<PAGE>

                                     FORM 10-K
                         SECURITIES AND EXCHANGE COMMISSION

                              Washington, D.C.  20549

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

                    for the fiscal year ended December 31, 1997

                                         OR

              [  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                          SECURITIES EXCHANGE ACT OF 1934
                           Commission file number 0-23782

                       RENAISSANCE ENTERTAINMENT CORPORATION

                             --------------------------
                  (Name of Registrant as Specified in its Charter)

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

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

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

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

                                        None

            Securities registered pursuant to Section 12(g) of the Act:
                            Common Stock, $.03 par value
                       Class A Common Stock Purchase Warrants
                       Class B Common Stock Purchase Warrants
             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 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, 1998, 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 Small Cap Market held by non-affiliates of
the Registrant was approximately $1,990,000.  As of March 31, 1998, 2,089,894
shares of the Common Stock of the Registrant were outstanding.

                        DOCUMENTS INCORPORATED BY REFERENCE

None.

<PAGE>

                                       PART I

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

                                 ITEM 1:  BUSINESS

OVERVIEW

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

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

WEB SITE.  The Company maintains a home page at www.renfair.com and financial
information pages at www.recfair.com/fair.

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.

The following table shows the attendance, number of vendors and net operating
income for the Company's Faires during the 1997 and 1996 faire seasons.


                                          1
<PAGE>

<TABLE>
<CAPTION>

                                     Approximate
                 Attendance       Number of Vendors    Net Operating Income
               -----------------  -----------------    ---------------------
                 1997      1996     1997     1996         1997        1996
                ------    ------   ------   ------       ------      ------
<S>          <C>       <C>       <C>        <C>       <C>           <C>
Bristol       167,166   190,604      150      150      $655,762      $987,660
Northern CA   182,600   184,548      150      150       455,824       352,964
Southern CA   172,050   166,283      150      150       165,597       745,634
New York      131,701   150,773      100      100      (119,600)     (301,291)
Virginia       49,574    60,943       50       50      (549,143)     (644,813)
              -------   -------                         -------    ----------
  Total       703,091   753,151                        $608,440    $1,140,154

</TABLE>
--------------

BRISTOL RENAISSANCE FAIRE.  The Bristol Renaissance Faire is conducted at the
Kenosha, Wisconsin site leased by the Company.  It has been in existence for  11
years.  The Bristol Renaissance Faire is presented annually for nine weekends
beginning the last weekend in June and ending the third weekend in August.

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

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 31
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.  This Faire is scheduled to run for seven weekends in 1998 beginning in
the last weekend in July through the Labor Day weekend.

The Northern California Faire is located on leased property in Novato,
California.  The lease is on a year-by-year basis which, unless extended, will
expire before the 1998 faire season.  The rent was $350,000 in 1996 and $375,000
in 1997.  The owner of this site has indicated that the site will be available
in 1998 on the same terms as for 1997.  The Company is investigating new sites
for the Faire which, if acceptable and available, will not be available until at
least 1999.  The Company estimates that it will be required to spend from
$800,000 to $1,300,000 for the investigation and development of a new site prior
to the opening of the Faire at the 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 35 years in the Los
Angeles metropolitan area.  This Faire is held annually for eight or nine
weekends beginning the last week of April and ending Mid-June.


                                          2
<PAGE>

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 1998
Faire.  Rental under the lease is equal to 4.0% 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 several years at a
profit, management believes that it should either relocate the Faire or obtain a
long-term lease for the current faire site in order to improve its profitability
in the future.  The owner of this site has indicated that it is willing to enter
into a long-term lease for the faire site.  With a long-term lease, the Company
would be able to make permanent improvements to the site and reduce its annual
set-up cost for the faire.  The Company has not, as of the date of this report,
entered into a long-term lease for the existing faire site and there can be no
assurance that it will be able to obtain a long-term lease for this site.

NEW YORK RENAISSANCE FAIRE.  The Company acquired Creative Faires, Ltd., the
owner and operator of the New York Renaissance Faire in February of 1996.  The
New York Renaissance Faire opened in July 1978 and recreates a 16th century
English country Faire on 65 leased acres in Sterling Forest, Tuxedo, New York.
Creative Faires, Ltd. also produces Sterling Forest's Forest of Fear as well as
other arts and crafts shows in the New York tri-state area.  The Company issued
108,000 shares (adjusted for the reverse stock split effective February 20,
1998) of the Company's Common Stock in consideration for all of the outstanding
shares of Creative Faires, Ltd.  A new manager was hired for this faire and a
number of new promotional activities and entertainment acts were introduced
during the 1997 faire season.

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 Faire, as is typical of new Faires, operated at a loss
in 1996, its first year of operation, and incurred an operating loss in the 1997
faire season.  These losses may continue for one or more future faire seasons
until the Company is able to establish a regular customer base and increase the
awareness of the faire.

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

Some of the management of the Virginia Faire is handled by employees of the
Bristol Faire, including such areas as entertainment and public relations.  The
Company is developing other income-producing activities for this site.  A winter
festival was held in December 1997 and has been scheduled for 1998.  Additional
potential uses for this site include a Halloween forest of fear, music
festivals, or other special events.

