328 at December 31, 1995 to $2,437,735
at December 31, 1996, an increase of $1,898,407 or 352%.  This increase is
largely due to construction spending on the Virginia Faire and operation of the
two additional faires.   Accounts payable and accrued expenses increased from
$279,244 at December 31, 1995 to $1,068,028 at December 31, 1996, an increase of
$788,784 or 282%.  The current portion of notes payable increased from $140,064
at December 31, 1995 to $1,209,119 at December 31, 1996.  Of the $1,069,055
increase, $1,000,000 was due to short-term borrowings on two lines of credit in
1996.  Unearned income, which consists of the sale of admission tickets to
upcoming faires and deposits received from craft vendors for future faires,
increased from $120,020 at December 31, 1995 to $160,588 at December 31, 1996.

Total assets increased from $8,226,264 at December 31, 1995 to $9,872,349 at
December 31, 1996, an increase of $1,646,085 or 20%.  Of those amounts, property
and equipment (net of depreciation) increased 49% from $4,819,198 at December
31, 1995 to $7,176,755 at December 31, 1996.  Most of this increase was the
result of the purchase of the New York Faire and the completion of the
construction of the Virginia Faire.  Goodwill, which arose from the purchase of
the two California Faires and is being amortized over 15 years, decreased from
$1,066,405 at December 31, 1995 to $620,826 at December 31, 1996.  This was
primarily due to the Company writing down this account by an additional $380,000
as the result of two consecutive years of disappointing performance for the
Southern California Faire.  Other miscellaneous assets (organizational costs and
vendor deposits) increased from $186,702 at December 31, 1995 to $253,201 at
December 31, 1996.

Total liabilities increased from $1,385,208 at December 31, 1995 to $4,816,897
at December 31, 1996, an increase of $3,431,689 or 248%.  This increase is
primarily due to costs incurred in connection with the purchase and construction
of the Virginia Faire site and increased borrowings required to fund the
Company's losses.  Total liabilities at December 31, 1996 include $2,437,735 in
current liabilities (discussed above), plus $2,341,987 from the long-term
portion of the following bank loans: an $800,000 mortgage on the Bristol Faire
property, a $1,500,000 mortgage on the Virginia Faire property, and a $250,000
loan for construction of vendor booths in Virginia.

Stockholders' Equity decreased from $6,841,056 at December 31, 1995 to
$5,055,452 at December 31, 1996, a decrease of $1,785,604 or 26%.  This decrease
resulted from the net loss of $1,851,725, partially offset by additional
contributed capital received as the result of the exercise of          125,328
Class A Warrants at $2.00 per share; the exercise of 34,000 Class B Warrants at
$2.625 per share; the exercise of 324,998 employee stock options at prices
ranging from $1.125 to $3.50 per share; the repurchase of 20,626 shares by the
Company at $4.00 per share.  As of December 31, 1996, the Company had
outstanding 9,233,772 shares of common stock, 1,813,856 Class A


                                         -20-


<PAGE>

Warrants representing the right to purchase common stock at $2.00 per share, and
2,049,966 Class B Warrants representing the right to purchase common stock at
$2.625 per share.  The book value of a share of common stock (stockholders'
equity divided by number of shares outstanding) as of that date was $0.55.

The Company has no significant commitment for capital expenses during the fiscal
year ending December 31, 1997.  See Item 1 - Business for a discussion of the
Company's efforts to find new sites for its Southern and Northern California
faires.


                 ITEM 8:  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, 1996 and March 31,
         1996, (audited);

    3.   Consolidated Statements of Operations for the Fiscal Years Ended March
         31, 1995 and March 31, 1996, and the nine-month period ended December
         31, 1996 (audited);

    4.   Consolidated Statements of Changes in Stockholders' Equity for the 
         Fiscal Years Ended March 31, 1995 and March 31, 1996, and the
         nine-month period ended December 31, 1996 (audited);

    5.   Consolidated Statements of Cash Flows for the Fiscal Years Ended 
         March 31, 1995 and March 31, 1996 and the nine-month period ended 
         December 31, 1996 (audited); and

    6.   Notes to the Consolidated Financial Statements.


ITEM 9:  CHANGES IN AND DISAGREEMENTS WITH  ACCOUNTANTS
         ON ACCOUNTING AND FINANCIAL DISCLOSURE

         None.



                                         -21-


<PAGE>

                                       PART III

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT


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

                                                                      Director
Name(1)                 Age       Position                             Since
-------                 ---       --------                             -----

 Charles S. Leavell     55        Chairman of the Board of Directors
                                  & Chief Executive Officer             1993

 Sanford L. Schwartz    47        Director                              1993

 Robert M. Geller       44        Director                              1994

 Gregg Adam Thaler      31        Director                              1996

 Dean Petkanas          33        Director                              1996

 J. Stanley Gilbert     59        President and Chief Operating
                                  Officer                               --

 James R. McDonald      51        Chief Financial Officer               --

 Howard Hamburg         60        Vice President                        --

 Kevin Patterson        36        Vice President                        --

 Gloria Constantin      46        Secretary                             --

 Sue Brophy             41        Controller                            --


    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. Leavell worked with Columbia
Pictures in Los Angeles, California, where he was producer of


                                         -22-


<PAGE>

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
The Leavell Company and CK Properties, L.C., of El Paso, Texas, both of which
are real estate development and management corporations 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 nineteen years.  From 1992 to present,
Mr. Schwartz has been the Chairman of Creative Business Strategies, Inc.
("CBSI").  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.

    GREGG ADAM THALER was elected a director of the Company in 1996.  He has
been president of Duke & Company, Inc., a New York investment banking firm since
1993.  In 1993 he was a sales manager for Corporate Securities of Los Angeles,
California, and from 1992 - 1993, he was a sales manager for HJ Meyers &
Company, also of Los Angeles. From 1989 to 1992, Mr. Thaler was a broker and
analyst with Stratton Oakmont of Lake Success, New York, a broker/dealer.  Mr.
Thaler graduated with honors from the University of Michigan in 1987, with a
Bachelor of Arts degree in Political Science.

    DEAN PETKANAS was elected a director of the Company in 1996.  He has been
President of Briarwood Investment Counsel, a broker/dealer registered with the
National Association of Securities Dealers since 1981.   From 1992 to 1994, Mr.
Petkanas was Director of Corporate Finance for Kensington Wells, Inc. of New
York.  From 1989 to 1992, he served as a Vice President of Corporate Finance and
Assistant Director of Research for Stratton Oakmont of Lake Success, New York, a
broker/dealer.

    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


                                         -23-


<PAGE>

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.

    JAMES R.. MCDONALD  became Chief Financial Officer of the Company in
November of 1996.  From August of 1996 until October of 1996, he served as Chief
Financial Officer of Mountain Solutions, a personal communications services
company.  From January of 1994 until August of 1996, Mr. McDonald was Controller
of Omnipoint Corporation, another personal communications services company.  Mr.
McDonald was also a principal of James R. McDonald, CPA, from August of 1991 
until December 1993. Mr. McDonald received a Bachelor of Science degree in 
Accounting from California State University at Fullerton in 1978, and a Masters 
of Business Administration in Finance from Loyola University of Chicago in 1980.

    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.

    KEVIN PATTERSON, General Manager of RPFI since April 1, 1994, has 18 years
experience in the administration and production of Renaissance Faires.  From
1993 to 1994 he served as Vice President & Assistant General Manager of the
Living History Center, a non-profit public benefit corporation which previously
produced the California Renaissance Pleasure Faires.  Mr. Patterson served as
Production Manager of The Living History Centre in 1992, as Community Outreach
Director during 1989 to 1992, and in other positions with the organization
continuously since 1977.  Mr. Patterson holds a B.A. degree in Economics from
Moorpark College and attended the B.S.M. program at Pepperdine University.  He
is a founding Board Member of the Historic Oaks Foundation and the St. Andrew's
Society of San Francisco.

    GLORIA CONSTANTIN has been Secretary of the Company since 1993. She has
also been  in-house Investor Relations since 1993.  From 1991 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 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.  From 1991 to 1992, she was an accountant with Rigden, Inc., a
software development company.


                                         -24-


<PAGE>

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

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.

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 period ended December 31, 1996, all
required reports were timely filed, except that due to administrative oversight,
J. Stanley Gilbert filed one late Form 4 reporting one transaction.

                   ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth certain information for the Company's fiscal
periods ended December 31, 1996 (D1996), March 31, 1996 (M1996) and 1995 (M1995)
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                             Other
Name and                                                          Compen-      Stock                    LTIP       Compen-
Principal                              Salary           Bonus     sation      Award(s)     Options/    Payouts      sation
Position                 Year            ($)             ($)      ($)(1)        ($)          SARs        ($)          ($)
-----------------------------------------------------------------------------------------------------------------------------
<S>                     <C>         <C>              <C>        <C>           <C>           <C>         <C>        <C>

Charles S. Leavell
  Chairman,             D1996          -0-              -0-          -0-          -0-          -0-          -0-          -0-
  CEO and               M1996          -0-              -0-     $ 48,000(1)       -0-          -0-          -0-          -0-
  President             M1995       $ 92,000         $ 23,894        -0-          -0-          -0-          -0-          -0-

Miles Silverman,
  CEO                   D1996       $ 95,147            -0-          -0-          -0-          -0-          -0-          -0-
  President             M1996       $131,442            -0-          -0-          -0-          -0-          -0-          -0-
                        M1995       $ 80,000         $ 28,894        -0-          -0-         80,000        -0-          -0-

Howard Hamburg,
  COO,VP                D1996       $ 78,182            -0-          -0-          -0-          -0-          -0-          -0-
                        M1996       $114,391            -0-          -0-          -0-          -0-          -0-          -0-
                        M1995       $ 84,359            -0-          -0-          -0-         30,000        -0-          -0-
</TABLE>


                                         -25-


<PAGE>

(1) Includes $48,000 received under Consulting Agreement that terminated March
    31, 1996.

(2) 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.

OPTIONS GRANTED DURING FISCAL 1996

During the Company's fiscal period ended December 31, 1996, no options were
granted to Named Executive Officers

AGGREGATED OPTION EXERCISES DURING FISCAL 1996 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, 1996.  The
Company does not have any outstanding stock appreciation rights.

<TABLE>
<CAPTION>
                                                       Value of Number of        Unexercised
                                                           Unexercised           In-the-Money
                                                         Options/SARs at         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-                 0/0                    $0/$0
Miles Silverman                -0-           $-0-                 0/0                    $0/$0
Howard Hamburg                 -0-           $-0-       84,266/30,000         $296,502/$67,500

</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.

                                EMPLOYMENT AGREEMENTS

The Company has Employment Agreements with several of its executive officers and
key employees, the material provisions of which are summarized as follows:

    HOWARD HAMBURG.  Effective April 1, 1994, the Company entered into an
Employment Agreement with Mr. Hamburg as Treasurer of Renaissance Pleasure
Faires, Inc.  Effective April 28, 1995, Mr. Hamburg was also appointed the
Company's COO.  Effective June 20, 1996, Mr. Hamburg resigned as COO and was
appointed a Vice President.  The current Employment Agreement, which supersedes
the agreement dated April 1, 1994,  has a term of one year from the date of
termination notice from the Company.  His current annual salary is $110,250.


                                         -26-


<PAGE>

    KEVIN PATTERSON.  Effective April 1, 1994, the Company entered into an
Employment Agreement with Mr. Patterson as Chief Executive Officer of
Renaissance Pleasure Faires, Inc.   Effective August 29, 1994, Mr. Patterson was
also appointed a Vice President of the Company.  The current Agreement, which
supersedes the agreement dated April 1, 1994,  has a term of one year from the
date of termination notice from the Company.  His current base salary is 
$78,750.

     BARBARA HOPE.  On February 5, 1996, the Company entered into an Employment
Agreement with Ms. Hope in connection with the acquisition of Creative Faires,
Ltd. The Agreement has a term of two years and provides for a base salary of
$100,000.

    DONALD C. GAITI.  On February 5, 1996, the Company entered into an
Employment Agreement with Mr. Gaiti in connection with the acquisition of
Creative Faires, Ltd.  The Agreement has a term of two years and provides for a
base salary of $100,000.

DIRECTOR COMPENSATION

During the fiscal period ended December 31, 1996, outside 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.  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 as a
director of the Company and entered into an Agreement with him pursuant to which
the Company agreed to include his name on the slate of nominees to be elected to
serve as directors of the Company, and Mr. Geller consented to the inclusion of
his name as a nominee through the 1996 annual meeting of shareholders.  Pursuant
to the terms of the agreement, Mr. Geller was granted non-qualified options
exercisable to acquire up to 83,333 shares of the Company's Common Stock at an
exercise price of $2.25 per share.  Further, the Company has agreed to pay him
$300 for each Board of Directors meeting he attends and to reimburse him for
out-of-pocket expenses incurred in connection with attending those meetings.
The Company has also agreed to reimburse Mr. Geller for his out-of-pocket
expenses incurred in connection with his services rendered as a consultant to
the Company for which he also receives $75 an hour.  Under this agreement, Mr.
Geller received $30,137 in the 1996 fiscal year and $9,421 in the nine-month
period ended December 31, 1996.

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


                                         -27-


<PAGE>

Company, except discussions and decisions relating to his own salary, benefits
and incentive compensation.

       ITEM 12:  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 26, 1997, by:
(i) each of the directors of the Company, (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.

Name and Address                                        Percent of
Of Beneficial Owner               Number of Shares      Class (1)
-------------------               ----------------      ---------

Charles S. Leavell                  1,399,374 (2)         12.9%
1881 Ninth Street, Suite 319
Boulder, Colorado 80302

Robert M. Geller                      226,666 (3)          2.1%
1402 Kalmia
Boulder, Colorado 80304

Sanford L. Schwartz                    17,350 (4)             *
5353 Manhattan Circle, #201
Boulder, Colorado 80303

Gregg Adam Thaler                              0              *
909 Third Avenue; 7th Floor
New York, NY  10022

Dean Petkanas                                  0              *
100 Store Hill Road
Old Westbury, NY  11568

All Directors &                     2,920,130 (5)           27%
Officers as a Group
(Nine [9] Persons)


  * Less than one percent

(1) Shares not outstanding but deemed beneficially owned by virtue of the
    individual's right to acquire them as of March 24, 1997, 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.


                                         -28-


<PAGE>

(2) Includes 1,020,000 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.  133,334 shares of Common Stock held of record by
    LMG are subject to an option granted in favor of Mr. Leavell, exercisable
    at a price of $.937 per share.  Mr. Leavell disclaims beneficial ownership
    of the securities held by LMG for purposes of Section 16 under the Exchange
    Act.

(3) Includes non-qualified options to purchase 166,666 shares of Common Stock
    at an exercise price of $1.125 per share and non-qualified options to
    purchase 60,000 shares of Common Stock at an exercise price of $3.50 per
    share.

(4) Includes 17,350 shares owned by Creative Business Strategies, Inc., a
    corporation of which Mr. Schwartz is an officer, director and shareholder.

(5) Includes 226,666 shares issuable upon exercise of stock options exercisable
    within 60 days of March 24, 1997.

               ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CBSI CONSULTATION AGREEMENT

Sanford L. Schwartz was elected to serve as a member of the Company's Board of
Directors in April, 1993.  Mr. Schwartz is President, Director and a principal
stockholder of Creative Business Strategies, Inc., ("CBSI").  The Company had a
Consultation Agreement with CBSI which expired December 31, 1996 pursuant to
which it performed financial and public relations services.  In consideration of
those services, the Company agreed to pay CBSI a fee of $4,500 per month and
$200 per hour for services rendered in excess of 20 days per month.  A total of
$36,000 was paid to CBSI during the nine months ended December 31, 1996,
pursuant this agreement.