VENDORS

Approximately 15% 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.  During the
1997 faire season, there were approximately 150 vendors at each of the Bristol,
Northern California and Southern California Faires, 100 vendors at the New York
faire and 50 vendors at the Virginia faire.  Typically, there is little


                                          3
<PAGE>

turnover in vendors from one faire season to the next.  The loss of any one or
more vendors would not have a material adverse effect upon a particular faire.

At the Bristol Renaissance Faire site, the vendors and 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.

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% of gross revenues.

At the Northern and Southern California Renaissance Pleasure Faires, craft shops
and booths are owned by the vendors and transported onto the site for the
duration of the Faire and then removed.  In lieu of a flat fee to participate,
vendors at the California Faires pay the Company a fee equal to 15% of their
gross revenues.

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

REVENUE SOURCES

A Renaissance Faire generates revenues from numerous sources, including gate
admissions, beverage sales, parking fees, food sales, craft fees, game fees,
camping fees, souvenir sales and sponsorship fees.  The following table shows
the Company's revenues during the 1997 and 1996 faire seasons from each of these
activities.


<TABLE>
<CAPTION>

                                 1997           1996
                              ----------   ------------
<S>                          <C>          <C>
Gate Admissions               $6,287,093   $  6,443,461
Beverage Revenue               2,826,241      2,797,683
Parking Revenue                  876,557        808,008
Food Revenue                   1,191,705      1,328,339
Craft Fees                     1,246,980      1,319,805
Game Fees                        230,642        224,542
Souvenir Revenue                 827,907        724,518
Sponsorship Fees                 252,292        230,020
Camping Fees                     261,136        241,084
Miscellaneous Fees               158,037        436,117
                             -----------    -----------
   Total                     $14,158,590    $14,553,577

</TABLE>

GATE ADMISSIONS.  Gate admissions are set generally 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.


                                          4
<PAGE>

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

PARKING INCOME.  The California Faires charge $6.00 per car for regular parking
and $10 for preferred close-in parking.  The Bristol and New York Faires have
preferred parking for $2.00 and $5.00.  The Virginia Faire charges $2 for
regular parking.

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

CRAFT FEES.  Each Faire has from 50 to 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.

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

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

SPONSORSHIP FEES.  The Company solicits sponsorship arrangements with major
sponsors including Coca-Cola Company, Anheuser-Busch, Inc., Miller Brewing
Company, Amoco Oil Company, Eastman Kodak Company, Pepsi Cola  Company and
Guinness Import Co.  The sponsors also participate in joint advertising
campaigns.

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

MARKETING

The Company markets its Faires as entertainment events for the whole family,
which also include shopping and food.  Marketing is accomplished through local
television and radio stations which, from time-to-time, and, often in
conjunction with other advertisers, conduct live broadcasts from the Faires.
Supplementing this television and radio advertising, newspapers and billboards
provide essential information to the general public regarding the cost of
admission, location and times of operation.  Artistic brochures and fliers are
directed toward groups for 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.  During the 1998 faire season, the Company is premiering
matinee programs with Educational Travel Tours, Inc. for school children at
three of its faire sites.  The program is designed to provide an educational
experience with lively entertainment.  The Company anticipates that 20,000
school children will attend these programs during 1998.


                                          5
<PAGE>

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, or even the forecast of adverse weather,
to harm the financial results during certain weekends of any particular Faire.

During the period from the middle of October through 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 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
Bristol, New York and Virginia Faires are open "rain or shine."  The Northern
and Southern California sites, which have temporary buildings, are closed on
rain days.  The Company is also vulnerable to severe climatic events which are
similarly beyond its control but nevertheless could have a direct and material
impact upon the Company's relative success or failure.

COMPETITION

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

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


                                          6
<PAGE>

that the Company could apply for and obtain trademark or service mark
registrations on a state level for its other individual Faires, such as "Bristol
Renaissance Faire" and other name-specific marks associated with the
"Renaissance Faire" description as those names are acquired or developed.  While
the Company may be able to protect a site-specific name for its productions, the
Company does not consider this protection a significant deterrent to the entry
of competitors into existing markets, given the limited barriers to such entry.

PUBLIC LIABILITY AND INSURANCE

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

GOVERNMENT REGULATION

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

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

EMPLOYEES

At March 31, 1998, the Company had 13 full-time employees working in its
Colorado headquarters.  Each Faire has its own full-time staff as well as
seasonal and part-time employees who are engaged during the Faire presentation.
At March 31, 1998, the Bristol Faire had 7 full-time employees, the California
Faires had 10 full-time employees, the New York Faire had 8 full-time employees
and the Virginia Faire had 7 full-time employees.

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

                                 ITEM 2:  PROPERTY

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

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


                                          7
<PAGE>

during the first three years, increasing to $4,900,000 during years 13 through
20.  The Company has made a security deposit of $666,667, $333,333 of which is
to be released in three years and the balance released in seven years.

The Company 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.  See "Business--Existing Renaissance Faires and
Sites--Northern California Renaissance Faire."