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 540,000 shares of the Company's Common Stock, and the Company
became the sole shareholder of Creative Faires, Ltd.  The Company also agreed to
employ Mr. Gaiti and Ms. Hope for two-year periods.


                                         -29-


<PAGE>

                                       PART IV

           ITEM 14:  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      Employment Agreement with Howard Hamburg, incorporated by
                   reference from the Registrant's Current Report on Form 8-K
                   dated December 31, 1995. (1)

         10.2      Employment Agreement with Kevin Patterson, incorporated by
                   reference from the Registrant's Current Report on Form 8-K
                   dated December 31, 1995. (1)

 **      10.3      Office Lease with Diana Wilkins dated August 15, 1996.

 *       10.4      Consultation Agreement with Creative Business Strategies,
                   Inc. (1)

 *       10.4      Letter Agreement with Rob Geller dated July 19, 1994. (1)

 *       10.5      Agreement with The Living History Centre dated August 25,
                   1994.


                                         -30-


<PAGE>

 *       10.6      Specimen Vendor and Exhibitor Agreement for the Bristol
                   Renaissance Faire.

 *       10.7      Specimen Vendor and Exhibitor Agreement for the Northern and
                   Southern Renaissance Pleasure Faires.

 *       10.8      Specimen Bristol Renaissance Faire Concession Agreement.

 *       10.9      Specimen Bristol Renaissance Faire Games Concession
                   Agreement.

 *       10.10     License Agreement and Lease with San Bernardino County for
                   the Southern Renaissance Pleasure Faire site.

 *       10.11     Investment Banking Agreement with Duke & Co., Inc.

         10.12     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.

         10.13     Mortgage dated April 7, 1995 with Bank One, Kenosha N.A.
                   with respect to Bristol Property, incorporated by reference
                   from the Registrant's Annual Report on Form 10-KSB for the
                   year ended March 31, 1996.

 *       10.14     Employment Agreement dated February 5, 1996 with Barbara
                   Hope.

 *       10.15     Employment Agreement dated February 5, 1996 with Donald C.
                   Gaiti.

         10.16     Line of credit with Bank One, Wisconsin in the amount of
                   $250,000 dated February 6, 1996, incorporated by reference
                   from the Registrant's Quarterly Report on Form 10-QSB for
                   the quarter ended December 31, 1995, filed with the
                   Commission on February 20, 1996.

         10.17     Line of credit with Union Bank & Trust in the amount of
                   $250,000 dated December 29, 1995, incorporated by reference
                   from the Registrant's Quarterly Report on Form 10-QSB for
                   the quarter ended December 31, 1995, filed with the
                   Commission on February 20, 1996.

         10.18     Commitment Letter for a line of credit with Bank One
                   Colorado in the amount of $750,000 dated January 26, 1996,
                   incorporated by reference from the Registrant's Quarterly
                   Report on Form 10-QSB for the quarter ended December 31,
                   1995, filed with the Commission on February 20, 1996.

         10.19     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.


                                         -31-


<PAGE>

 **      10.20     Loan Workout Agreement by and among Renaissance
                   Entertainment Corporation, Bank One, Colorado, N.A. and Bank
                   One, Kenosha, N.A.

         21.0      Subsidiaries, incorporated by reference from the
                   Registrant's Annual Report on Form 10-KSB for the year ended
                   March 31, 1996.

 **      23.1      Independent Auditor's Consent

 **      27.0      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.

(1)      Indicates management contracts, compensation plans or arrangements
         required to be filed as exhibits.

         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, 1996.


                                         -32-

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                        CONSOLIDATED FINANCIAL STATEMENTS

                                      WITH

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

              MARCH 31, 1995, MARCH 31, 1996 AND DECEMBER 31, 1996





<PAGE>



                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                        CONSOLIDATED FINANCIAL STATEMENTS

                                      with

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

                                                            Page

     Report of Independent Certified Public Accountants     F-3

     Audited Financial Statements:

          Consolidated Balance Sheets                       F-4

          Consolidated Statements of Operations             F-5

          Consolidated Statement of Changes in 
           Stockholders' Equity                             F-6

          Consolidated Statements of Cash Flows             F-8

          Notes to Consolidated Financial Statements        F-9



                                    F-2

<PAGE>



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors
Renaissance Entertainment Corporation
 and Consolidated Subsidiary

We have audited the combined balance sheet of Renaissance Entertainment
Corporation and Consolidated Subsidiary as of March 31, 1996 and December 31,
1996 and the related consolidated statements of operations and changes in
stockholders' equity, and cash flows for the nine month period ended December
31, 1996 and for the years ended March 31, 1995 and 1996.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion of these combined 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 and Consolidated Subsidiary as of March 31, 1996 and December 31,
1996 and the combined results of operations, changes in stockholders' equity and
cash flows for the nine period ended December 31, 1996 and the years ended March
31, 1995 and 1996 in conformity with generally accepted accounting principles.





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

March 31, 1997


                                    F-3

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET

                                     ASSETS
                                                       March 31,   December 31,
                                                         1996          1996    
                                                     ------------  ------------
Current Assets:
     Cash and equivalents                            $   631,063   $   374,289 
     Income tax refunds receivable (Note 6)              323,380             - 
     Stock subscription receivable (Note 13)                   -       133,749 
     Accounts receivable, net of allowance 
      for doubtful accounts of $8,341                     69,434        99,551 
     Inventory, at lower of cost or market               116,221       184,695 
     Prepaid expenses and other current assets           979,769       139,167 
                                                     ------------  ------------
  Total Current Assets                                 2,119,867       931,451 

     Property and equipment, net of accumulated
       depreciation of $1,372,060 and $1,982,765
       at March 31, 1996 and December 31, 1996
       respectively (Note 7)                           5,156,217     7,176,755 
     Construction in progress                          1,080,895             - 
     Goodwill, net of accumulated amortization         
       of $160,960 and $206,410 at March 31,
       1996 and December 31, 1996
       respectively (Note 5)                           1,046,285       620,826 
     Covenant not to compete, net of
       accumulated amortization of $40,000
       and $55,000 at March 31, 1996 and
       December 31, 1996 respectively (Note 5)            60,000        45,000 
     Restricted cash (Note 11)                           848,296       890,116 
     Other assets                                        121,909       208,201 
                                                     ------------  ------------
Total Assets                                        $ 10,433,469   $ 9,872,349 
                                                    -------------  ------------
                                                    -------------  ------------

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
     Accounts payable and accrued expenses          $  1,181,090   $ 1,068,028 
     Notes payable, current portion (Note 3)             437,956     1,209,119 
     Unearned income                                     485,798       160,588 
                                                    -------------  ------------
  Total Current Liabilities                            2,104,844     2,437,735 

     Notes payable, net of current
      portion (Note 3)                                 2,531,187     2,341,987 
     Other                                                     -        37,175 
                                                    -------------  ------------
  Total Liabilities                                    4,636,031     4,816,897 
                                                    -------------  ------------

     Commitments (Notes 3, 4, 8 and 12)                        -             - 

Stockholders' Equity (Notes 2, 8, 10, 12 and 13):
     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, 8,721,706 and
       9,233,772 issued and outstanding
       at March 31, 1996 and December 31, 1996
       respectively                                      130,826       277,013 
     Additional paid-in capital                        7,108,082     8,071,634 
     Accumulated (deficit)                            (1,441,470)   (3,293,195)
                                                    -------------  ------------
  Total Stockholders' Equity                           5,797,438     5,055,452 
                                                    -------------  ------------

Total Liabilities and Stockholders' Equity          $ 10,433,469   $ 9,872,349 
                                                    -------------  ------------
                                                    -------------  ------------

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

                                    F-4
<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                          Nine Month 
                                           Year Ended      Year Ended    Period Ended
                                           March 31,       March 31,     December 31,
                                              1995            1996         31, 1996
                                          -------------   ------------   --------------
<S>                                      <C>               <C>           <C>

REVENUE:
   Sales                                   $12,539,653   $ 12,810,617    $14,553,577 
   Faire operating costs                     3,212,491      3,826,868      4,812,616 
                                          -------------   ------------   ------------
     Gross Profit                            9,327,162      8,983,749      9,740,961 
                                          -------------   ------------   ------------

OPERATING EXPENSES:
   Salaries and wages                        3,474,799      4,082,271      4,048,603 
   Depreciation and amortization               351,215        500,203        633,819 
   Advertising                               1,211,798      1,546,701      2,511,973 
   Other operating expenses                  3,532,508      4,329,713      4,300,062 
                                          -------------   ------------   ------------
     Total Operating Expenses                8,570,320     10,458,888     11,494,457 
                                          -------------   ------------   ------------

Net Operating Income (Loss)                    756,842     (1,475,139)    (1,753,496)
                                          -------------   ------------   ------------

Other Income (Expenses):
   Interest income                              48,132        109,652         68,571 
   Interest (expense)                          (53,223)      (138,036)      (253,740)
   Other income (expense)                      (28,327)        36,049         86,940 
                                          -------------   ------------   ------------
     Total Other Income (Expenses)             (33,418)         7,665        (98,229)
                                          -------------   ------------   ------------

Net Income (Loss) before (Provision)
 Credit for Income Taxes                       723,424     (1,467,474)    (1,851,725)

(Provision) Credit for Income Taxes           (147,000)       193,803              - 
                                          -------------   ------------   ------------

Net Income (Loss)                              576,424     (1,273,671)    (1,851,725)
                                          -------------   ------------   ------------

Dividends on preferred stock                   (43,115)             -              - 
                                          -------------   ------------   ------------

Net Income (Loss) to Common
 Stockholders                             $    533,309   $ (1,273,671)   $(1,851,725)
                                          -------------   ------------   ------------
                                          -------------   ------------   ------------

Net Income (Loss) per Common Share        $        .11   $       (.16)   $      (.21)
                                          -------------   ------------   ------------
                                          -------------   ------------   ------------

Weighted Average Number of
 Shares Outstanding                          4,801,044      7,824,182      8,907,049 
                                          -------------   ------------   ------------
                                          -------------   ------------   ------------



</TABLE>


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

                                    F-5

<PAGE>

        RENAISSANCE ENTERTAINMENT CORPORATION AND CONSOLIDATED SUBSIDIARY

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  From March 31, 1994 through December 31, 1996

<TABLE>
<CAPTION>
                                                                                  Additional 
                                                     Common Stock                   Paid-in         Accumulated 
                                                 -------------------- 
                                               Shares             Amount            Capital            (Deficit)            Total 
                                             -----------      -------------        ------------       --------------    -----------
<S>                                          <C>               <C>                  <C>              <C>                 <C>

 Balance, March 31, 1994                      2,664,356        $    79,930         $   795,994        $ (631,226)      $   244,698

 Common stock issued, private
 placements and acquisition of assets
                                              2,070,050             62,102             835,709                 -           897,811

 Common stock issued, public offering,
 net of offering costs of $646,056
                                              2,070,000             62,100           2,914,344                 -         2,976,444
 Common stock issued in exchange for
 preferred stock issued
                                                583,334             17,500             794,695                 -           812,195

 Preferred dividends                                  -                  -                   -           (43,115)          (43,115)

 Net income for the year ended March
 31, 1995, excluding loss of $48,185
 of CFL included in accumulated
 deficit below                                        -                  -                   -           624,609           624,609 
                                             ------------       ------------       -------------     ------------      ----------- 
                                     

 Balance March 31, 1995                       7,387,740            221,632           5,340,742           (49,732)        5,512,642

 Treasury stock acquired and retired            (20,626)              (618)            (81,886)                -           (82,504)
                                    
 Common stock issued for cash                   814,592             24,438           1,547,809                 -         1,572,247

 Common stock issued for CFL                    540,000             16,200             170,591          (118,067)           68,724

 Net Loss for the year ended March 31,
 1996                                                 -                  -                   -        (1,273,671)       (1,273,671)
                                             ------------       ------------       -------------     ------------      -----------

 Balance March 31, 1996                       8,721,706            261,652           6,977,256        (1,441,470)        5,797,438



 Exercise of Class A warrants at $2.00          125,328              3,760             246,896                 -           250,656
 per share
 Exercise of Class B warrants at $2.63
 per share                                       34,000              1,020              88,230                 -            89,250

 Exercise of stock options                      324,998              9,749             610,224                 -           619,973

</TABLE>


                                    F-6

<PAGE>

<TABLE>
<CAPTION>
                                                                                  Additional 
                                                     Common Stock                   Paid-in         Accumulated 
                                                 -------------------- 
                                               Shares             Amount            Capital            (Deficit)            Total 
                                             -----------      -------------        ------------       --------------    -----------
<S>                                          <C>               <C>                  <C>              <C>                 <C>

 Issuance of stock for services                  27,740                832             151,118                 -           151,950

 Fees incurred in connection with
 exercising warrants                                  -                  -              (2,090)                -            (2,090)

 Net loss for the nine month period
 ended December 31, 1996                              -                  -                   -        (1,851,725)       (1,851,725
                                             ------------       ------------       -------------     ------------      -----------)

                        
 Balance December 31, 1996                    9,233,772         $  277,013        $  8,071,634       $(3,293,195)      $ 5,055,452
                                             ------------       ------------       -------------     ------------      -----------
                                             ------------       ------------       -------------     ------------      -----------

</TABLE>


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

                                    F-7

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                         Nine Months 
                                           Year Ended      Year Ended        Ended
                                            March 31,      March 31,     December 31,
                                           ------------    -----------    ------------
<S>                                        <C>            <C>            <C>

Cash Flows from Operating Activities:
   Net Income (loss)                        $  576,424    $(1,273,671)   $(1,851,725)
   Adjustments to reconcile net income
    to net cash provided by operating 
    activities:
       Depreciation and amortization           351,214        500,200        633,819 
       Impairment of goodwill                        -              -        380,000 
       (Increase) decrease in:
         Income tax refund receivable                -       (323,380)       323,380 
         Accounts receivable                   (50,124)       (19,310)      (163,866)
         Prepaid expenses                     (570,332)      (396,276)       840,602 
         Inventory                             (82,900)       (33,321)       (68,474)
         Other assets                          (47,657)       (38,811)       (86,292)
       Increase (decrease) in:
         Income taxes payable                   48,175        (48,175)             - 
         Accounts payable and accrued
          expenses                             274,940        742,368       (113,062)
         Unearned revenue and other            322,083         42,681       (294,030)
                                           ------------    -----------    ------------
   Net Cash Provided by Operating
    Activities                                 821,823       (847,695)      (399,648)
                                           ------------    -----------    ------------
   Cash Flows from Investing Activities:
      Investment in restricted cash                  -       (848,296)       (41,820)
      Repayment of advances                    351,150              -              - 
      Construction in progress costs                 -     (1,046,285)     1,080,895 
      Acquisition of property and 
       equipment, goodwill and covenant
       not to compete                         (896,551)    (3,873,738)    (2,587,903)
                                           ------------    -----------    ------------
   Net Cash (Used in) Investing
    Activities                                (545,401)    (5,768,319)    (1,548,828)
                                           ------------    -----------    ------------
   Cash Flows from Financing Activities:
      Common stock issued and additional
       paid-in capital                       3,403,450      1,489,743      1,109,739 
      Preferred dividends paid                 (43,115)             -              - 
      Advances from officers                    60,500              -              - 
      Proceeds from notes payable                    -      2,518,018      1,000,000 
      Principal payments on notes 
       payable                                (438,793)       (59,429)      (418,037)
                                           ------------    -----------    ------------
   Net Cash Provided by (Used in)
    Financing Activities                     2,982,042      3,948,332      1,691,702 
                                           ------------    -----------    ------------
   Net Increase (Decrease) in Cash           3,258,464     (2,667,682)      (256,774)
   Cash, beginning of period                    40,281      3,298,745        631,063 
                                           ------------    -----------    ------------
   Cash, end of period                     $ 3,298,745    $   631,063    $   374,289 
                                           ------------    -----------    ------------
                                           ------------    -----------    ------------
   Interest paid                           $    54,506    $   112,248    $   268,605 
                                           ------------    -----------    ------------
                                           ------------    -----------    ------------
   Income tax paid                         $    98,825    $   237,752    $         - 
                                           ------------    -----------    ------------
                                           ------------    -----------    ------------

</TABLE>

Note: The Company issued common and preferred stock for assets totalling
$1,408,000 during the year ended March 31, 1995.  During the year ended March
31, 1996 the Company issued 270,000 shares of its common stock to consummate the
business combination with CFL.