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

On July 27, 1995, the Company acquired approximately 250 acres of land in
Stafford County, Virginia, for a purchase price of $925,000.  The funds for this
purchase were provided from the proceeds of a sale of the Company's Common Stock
early in 1995.  This property houses the Virginia Renaissance Faire.  The
construction of the Faire was financed with a $1.5 million mortgage (balance at
December 31, 1997 - $990,297), 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.  On June 5, 1997, Carl Jablonski, a former employee
of the Company, commenced an action against the Company, Charles S. Leavell,
Chairman of the Board of Directors of the Company, Howard C. Hamburg, a Vice
President of the Company, and Duke & Co., Inc. in Superior Court of the State of
California in and for the County of Marin alleging breach of implied contract of
employment, breach of the covenant of good faith and fair dealing, promissory
estoppel, negligent misrepresentation, unlawful discrimination based on age and
intentional and negligent infliction of emotional distress.  This suit has been
settled, based on the Company's agreement to pay Mr. Jablonski $64,875.

             ITEM 4:  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

The Annual Meeting of the Stockholders of the Company was held on November 24,
1997.  At that meeting, the following five directors, constituting all members
of the Board of Directors, were elected.

<TABLE>
<CAPTION>
                         VOTES CAST    VOTES CAST                 BROKER
NAME                         FOR         AGAINST   ABSTENTIONS   NON-VOTES
<S>                      <C>           <C>         <C>           <C>
Charles S. Leavell        8,028,032         0        285,856         0
Sanford L. Schwartz       8,028,032         0        285,856         0
Robert Geller             8,028,032         0        285,856         0
Charles J. Weber          7,629,032         0        684,856         0
Dean Petkanas             7,629,032         0        684,856         0
</TABLE>

At the 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: 8,036,787 FOR; 117,325 AGAINST, and 159,776
ABSTENTIONS.

The Proxy Card for the meeting included a proposal to increase the number of
shares reserved for issuance under the Company's 1993 Incentive  Stock Plan (the
"Plan").  This item was added late in the preparation of the proxy materials and
no disclosure regarding the Plan and this proposal was included in the
accompanying Proxy Statement due to a communications failure.  The Company
learned, just prior to the meeting, that a shareholder was soliciting against
this proposal and subsequently discovered that a description of the proposal had
not been included in the Proxy Statement.  Because of this omission, no action
was taken at the meeting with respect to the proposal to increase the number of
shares reserved for issuance under the Plan.


                                          8
<PAGE>

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

PRICE RANGE OF COMMON STOCK

     Since August 21, 1997, the Company's Common Stock has been traded in the
Nasdaq Small Cap Market and from September 1, 1995 to August 21, 1997, it traded
on the Nasdaq National Market.  From December 9, 1996, to January 27, 1998, the
Company's Common Stock was also traded on the Philadelphia Stock Exchange. The
following table reflects the high and low prices of the Company's Common Stock
for each quarterly period of the two most recent calendar years and the
subsequent interim quarters retroactively adjusted for a 2-for-1 stock split in
October 1996 and a 1-for-5 reverse stock split in February 1998.  The prices
reflect the high and low sales prices.  The quotations represent prices between
broker-dealers and do not include retail mark-ups and mark-downs or any
commission to the broker-dealer and may not reflect prices in actual
transactions.

<TABLE>
<CAPTION>
Calendar Years Ended December 31              High           Low
--------------------------------              ----           ---
<S>                                         <C>            <C>
          1996

First Quarter ended March 31                $35.94         $25.94
Second Quarter ended June 30                 34.05          28.13
Third Quarter ended September 30             35.00          31.50
Fourth Quarter ended December 31             37.50          25.00

          1997
First Quarter ended March 31                 34.38          25.31
Second Quarter ended June 30                 25.00           5.00
Third Quarter ended September 30              6.25           2.50
Fourth Quarter ended December 31              6.56           1.40

          1998
First Quarter ended March 31                 1.625           .625
</TABLE>

     As of March 31, 1998, there were approximately 117 shareholders of record.
The Company estimates that there are approximately 1,530 beneficial owners of
its Common Stock.

DIVIDENDS

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

                          ITEM 6:  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 report.
Information is not provided for or at the end of fiscal 1993 as the financial
statements for this period, which would be for a predecessor company, are not
available to the Company.  The information for fiscal 1993 would, as is the
information for and at the end of fiscal 1994, be for only one of the Company's
Faires (the Bristol Renaissance Faire) and would not be, in the Company's
opinion, material to an understanding of the Company's current financial
information.  The acquisition in 1996 of Creative Fairs Ltd.  was accounted for
as a pooling of interest.  The income statement data for the nine months ended
December 31, 1996 and 1995 include the accounts of Creative Fairs Ltd.  for the
year ended December 31, 1996 and 1995 and accounts for the Company for the
nine-month periods ended December 31, 1996 and 1995.  The income statement data
for the years ended March 31, 1996 and 1995 include the accounts of Creative
Fairs Ltd.  for the two years ended December 31, 1995 and 1994 and the
consolidated accounts of the Company for the years ended March 31, 1996 and
1995, respectively.  The balance sheet data as of December 31, 1996 and 1995
include the accounts of Creative Fairs Ltd. as of December 31, 1996