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

                                    F-8

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(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 owns and
     operates the Bristol Renaissance Faire located in Kenosha, Wisconsin.  In
     the acquisition, REC issued a total of 1,784,800 shares of common stock to
     the shareholders of Ellora Corporation, representing ninety-one percent of
     the total issued and outstanding shares of REC following the exchange.  The
     acquisition was accounted for as a reverse acquisition since the
     controlling shareholders of Ellora became the controlling shareholders of
     REC.  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 and had limited activity during the year. 
     During February, 1994 REC formed Renaissance Pleasure Faires, Inc. (RPFI)
     for the purpose of acquiring the assets and the business of two Renaissance
     Faires in California.  In connection with this acquisition and the
     formation of RPFI, the Company issued 1,136,666 shares of its common stock
     and 875,000 shares of Series A Convertible Preferred Voting Stock and
     assumed certain liabilities and guaranteed certain lease obligations of the
     seller.  The preferred shares were later exchanged for common stock.  Of
     the common shares issued, 524,000 common shares were issued to the seller
     and 612,666 common shares were issued to shareholders of Western
     Renaissance Fair Presentation, Inc. (Western) a newly formed California
     corporation, formed for the purpose of providing management services to
     operators of renaissance festivals.

     Western was owned by certain employees of the seller.  Subsequent to its
     acquisition, Western was merged into a 

                                    F-9

<PAGE>


                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     (a)  GENERAL

     subsidiary of REC.  For accounting purposes, the acquisition of the
     California Faires net assets and business and the acquisition of Western
     was treated as one combined acquisition with the excess of cost over fair
     value of net assets acquired accounted for as goodwill.  The preferred
     shares had an annual 6% dividend provision payable monthly in arrears.  The
     preferred shares had equal voting rights per share as the common shares
     outstanding (583,334 votes after giving effect to the reverse common stock
     splits described in note 10).  The preferred shares had a conversion
     provision that they could be converted by the holders at any time during
     the first two years into common stock on a one-for-three basis.  REC had
     the right at any time to redeem these shares at $1.00 per share.  During
     January, 1995 these preferred shares were converted to 583,334 shares of
     common stock. The Company also forgave loans to the seller totalling
     $62,805 which reduced additional paid-in capital related to this conversion
     transaction.  Prior to conversion, the Company paid dividends totalling
     $43,115 related to these preferred shares.  All documents related to this
     closing and all shares issued were signed and dated in March, 1994.  The
     bill of sale related to the transfer of the assets was effective April 1,
     1994.  In connection with this transaction, certain controlling
     shareholders have entered into a stock pooling and voting agreement
     requiring the voting for certain individuals to serve as directors of the
     Company.  In connection with this acquisition, the Company incurred
     approximately $50,000 of legal and professional fees and issued 233,066
     shares of common stock valued at $72,833 for consulting services related to
     assistance with negotiations regarding the acquisition.    The business
     combination as of April 1, 1994 was accounted for as a purchase by REC. 
     See Note 10 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 540,000 restricted common shares
     of REC stock.  REC entered into employment agreements with the two former
     owners of CFL and one of the two former owners became a director of REC. 
     The business combination with CFL was accounted for as a pooling of
     interests. The Company changed its year end to December 31.  The March 31,
     1996 consolidated balance sheet

                                    F-10

<PAGE>






                     RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     (a)  GENERAL

     includes the accounts of CFL as of December 31, 1995 and the consolidated
     accounts of REC and subsidiaries as of March 31, 1996.  The consolidated
     statements of operations and cash flows include the accounts of CFL for the
     two years ended December 31, 1995 and the consolidated accounts of REC and
     subsidiaries for the two years ended March 31, 1996.  The consolidated
     statements of operations and cash flows include the accounts of CFL for the
     year ended December 31, 1996 and accounts of REC for the nine month period
     ended December 31, 1996.  During the three month period ended March 31,
     1996, REC loaned $141,179 to CFL which was not eliminated in the
     consolidated financial statements because of the different year ends.  The
     majority of the advances to CFL were used for start-up costs for the
     upcoming New York Faire described in note 9.  The $141,179 has been
     included with prepaid expenses in the March 31, 1996 consolidated balance
     sheet.

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

     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.

     (b)  PER SHARE INFORMATION

     Per share information is determined using the weighted average number of
     shares outstanding during the periods after giving effect to the common
     stock splits described in note 10.

     (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 fairs as earned during
     the period when the fairs are in operation.  

                                    F-11

<PAGE>


                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     (d)  REVENUE AND EXPENSE RECOGNITION AND COST OF SALES

     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
     fairs, and prior to the opening of the next years fairs, 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 fair.

     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 fair are shown as operating expenses in the statement of
     operations.

     Advertising costs are expensed as incurred.  Direct costs related to the
     setting up of the fairs are capitalized as prepaid expenses and expensed
     during the period of the operation of the applicable fairs.  Also, included
     in prepaid expenses at March 31, 1996 is $141,179 of advances from REC to
     CFL.  CFL has a December 31 year end and REC has a March 31 year end. 
     These advances relate principally to cost related to setting up the New
     York Faire but also include operating expenses which apply to the short
     period after the CFL year end.  See a description above of the business
     combination with CFL accounts for a pooling of interest.

     (e)  STOCK SPLIT

     During the fiscal year ended March 31, 1995, the Company effected a one-
     for-three reverse stock split and changed the par value of the common stock
     from $.01 to $.03 per share.  During the period ended December 31, 1996,
     the Company effected a two-for-one stock split.  The financial statements
     were retroactively adjusted for this split.

     (f)  CONCENTRATIONS OF CREDIT RISKS

     Financial instruments that potentially subject the company to
     concentrations of credit risk consist principally of temporary

                                    F-12

<PAGE>


                     RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     (f)  CONCENTRATIONS OF CREDIT RISKS

     cash investments and cash equivalents and trade accounts receivables.  At
     March 31, 1996 and December 31, 1996 respectively, the Company had
     approximately $1,370,000 and $1,065,000 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-13

<PAGE>


                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(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.

     (l)  CONSTRUCTION IN PROGRESS

     As of March 31, 1996 the Company had incurred $1,080,895 of construction
     costs related to the Company building a fair site in Virginia.  These
     construction costs incurred consisted of buildings and land improvements. 
     The construction was completed subsequent to March 31, 1996.  

     (m)  IMPAIRMENT OF LONG-LIVED ASSETS

     The Company determined that the goodwill associated with its acquisition of
     the California Faires net assets and its acquisition of Western was
     impaired after estimating the expected gross profit from future revenues as
     compared to the net book value.  The Company wrote down the intangible
     assets by $380,000 through a charge to other operating expenses during the
     period December 31, 1996.

(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.  See note 1 for a description of
     the preferred stock issued and then subsequently converted to common stock.

     During January, 1995 the Company sold in a public offering 1,035,000 units
     of its securities at $3.50 per unit.  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

                                    F-14

<PAGE>



                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(2)  COMMON AND PREFERRED STOCK, CONTINUED

     purchase one share of common stock at a price of $5.25 per share through
     January 27, 2000.  These warrants were immediately exercisable.  The
     warrants are redeemable by the Company after 24 months from January 27,
     1995, the date of the prospectus, or sooner with the consent of the
     Underwriter, at a price of $.01 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 have been offset against the proceeds of the offering.

(3)  NOTES PAYABLE

     Notes payable at December 31, 1996 and March 31, 1996 are summarized as
     follows:

                                                   March 31,       December 31,
                                                     1996              1996    
                                               --------------     -------------

     Note payable to bank at 8.65%, 
     interest quarterly until June, 1996
     then monthly principal and interest
     payment of $5,082 through May, 2011
     collateralized by land, improvements
     and jumbo CD's.  See note 11.               $ 1,500,000         $1,475,950

     Note payable to bank at 9.5%, 60
     equal monthly payments of $5,251 
     through March, 2001 collateralized
     by land, improvements and jumbo
     CD's.  See note 11.                             250,000            219,605

     Mortgage payable to Bank One Kenosha 
     at 9.5 % at March 31, 1996 and 9.25%
     at 9.25% at December 31, 1996;
     interest quarterly, two annual
     payments of $100,000 each with a
     balloon payment of $700,000 due
     January, 1998; collateralized by land
     and improvements.                               900,000            800,000



                                    F-15

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(3)  NOTES PAYABLE, CONTINUED

     Note payable to Bank One Colorado at
     the bank reference rate plus 1%, 9.25%
     at December 31, 1996, due September 1,
     1996; collateralized by inventory,
     accounts and equipment.                               -            746,132

     Note payable to Bank One Kenosha at  
     the bank reference rate plus 2% with a
     minimum rate of 10.25%;  interest paid
     monthly with the balance due September
     1996, extended to December 15, 1997;
     collateralized by equipment, fixtures
     and inventory.                                  250,000            250,000

     Various notes payable to financial
     institutions collateralized by certain 
     vehicles.  Payable in monthly
     installments of principal and interest;
     final payments due in 2000, interest 
     ranging from 10% to 12%.                         69,144             59,419
                                               --------------     --------------

     Total                                         2,969,144          3,551,106
     Less current portion                            437,957          1,209,119
                                               --------------     --------------
     Long-term portion                            $2,531,187         $2,341,987
                                               --------------     --------------
                                               --------------     --------------

     In March 1997, the Company entered into a loan workout agreement with Bank
     One Colorado and Bank One Kenosha (Bank One Wisconsin).  The agreement
     provides that the Company make principal payments of $50,000 each to Bank
     One Colorado and Bank One Wisconsin.  Upon execution of this agreement, the
     Company executed a real estate mortgage in favor of Bank One Colorado
     subordinated to the Bank One Wisconsin's mortgage.  Bank One Colorado
     agreed to subordinate its mortgage to a potential new loan from a third
     party lender to the Company in the amount of from $750,000 to $1.5 million,
     so long as the new loan is funded prior to June 1, 1997 and the Company is
     not otherwise in default under the loans.  As part of this agreement, Bank
     One Colorado changed the terms of its loan agreement to provide the Company
     interest monthly on its loan starting April 30, 1997 with principal
     payments of $150,000 on June 30, 1997, $200,000 on July 31, 1997, $250,000
     on August 31, 1997 and final principal payment of $90,189 on September  30,
     1997.  Additionally Bank One Wisconsin modified the terms of its loan
     agreement to provide for monthly interest payments starting April 30, 1997
     with four monthly principal payments 
                                    F-16

<PAGE>


                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(3)  NOTES PAYABLE, CONTINUED

     of $50,000 starting June 30, 1997.  If the Company complies with all terms
     of this agreement, Bank One Wisconsin agrees to renew its real estate
     mortgage to provide for quarterly principal payments of $50,000 beginning
     in March of 1998 with the remaining balance due and payable in December
     1998.  The Company agreed, if it obtains alternative financing in excess of
     $2.5 million during calendar year 1997, then the Company will immediately
     pay off all amounts then due and owing Bank One Colorado and Bank One
     Wisconsin, excluding the Bank One Wisconsin mortgage.

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

          1997                     $ 1,210,214 
          1998                       2,188,583
          1999                          66,108
          2000                          68,807
          2001                          17,394
                                  -------------
                                   $ 3,551,106
                                  -------------
                                  -------------


(4)  LEASES

     The Company leases a vehicle under a four year lease which commenced June
     8, 1992 with monthly lease payments of $336.  Effective April 1, 1995 the
     Company entered into an 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.   Commencing November 1, 1996, the
     Company leased additional office space at 4410 Arapahoe in Boulder,
     Colorado and subleased its original office space at 4440 Arapahoe.  This
     lease provides initial monthly lease payments of $5,969 increasing to
     $7,255 for the five year term of the lease.  In addition the Company will
     be allocated certain operating expenses.  The Company also leases various
     other properties in New York with terms expiring through the year 2001. 
     Annual lease payments on the New York Faire site range from approximately
     $270,000 to $312,000 over the next five years.

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

                                    F-17

<PAGE>



                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(4)  LEASES, CONTINUED

       Year Ending
       December 31,
          1997              436,177
          1998              456,623
          1999              476,237
          2000              468,370
          2001               79,807
                        -----------
          Total          $1,917,214
                        -----------
                        -----------

     Effective January 1, 1997, the Company entered into a three year sublease
     agreement 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.

     Future minimum sublease rentals are as follows:

       Year ending
       December 31,
          1997           $  28,979
          1998              30,428
          1999              31,949
          2000              24,849
          2001                   -
                        -----------
          Total          $ 116,205
                        -----------
                        -----------

     Rent expense for the nine month period ended December 31, 1996 and for the
     years ended March 31, 1995 and 1996 totalled approximately $431,292,
     $404,495 and $788,375, respectively.

(5)  GOODWILL AND COVENANT NOT TO COMPETE

     The cost of the acquisition of the California Faire assets and business as
     described in Notes 1 and 10 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 


                                    F-18

<PAGE>


                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(5)  GOODWILL AND COVENANT NOT TO COMPETE, CONTINUED

     March 31, 1996 and December 31, 1996 the Company's net carrying value for
     goodwill was $1,046,285 and $620,826 after amortization and write down of
     $160,960 and $586,419 respectively.
     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

     The Company files income tax returns with its subsidiaries.
     During the year ended March 31, 1995 the Company utilized loss carryovers
     to offset taxable income totalling approximately $386,000 resulting in
     realization of tax benefits of approximately $154,000.  During the year
     ended March 31, 1996 the Company incurred an operating loss resulting in a
     carryback to prior years.  As of March 31, 1996 the Company had income tax
     refunds receivable resulting from the carryback and refunds receivable from
     excess estimated payments which together totalled $323,380. 

     As of December 31, 1996, there are no current or deferred income taxes
     payable.  As of December 31, 1996, the Company has total deferred tax
     assets of approximately $450,000 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 $450,000.  Thus, no tax
     assets have been recorded in the financial statements as of December 31,
     1996.

     The Company has available at December 31, 1996, unused operating loss
     carryforwards of approximately $3,251,725 which may be applied against
     future taxable income, expiring in various years through 2012.