                                          9
<PAGE>

and December 31, 1995, respectively.  The balance sheet data as of March 31,
1996 and 1995, also include the accounts of Creative Fairs Ltd.  as of December
31, 1995 and 1994, respectively.  The income statement data for the year ended
March 31, 1994 and as of March 31, 1994 do not include information regarding
Creative Fairs Ltd.  as audited financial statements for periods prior to
January 1, 1994 were not available to the Company.  All share and per share data
contained herein and elsewhere in this report have, unless the context indicates
otherwise, been retroactively adjusted for the February 23, 1998 one-for-five
reverse stock split of the Company's common stock.


<TABLE>
<CAPTION>
                                                           YEARS ENDED                     NINE MONTHS               YEAR ENDED
                                                             MARCH 31,                  ENDED DECEMBER 31,           DECEMBER 31,
                                                 --------------------------------    ----------------------   ---------------------
<S>                                             <C>         <C>          <C>        <C>           <C>         <C>          <C>
INCOME STATEMENT DATA                              1994        1995         1996        1995         1996        1996         1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)           ----        ----         ----        ----         ----        ----         ----
Revenue                                          $1,973     $12,540      $12,811     $10,470      $14,554     $14,543      $14,159
Gross Profit                                      1,694       9,327        8,984       7,265        9,741       9,715        9,552
Net Operating Income (Loss)                         (39)        757       (1,475)        111       (1,753)     (3,221)      (2,288)
Net Income (Loss) After Taxes                       (98)        576       (1,274)        264       (1,852)     (3,351)      (2,567)
Net Income (Loss) to Common Shareholders            (98)        533       (1,274)        264       (1,852)     (3,351)      (2,567)
Net Income (Loss) Per Common Share                 (.26)        .56         (.81)        .17        (1.04)      (1.91)       (1.32)

Weighted Average Common Shares Outstanding          380         960        1,565       1,529        1,781       1,753        1,949

<CAPTION>
                                                                     MARCH 31,                           DECEMBER 31,
                                                       ------------------------------------  ----------------------------------
<S>                                                   <C>           <C>        <C>           <C>        <C>           <C>
BALANCE SHEET DATA                                        1994         1995         1996        1995        1996         1997
(IN THOUSANDS)                                            ----         ----         ----        ----        ----         ----
Working capital (deficiency)                           $  (524)      $3,123      $    15      $  768     $(1,506)      $ (205)
Total current assets                                       167        4,012        2,120       1,308         931        1,236
Total assets                                             1,257        6,853       10,433       8,226       9,872        9,878
Total current liabilities                                  691          889        2,105         539       2,438        1,440
Long-term debt (less current maturities)                   434          451        2,531         846       2,379          954
Stockholders' equity                                       132        5,513        5,797       6,841       5,055        3,574
</TABLE>



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

GENERAL

The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements, including the footnotes for the fiscal period
ended December 31, 1997.  On June 21, 1996, the Company changed its fiscal year
end from March 31 to December 31.

The Company operates five Renaissance Faires in the United States and is engaged
in a strategy to develop and acquire additional Renaissance Faires nationwide.
The Company's 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 Faire is a re-creation of a Renaissance village, a fantasy
experience transporting the visitor back into sixteenth century England.


                                          10
<PAGE>

Although the Company was profitable in its fiscal year ended March 31, 1995, it
incurred a net loss of ($1,273,671) in the fiscal year ended March 31, 1996, a
net loss of ($1,851,725) for the nine months ended December 31, 1996 and a net
loss of ($2,567,097) for the fiscal year ended December 31, 1997.  The New York
and Virginia Faires operated at a loss during 1996 and 1997.  It is typical for
a new faire such as the Virginia Faire to operate at a loss for two or more
years until it is able to build a significant customer base and awareness of the
faire.  Due to the fact that the New York Faire was acquired in 1996, the
Company had limited ability to affect the operations of this Faire during the
1996 faire season.  The Company hired a new manager for this Faire and
introduced several new entertainment acts and implemented additional promotional
efforts for this Faire's 1997 season.  The operating loss for this Faire was
reduced by over 60% in 1997 compared to 1996.

The owner of the site for the Company's Northern California Faire is seeking to
develop this site for commercial construction purposes, although the owner's
efforts to do so are currently being blocked by pending litigation in which the
use of the site for such purposes is being challenged.  The owner of this site
has indicated that it will grant an extension of the lease for this site for the
1998 faire season.  While the Company is investigating new sites for the
Northern California Faire, there can be no assurance that the Company will be
able to secure a new site for this faire for the 1999 or following faire
seasons.

The Company is negotiating with the owner of the site for its Southern
California Faire for a long-term lease for this site.  The ability to enter into
a long-term lease for the current site would increase its value to the Company,
as the Company could construct structures on the site and significantly reduce
setup costs for the faire.

The Company had a working capital deficit ($204,821) as of December 31, 1997.
During the first four months of fiscal 1998, the Company obtained $498,000 of
additional capital through short-term loans.  While the Company believes that it
has adequate capital to fund anticipated operations for fiscal 1998, it believes
it must obtain additional working capital for future fiscal periods.  See
"LIQUIDITY AND CAPITAL RESOURCES."

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1997 COMPARED TO NINE MONTHS ENDED DECEMBER 31, 1996.
Revenues decreased approximately $394,987 or 3% from $14,543,577 in 1996 to
$14,158,590 in 1997.  This decrease was primarily the result of a decrease in
revenues for the Virginia Faire of approximately $150,000 and a decrease in
revenues for the Bristol and Southern California faires of approximately
$200,000 each.  These decreases were offset by increases of approximately
$200,000 and $50,000 for the Northern California and New York faires,
respectively.  The decreased revenues for the Virginia Faire were due to
unusually inclement weather - six of the seven faire weekends had substantial
rain which severely impacted attendance.  The decreased revenues for the
Southern California Faire were due to being open one less weekend in 1997 than
in 1996.  The decreased revenues for the Bristol faire was due to less favorable
weather in 1997 than in 1996.  Although revenues were down in Virginia, the
operating loss was reduced by approximately $100,000, from a loss of
approximately $650,000 for the 1996 period to a loss of approximately $550,000
for the 1997 period, through expense control.

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

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

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


                                          11
<PAGE>

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

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

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

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

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

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

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

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


                                          12
<PAGE>

revenues during the nine-month period ended December 31, 1995.  Thus, these
financial statements include the results of five operating Faires for the period
in 1996, but only three Faires for the same period in 1995.

Revenue increased from $10,469,824 for the nine-month period ended December 31,
1995 to $14,553,577 for the nine-month period ended December 31, 1996, an
increase of $4,083,753 or 39%.  The increase in revenues resulted from the
additional revenues of $949,304 and $2,360,941 for the Virginia and New York
Faires, respectively, for the period ended December 31, 1996, as compared to the
same period of 1995.  The increased revenues from the new Faires were partially
offset by a decrease of approximately $500,000 in revenues for the Southern
California Faire as compared to the same period of 1995.  Management believes
that unusually inclement weather in Virginia, New York and Southern California
reduced the expected revenues from these faire operations.  In addition, the
Virginia Faire, as is typical of new Faires, operated at a loss in 1996, its
first year of operation, and is expected to incur an operating loss in the 1997
faire season.  During the 1996 season the Bristol Renaissance Faire revenues
increased approximately $500,000 over the 1995 season due, in part, to good
weather during each of the nine weekends of this faire.  This was the eighth
consecutive year that attendance increased at the Bristol faire.

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

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

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

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


                                          13
<PAGE>

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

The Company's working capital deficit was narrowed during 1997 from ($1,506,284)
at December 31, 1996 to ($204,821) at December 31, 1997.  This improvement
resulted from a number of cost reductions implemented by management in order to
reduce the Company's working capital requirements and the sale lease back of the
Bristol faire site in Wisconsin.

The Company's working capital requirements are greatest during the period from
January 1 through April 30, when it is incurring start-up expenses for its first
faires of the faire season, the Southern California and Virginia Faires.  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 bank lines 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.  During the first
quarter of 1997, the Company entered into an agreement with the banks which
required the Company to pay these lines from 1997 operations.  During 1997, the
Company also raised $1,000,000 of working capital through the issuance of
convertible debentures, of which $250,000 was issued to Charles S. Leavell,
Chairman of the Board of Directors of the Company and the balance to Mr.
Leavell's father and an unrelated party, and also raised $350,000 of working
capital from the sale of convertible notes to a number of private investors.
The debentures which were secured by mortgages on the Company's Wisconsin and
Virginia faire sites, were repaid upon completion of the sale/lease back of the
Wisconsin faire site described below.  The notes were secured by a mortgage on
the Company's Wisconsin Faire site.  Upon the sale/lease back of the Wisconsin
faire site, the noteholders consented to a termination of the mortgage on this
property in consideration for which they were granted a mortgage on the Virginia
Faire site.  The notes are convertible into common stock at the lesser of $8.75
per share or 50% of the fair market value for the Company's common stock.  The
debenture holders were also granted warrants to purchase an aggregate of 200,000
shares of the Company's common stock which were canceled upon payment of the
debentures.  At December 31, 1997, $175,000 principal amount of the notes were
outstanding and $175,000 principal amount of the notes and interest due thereon
had been converted into 125,397 shares of the Company's Common Stock.