                                    F-19

<PAGE>





                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(7)  PROPERTY AND EQUIPMENT

     Land                               $3,415,798
     Buildings and Improvements          3,018,450
     Office Furniture and Equipment        490,975
     Costumes, Props and Other Assets    2,180,297
                                      ------------
          Sub-total                      9,105,520
     Less Accumulated Depreciation      (1 928,765)
                                      ------------
          Total                         $7,176,755
                                      ------------
                                      ------------

(8)  WARRANTS ISSUED FOR SERVICES AND STOCK OPTIONS

     In January, 1994 the Company issued warrants to purchase an aggregate of
     266,666 shares of the Company's common stock at an exercise price of $1.87
     per share.  These warrants were issued pursuant to a Form S-8 registration
     statement for various consulting services.  These warrants were exercised
     during the year ended March 31, 1995.  These 266,666 warrants 
     were valued at $.15 per warrant and expensed in the total amount of $40,000
     in the financial statements.

     Pursuant to the Company's stock option plans, the Company has granted
     options to acquire 1,081,318 shares of the Company's common stock.  Of this
     amount 133,724 options have been exercised and 11,998 have expired during
     the year ended March 31, 1996.  The options are exercisable at prices
     ranging from $1.13 per share to $3.50 per share.  During the period ended
     December 31, 1996, 105,000 options were granted with a weighted average
     price of $5.74, 452,558 options were exercised at a weighted average price
     of $1.87 and 161,998 options terminated with a weighted average price of
     $4.09.  The remaining number of options outstanding at December 31, 1996
     totalled 571,762 with a weighted average price of $2.60 which are
     exercisable at various dates through 2001.

(9)  BUSINESS COMBINATION, NEW YORK FAIRE

     Effective December 31, 1995 the Company issued 540,000 shares of its
     restricted common stock for 100% ownership of Creative Faires, Ltd. (CFL) 
     The transaction was accounted for as a pooling of interests as described in
     note 1.  CFL principally conducted a New York Faire.

     REC and consolidated subsidiaries previously reported revenue of
     $10,459,476 and net income of $624,609 during the year ended  March 31,
     1996.    The revenues  and net  loss of CFL 

                                    F-20

<PAGE>


                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(9)  BUSINESS COMBINATION, NEW YORK FAIRE, CONTINUED

     included in the combined statement of operations for the year ended March
     31, 1995 amounted to $2,081,177 and $(48,185), respectively.  Revenues of
     $2,308,378 and a net loss of $(37,756) of CFL, incurred prior to the
     business combination have been included in the combined statement of
     operations for the year ended March 31, 1996.

(10) 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 1,136,666 shares of its common
     stock and 875,000 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.  The results of operations of the  LHC  Faire  operations  are 
     included in the  income statement of REC commencing April 1, 1994.  The
     cost of this acquisition was approximately $2,534,000, including
     assumption of liabilities and issuance of the common and convertible
     preferred stock.

     The following table shows the allocation of the purchase price assets:

          Cash                               $    63,000
          Prepaid faire costs                    318,000
          Inventory                               56,000
          Accounts receivable                     87,000
          Property and equipment                 664,000
          Covenant not to compete                100,000
          Goodwill                             1,207,000
          Other assets                            39,000
                                           -------------
                                             $ 2,534,000
                                           -------------
                                           -------------

          Liabilities assumed                    640,000
          Preferred stock issued                 875,000
          Common stock issued                    533,000
          Cash advanced and acquisition
           expenses incurred                     486,000
                                           -------------
                                             $ 2,534,000
                                           -------------
                                           -------------



                                    F-21

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(10) BUSINESS COMBINATION, CALIFORNIA FAIRES, CONTINUED

     Assets and liabilities acquired or assumed were recorded at estimated fair
     value at April 1, 1994 the date of acquisition.

     The amount assigned to the common stock was $532,812 ($.9375 per share)
     approximately one half of the market trading price of the Company's common
     stock as of April 1, 1994.  This value was used due to the large number of
     shares and their restrictive nature.  LHC, a non-profit corporation,
     obtained an appraisal of its business for the purpose of determining an
     approximate valuation necessary to obtain regulatory approval for sale of
     its assets.  Although this appraisal indicated a valuation in an amount
     such that the common stock of REC exchanged for the certain net assets and
     the business of LHC would have been recorded at $1.56 per share, management
     of REC did not believe that such a valuation was appropriate under the
     circumstances.  The appraiser based the valuation on projected net income
     from the California Faires of $500,000 per year.  The California Faires
     have not been historically profitable and to assume that the Faires will
     earn $500,000 per year is, as explained in the appraisal, inherently
     highly speculative. Therefore, management believes that the appraisal
     is unsuitable for determining a value of the business acquired. 
     Management gave consideration to the following transactions and events
     when it determined the appropriate valuation of the shares issued in the
     acquisition:
     
     a.   In the fall of 1993, the Company sold 253,334 shares at a cash price
          of $.75 per share.  Following this private offering of a small number
          of shares, the Company incurred substantial operating losses and
          accumulated deficits.

     b.   For the two years prior to their acquisition, the two California
          Renaissance Faires had generated substantial net operating loss of
          $(869,953) and $(928,569) in the years 1992 and 1993, respectively.

     c.   In August 1994, the Company sold in a private offering 800,000 shares
          at a price of $.30 per share, principally to raise working capital to
          cover the anticipated cost of the public offering.

     d.   The public market of the Company's common stock was highly illiquid,
          with only 300,000 shares in the public float eligible for trading. 
          Management believes that the price of $1.875 per share of the
          publicly-traded shares was not indicative of the fair market value of
          substantially larger blocks of restricted shares. 


                                    F-22

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(10) BUSINESS COMBINATION, CALIFORNIA FAIRES, CONTINUED

     e.   The Company issued 77,688 shares and warrants to purchase an
          additional 133,334 shares at an exercise price of $.9375, to an entity
          affiliated with a director of the Company.  The shares and the
          exercise price of the warrants were valued at 100% of the public
          trading price due to (I) the transaction having been between the
          Company and a related party, and (ii) the fact that the shares were
          registered on a Form S-8 which rendered them free-trading.

     f.   The Company has granted to executive officers and key employees
          incentive stock options at an exercise price of $1.875 per share.  In
          order to qualify as incentive stock options under Section 422 of the
          Internal Revenue Code, the options must be priced at 100% of the
          public trading market of the Company's common stock.

     Management believes that recording the shares issued for the LHC
     acquisition at 50% of the publicly traded value is reasonable, appropriate
     and normal for this large of a block of restricted securities. Goodwill is
     being amortized on a straight-line basis over a fifteen year period and the
     covenant not to compete is being amortized on a straight-line basis over a
     five year period.  The Company believes that a 15 year estimated life over
     which goodwill is being amortized is reasonable due to the fact the
     California Faires have been in existence approximately 30 years and the
     fact that the average life of other currently successful Renaissance Faires
     in the United States is over 15 years and there is no reason to believe
     that those Faires will not be in existence for another 15 years.

     It is the Company's policy that management on a periodic basis, at least
     quarterly, will evaluate the Carrying value of goodwill and other
     intangibles to determine if there is an impairment of value or the
     remaining estimated life is less than the remaining unamortized period.  If
     the evaluation indicates write-downs or adjustments to the amortization are
     necessary, such write-downs or adjustments will be made immediately.

(11) RESTRICTED CASH

     Certificates of Deposit in the amount of $890,116 at December 31, 1996 are
     collateral to an 8.65% and a 9.5% loan maturing 



                                    F-23

<PAGE>

                      RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(11) RESTRICTED CASH, CONTINUED

     in 2011 and 2001, respectively, and Certificates of Deposit totalling
     $275,000 may be released annually beginning March 1, 1997 and each year
     thereafter provided that projected net operating income goals are realized
     in each of the three operating seasons commencing in 1996.  If the
     Certificates of Deposit have not been released for any of the previous
     years but the projected income goal for the current year is reached,
     the Certificates of Deposit for the previous year and the current year
     shall be released.  If projected goals are not reached by year three, then
     the certificates shall be released in any subsequent year that the third
     year goal amount is reached.