During November 1997, the Company completed the sale of its Wisconsin Faire site
for $4,000,000.  The purchaser leased this property back to the Company for a
period of 20 years with lease payments of $400,000 per year during each of the
first two years, and increasing to $543,333 per year in years 13 through 20.
The Company has the right to reacquire the property during the term of the lease
at an aggregate price of $4,433,333 during the first three years, increasing to
$4,900,000 during years 13 through 20.  The sale/leaseback transaction required
a security deposit of $666,667, $333,333 of which is to be released in four
years and the balance released in eight years.  The purchasers of the property
were granted a six-year warrant representing the right to acquire an aggregate
of 153,333 shares of the


                                          14
<PAGE>

Company's Common Stock at an exercise price of $5 per share.  The Company's
working capital was increased by approximately $1,600,000 as the result of this
transaction.  During the first four months of fiscal 1998, the Company has
raised $498,000 of short-term capital to fund operating capital requirements for
the first six months of the fiscal year.  These funds were provided by Charles
S. Leavell ($100,000), Chairman of the Board of Directors, two directors and two
officers of the Company (an aggregate of $198,000) and three other investors (an
aggregate of $200,000).  The loans bear interest at 6% per quarter and are
secured by substantially all of the Company's assets other than its real estate.
The investors also were granted a five-year warrant to purchase one share of
common stock for each $2.50 loaned to the Company at an excise price of $1.50.
While the Company believes it has adequate capital to fund operations during
1998, the Company believes it needs to raise additional capital to more
adequately fund its operations.  Additional capital will be sought through
borrowings or from additional equity financing.

Reviewing the change in financial position over the years, current assets,
largely comprised of cash and prepaid expenses, increased from $931,451 at
December 31, 1996 to $1,235,606 at December 31, 1997, an increase of $274,155 or
29%.  Of these amounts, cash and cash equivalents increased from $374,289 at
December 31, 1996 to $590,022 at December 31, 1997.  Accounts receivable
decreased from $99,551 at December 31, 1996 to $21,710 at December 31, 1997.
Prepaid expenses increased from $139,167 at December 31, 1996 to $480,320 at
December 31, 1997, due primarily to the prepayment of the first year's rent
pursuant to the sale/leaseback of the Bristol Faire site.

Current liabilities decreased from $2,437,735 at December 31, 1996 to $1,440,427
at December 31, 1997, a decrease of $997,308 or 41%.  This decrease is primarily
due to the pay off in the first nine months of 1997 of the $1,000,000 in bank
lines of credit borrowing discussed above. The current portion of notes payable
decreased from $1,209,119 at December 31, 1996 to $115,135 at December 31, 1997.
Of this amount, $1,000,000  was repaid during November 1997 from the proceeds of
the sale/leaseback transaction discussed above.

Total assets were $9,872,349 at December 31, 1996 compared to $9,877,683 at
December 31, 1997.  Property, plant and equipment (net of depreciation)
decreased by $289,883 or 4% from $7,176,755 at December 31, 1996 to $6,886,872
at December 31, 1997 as a result of depreciation of assets for the period.
Goodwill, which arose from the purchase of the two California Faires and is
being amortized over 15 years, decreased from $620,826 at December 31, 1996 to
$570,150 at December 31, 1997 as the result of normal amortization.  Other
miscellaneous assets (organizational costs and vendor deposits) increased from
$253,201 at December 31, 1996 to $845,977 at December 31, 1997, primarily due to
the $666,667 security deposit applicable to the Bristol faire site which was
paid at the closing of the sale/leaseback transaction described above.

Total liabilities increased from $4,816,897 at December 31, 1996 to $6,303,925
at December 31, 1997, an increase of $1,487,028 or 31%.  Total liabilities at
December 31, 1997 include $1,440,427 in current liabilities (discussed above),
plus $918,277 from the long-term portion of the mortgage on the Virginia Faire
site and the $3,909,696 lease obligation with respect to the sale/leaseback of
the Bristol Faire site described above.  In August 1997, the Company had
approximately $615,000 of certificates of deposit mature which were previously
held as additional collateral by the lending bank of the two Virginia loans.
The Company elected to apply this amount to the two loans, thereby paying off
the $250,000 loan for construction of vendor booths in Virginia, and applying
the balance to reduce the mortgage on the Virginia property.

Stockholders' Equity decreased from $5,055,452 at December 31, 1996 to
$3,573,758 at December 31, 1997, a decrease of $1,481,694 or 29%.  This decrease
resulted from the net loss of ($2,567,097), offset by additional contributed
capital received as the result of the exercise of 28,058 Class A Warrants at
$10.00 per share, the exercise of 13,600 Class B Warrants at $13.125 per share,
and the exercise of 22,343 employee stock options at prices ranging from $5.625
to $17.50 per share.  As of December 31, 1997, the Company had outstanding
2,051,679 shares of common stock, 334,712 Class A Warrants representing the
right to purchase common stock at $10.00 per share, and 396,393 Class B warrants
representing the right to purchase common stock at $13.125 per share.

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

                                          15
<PAGE>

                  FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

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

     RECENT LOSSES.  Although the Company was profitable in its fiscal year
ended March 31, 1995, it incurred a net loss of ($1,273,671) in the fiscal year
ended March 31, 1996, a net loss of ($1,851,725) for the nine months ended
December 31, 1996 and a net loss of ($2,567,097) in the fiscal year ended
December 31, 1997.  In addition, the Company expects to incur a net loss for the
fiscal year ending December 31, 1998.  There is no assurance that the Company
will return to profitability in any subsequent period.  The New York and
Virginia Faires each operated at a loss during 1996 and 1997.  If the
performance of these Faires does not improve in subsequent periods, the
Company's ability to achieve and sustain profitability in subsequent periods
will be adversely affected.

     NEED FOR ADDITIONAL CAPITAL. The Company had a working capital deficit of
($204,821) as of December 31, 1997 and ($1,506,284) as of December 31, 1996.
See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."  While the Company believes that it has adequate capital to fund
anticipated operations for fiscal 1998, it will need additional funds to sustain
operations after that time.  Additional capital may be sought through borrowings
or from additional equity financing.  Such additional equity financing may
result in additional dilution to investors.  In any case, there can be no
assurance that any additional capital can be satisfactorily obtained if and when
required.

     POSSIBLE SUSPENSION OF NORTHERN CALIFORNIA FAIRE.  The Company operates its
Northern California Faire during the Fall of each year at a site in Novato,
California.  While the Company does not have a written lease for this site for
1998, the owner of the site has indicated that it will be available although it
will be necessary to begin the faire four weeks earlier in 1998 than in 1997.
The Company understands that the owner of the site is seeking to develop the
site for commercial construction purposes, although the owner's efforts to do so
are currently being blocked by pending litigation in which the use of the site
for such purpose is being challenged.  The Company is investigating new sites
for the Faire.  There is no assurance that the Company will be successful in
locating a new site for the Northern California Faire.  In addition, the Company
estimates that it could be required to spend from $500,000 to $1,000,000 for
development of a site prior to the opening of the Faire at a new site.  See
"BUSINESS - EXISTING RENAISSANCE FAIRES AND SITES - NORTHERN CALIFORNIA
RENAISSANCE PLEASURE FAIRE."

     POSSIBLE RELOCATION OF SOUTHERN CALIFORNIA FAIRE.  Since April 1994, the
Company has operated its Southern California Faire in Devore, California.  The
Company believes that it either needs to obtain a long-term lease for the
current faire site or relocate the faire to another site for which a long-term
lease would be available.  The owner of this faire site has indicated that it
was willing to enter into a long-term lease for the site.  This would allow the
Company to construct permanent structures on the site and significantly reduce
setup cost for this faire.  As of the date of this report, the Company has not
entered into a long-term lease for the current faire site.  See
"BUSINESS-EXISTING RENAISSANCE FAIRES AND SITES-SOUTHERN CALIFORNIA RENAISSANCE
PLEASURE FAIRE."

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

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


                                          16
<PAGE>

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

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

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

     DEPENDENCE UPON WEATHER.  Each Renaissance Faire operated by the Company is
scheduled for a finite period, typically consecutive weekends during a seven to
nine-week period, which are determined substantially in advance in order to
facilitate advertising and other promotional efforts.  The success of each Faire
is directly dependent upon public attendance, which is directly affected by
weather conditions.  While each of the Company's faires, other than the Northern
and Southern California faires, are open, rain or shine, poor weather, or even
the forecast of poor weather, can result in substantial declines in attendance
and, as a result, loss of revenues.  The Northern and Southern California faires
are closed if it is raining.  Further, as the Renaissance Faires are outdoor
events, they are vulnerable to severe weather conditions that can cause damage
to the Faire's infrastructure and buildings, as well as injuries to patrons and
employees.  Risks associated with the weather are beyond anyone's control but
have a direct and material impact upon the relative success or failure of a
given Faire.  See "BUSINESS - SEASONALITY AND WEATHER."

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

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

                ITEM 8:  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

     1.   Report of Independent Certified Public Accountants;


                                          17
<PAGE>

     2.   Consolidated Balance Sheets as of December 31, 1996 and 1997,
          (audited);

     3.   Consolidated Statements of Operations for the Fiscal Year Ended  March
          31, 1996, the nine-month period ended December 31, 1996 and the Fiscal
          Year Ended December 31, 1997 (audited);

     4.   Consolidated Statements of Changes in Stockholders' Equity for the
          Fiscal Year Ended March 31, 1996, the nine-month period ended
          December 31, 1996 and the Fiscal Year Ended December 31, 1997
          (audited);

     5.   Consolidated Statements of Cash Flows for the Fiscal Year Ended  March
          31, 1996, the nine-month period ended December 31, 1996 and the Fiscal
          Year Ended December 31, 1997 (audited); and

     6.   Notes to the Consolidated Financial Statements.

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

None.