(12) COMMITMENTS AND SUBSEQUENT EVENTS

     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 fairs.  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 agreed to pay $7,500 per month for the five year term of the
     agreement.  The Company has also granted an option to the consulting firm
     to allow the firm to acquire a minimum of 66,000 and a maximum of 132,000
     shares of the Company's common stock at $1.625 per share with the increase
     depending on the results of the services performed by the consulting firm.

     Effective October 1, 1994 the Company entered into a consulting agreement
     with a company owned by a director of Renaissance Entertainment
     Corporation.  The Company has agreed to pay the consulting company $4,500
     per month for twenty hours per month for services.  Additional hours will
     be compensated at $200 per hour.  The term of the agreement continues until
     December 31, 1996.  Effective April 1, 1995 the Company agreed to pay
     $4,000 per month for consulting services to a director of the Company which
     expired effective December 31, 1995.  The Company also has a consulting
     agreement with another company that is owned by a director of the Company. 
     This agreement is for $75 per hour plus $300 per Board meeting and can be
     terminated at any time.

     On August 1, 1996, the Company entered into a one year agreement with a
     consultant.  The agreement provides that the Company pay the consultant a
     fee equal to 5% of any debt or



                                    F-24

<PAGE>

                     RENAISSANCE ENTERTAINMENT CORPORATION
                           AND CONSOLIDATED SUBSIDIARY

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1996

(12) COMMITMENTS AND SUBSEQUENT EVENTS, CONTINUED

     equity infusion to the Company initiated or introduced to the Company by
     the consultant.  Additionally, the Company will pay the consultant a fee
     equal to 5% of the total value of the merger or acquisition, including the
     value of stock, cash and other assets of the merged entities.

     Subsequent to December 31, 1996 the Company issued 54,738 shares of its
     common stock as payment of the Company's liabilities.

     During the year ended March 31, 1995 the Company adopted a non-qualified
     deferred compensation plan for ten employees of the Company.  Monthly
     contributions to the plan total approximately $3,500.  Beginning April 1,
     1996 monthly contributions are approximately $1,152.

(13) STOCK SUBSCRIPTIONS RECEIVABLE

     At December 31, 1996 the Company had stock subscriptions receivable in the
     amount of $133,749 which was collected in full in January, 1997.

(14) SUBSEQUENT EVENTS

     The Company incurred substantial losses from operations during 1995 and 
     1996 and incurred significant cost overruns in the construction of its
     Virginia faire. As described in note 3, the Company has entered into 
     loan workout agreements with two banks which will require total bank
     principal loan payments of $1,100,000 during 1997.

     Subsequent to December 31, 1996, the Company raised $750,000 from an 
     officer of the Company and a related party through the issuance of 
     convertible debt and has commitments from investors for $600,000 of
     convertible debt and additional equity capital. In order to reduce the
     Company's working capital requirements, management has implemented a 
     number of cost reductions which it estimates will reduce the Company's 
     operating expenses by approximately $1,300,000 during the fiscal year
     ending December 31, 1997.

     Management believes that the additional capital raised, plus the 
     additional capital to be received from investors, in conjunction with
     the reductions in operating expenses are sufficient for the Company to
     be able to meet its financial commitments in 1997.

     The Company's lease for the site of its Northern California faire expires
     April 30, 1997. While the Company believes that its lease for this site 
     will be renewed for the 1997 faire, there can be no assurance of such
     renewal. If the lease is not renewed, it is doubtful that the Company 
     would conduct a faire in Northern California in 1997.

(15) FOURTH QUARTER ADJUSTMENTS

     The Company recognized as expense in the nine-month period ended December
     31, 1996, $450,000 of costs 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. This adjustment, which was
     made in the fourth quarter, was material to fourth quarter operations.

                                    F-25




<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 14, 1997                        /S/ James R. Mcdonald
                                            -----------------------------------
                                            James R. McDonald, Chief Financial
                                            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 14, 1997
-------------------------         Chief Executive Officer
Charles S. Leavell

/s/ James R. Mcdonald             Chief Financial Officer       April 14, 1997
-------------------------
 James R. McDonald

/s/ Sue Brophy                    Chief Accounting Officer      April 14, 1997
-------------------------
 Sue Brophy

/s/ Sanford L. Schwartz           Director                      April 14, 1997
-------------------------
 Sanford L. Schwartz

/s/ Robert M. Geller              Director                      April 14, 1997
-------------------------
 Robert M. Geller


/s/ Gregg Adam Thaler             Director                      April 14, 1997
-------------------------
 Gregg Adam Thaler

/s/ Dean Petkanas                 Director                      April 14, 1997
-------------------------
 Dean Petkanas




<PAGE>
                                  INDEX TO EXHIBITS

       Exhibit No  Title                                                  Page
       ----------  -----                                                  ----

         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      Employment Agreement with Howard Hamburg,
                   incorporated by reference from the Registrant's
                   Current Report on Form 8-K dated
                   December 31, 1995.(1)

         10.2      Employment Agreement with Kevin Patterson,
                   incorporated by reference from the Registrant's
                   Current Report on Form 8-K dated
                   December 31, 1995.(1)

 **      10.3      Office Lease with Diana Wilkins dated
                   August 15, 1996.

 *       10.4      Consultation Agreement with Creative Business
                   Strategies, Inc.(1)

 *       10.4      Letter Agreement with Rob Geller dated
                   July 19, 1994.(1)






<PAGE>

 *       10.5      Agreement with The Living History Centre dated
                   August 25, 1994.

 *       10.6      Specimen Vendor and Exhibitor Agreement for the
                   Bristol Renaissance Faire.

 *       10.7      Specimen Vendor and Exhibitor Agreement for the
                   Northern and Southern Renaissance Pleasure Faires.

 *       10.8      Specimen Bristol Renaissance Faire Concession
                   Agreement.

 *       10.9      Specimen Bristol Renaissance Faire Games Concession
                   Agreement.

 *       10.10     License Agreement and Lease with San Bernardino
                   County for the Southern Renaissance Pleasure
                   Faire site.

 *       10.11     Investment Banking Agreement with Duke & Co., Inc.

         10.12     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.

         10.13     Mortgage dated April 7, 1995 with Bank One,
                   Kenosha N.A. with respect to Bristol Property,
                   incorporated by reference from the Registrant's
                   Annual Report on Form 10-KSB for the year ended
                   March 31, 1996.

 *       10.14     Employment Agreement dated February 5, 1996 with
                   Barbara Hope.

 *       10.15     Employment Agreement dated February 5, 1996 with
                   Donald C. Gaiti.

         10.16     Line of credit with Bank One, Wisconsin in the
                   amount of $250,000 dated February 6, 1996,
                   incorporated by reference from the Registrant's
                   Quarterly Report on Form 10-QSB for the quarter
                   ended December 31, 1995, filed with the Commission
                   on February 20, 1996.

         10.17     Line of credit with Union Bank & Trust in the
                   amount of $250,000 dated December 29, 1995,
                   incorporated by reference from the Registrant's
                   Quarterly Report on Form 10-QSB for the quarter
                   ended December 31, 1995, filed with the Commission
                   on February 20, 1996.



<PAGE>

         10.18     Commitment Letter for a line of credit with Bank
                   One Colorado in the amount of $750,000 dated
                   January 26, 1996, incorporated by reference from
                   the Registrant's Quarterly Report on Form 10-QSB
                   for the quarter ended December 31, 1995, filed with
                   the Commission on February 20, 1996.

         10.19     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.

 **      10.20     Loan Workout Agreement by and among Renaissance
                   Entertainment Corporation, Bank One,
                   Colorado, N.A. and Bank One, Kenosha, N.A.

         21.0      Subsidiaries, incorporated by reference from the
                   Registrant's Annual Report on Form 10-KSB for the
                   year ended March 31, 1996.

 **      23.1      Independent Auditor's Consent

 **      27.0      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.

(1)      Indicates management contracts, compensation plans or
         arrangements required to be filed as exhibits.