              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:



<TABLE>
<CAPTION>
                                                                        Director
  Name                        Age   Position                             Since
  ----                        ---   --------                             -----
<S>                          <C>   <C>                                 <C>
   Charles S. Leavell         56    Chairman of the Board of             1993
                                    Directors, Chief Executive Officer
                                    and Chief Financial Officer

   Sanford L. Schwartz        48    Director                             1993

   Robert M. Geller           45    Director                             1994

   Dean Petkanas              34    Director                             1996

   Charles J. Weber           52    Director                             1997

   J. Stanley Gilbert         60    President and Chief Operating        --
                                    Officer

   Howard Hamburg             61    Vice President                       --

   Gloria Constantin          47    Secretary                            --

   Sue Brophy                 42    Controller                           --
</TABLE>

     CHARLES S. LEAVELL was elected Chief Executive Officer effective June 20,
1996.  From April 1993 to March 31, 1995, he was Chief Executive Officer, and
from April 1, 1995 to present he has served as Chairman of the Board of the
Company.  From 1988 to present, Mr. Leavell has served as President and Chairman
of the Board of Leavell Management Group, Inc. and Ellora Corporation.  In that
capacity, he has acquired, developed, and managed numerous ventures, including
the Bristol Renaissance Faire; the 4UR Guest Ranch in Creede, Colorado, a


                                          18
<PAGE>

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 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 twenty years.  From 1992 to present, Mr.
Schwartz has been the Chairman of Creative Business Strategies, Inc. ("CBSI"), a
business consulting firm.  Prior to starting CBSI, Mr. Schwartz was, from 1989
to 1991, Chief Executive Officer of HealthWatch, Inc., a publicly-traded medical
equipment manufacturer.  Mr. Schwartz serves on the Board of Directors of
HealthWatch, Inc.

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

     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.

     CHARLES J. WEBER was elected a director of the Company in 1997.  Mr. Weber
has been a successful key executive in the Entertainment/Communications Industry
since the early 1970's.  During this time, he has also been Chairman and Chief
Executive Officer of Weber Communications, Inc., an international consulting
firm providing professional management, consulting, business development, and
financial services.  He specializes in strategic alliances in the multimedia,
broadcasting, entertainment, and communications fields.  In this capacity, Mr.
Weber has been instrumental in the production and financing of motion pictures,
public and private corporate financing, domestic and international distribution,
and mergers and acquisitions.  He has also served in an executive role for
Fortune 500, real estate and entertainment companies and has executive produced
a number of feature films.  In addition, from 1994-1995, he was President and
Chief Executive Officer of Canwest International Corp.; from 1995-1996 he was
President and Chief Executive Officer of the Producer's Entertainment Group;
from 1996-1997 he was President and Chief Executive Officer of Greenlight
Entertainment, Inc.  Mr. Weber graduated from Manhattan College in New York in
1965, with a B.B.A. degree in Accounting.  He received an M.B.A. degree in
Finance and Management from Hofstra University in New York in 1967.

     J. STANLEY GILBERT became President and Chief Operating Officer in January,
1997.  In 1996 Mr. Gilbert was a Vice President of the Company and he managed
the Bristol Renaissance Faire from 1988 until 1996.  Prior to that he worked in
the commercial banking field in senior management.  Prior to that, he was senior
vice president of Cinema America, a film and video production company.  Mr.
Gilbert is the president of Just in Jest, Inc., an art studio featuring
Renaissance and fantasy handmade sculptures, whose works have been displayed in
galleries and


                                          19
<PAGE>

museums, including the Delaware Museum of Fine Art.  Mr. Gilbert has served as a
board member of the Kenosha Area Convention and Business Bureau.  He holds a
degree in Business Administration.

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

     GLORIA CONSTANTIN has been Secretary of the Company since 1993. She has
also been in-house Investor Relations since 1993.  From 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.

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

                          ITEM 11.  EXECUTIVE COMPENSATION

The following table sets forth certain information for the Company's fiscal
periods ended December 31, 1997 (1977), December 31, 1996 (D1996), and March 31,
1996 (M1996) 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
                                                              Annual     Restricted                   LTIP       All Other
 Name and                                                     Compen-      Stock                  Options/Pay  Compensation
 Principal                        Salary         Bonus        sation       Award(s)                   outs          ($)
 Position             Year           ($)          ($)         ($)(1)         ($)         SARs          ($)
<S>                  <C>        <C>            <C>        <C>           <C>            <C>       <C>          <C>
--------------------------------------------------------------------------------------------------------------------------
 Charles S. Leavell,
 Chairman and         1997       $80,000            -0-           -0-          -0-          -0-          -0-          -0-
 CEO                 D1996           -0-            -0-           -0-          -0-          -0-          -0-          -0-
                     M1996           -0-            -0-      $48,000(1)        -0-          -0-          -0-          -0-

 Miles Silverman,
 CEO,                 1997           -0-            -0-           -0-          -0-          -0-          -0-          -0-
 President           D1996       $ 95,147           -0-           -0-          -0-          -0-          -0-          -0-
                     M1996       $131,442           -0-           -0-          -0-          -0-          -0-          -0-



                                       20
<PAGE>

 Howard Hamburg,
 COO, VP              1997       $ 92,516         -0-           -0-          -0-          -0-          -0-         -0-
                     D1996       $ 78,182         -0-           -0-          -0-          -0-          -0-         -0-
                     M1996       $114,392         -0-           -0-          -0-          -0-          -0-         -0-
</TABLE>

(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 1997

The following table shows option grants during fiscal 1997 to the named
executive officers of the Company.

<TABLE>
<CAPTION>
                    Options Granted  Percent of Total   Exercise     Expiration
Name                 in Fiscal 1997   Options Granted     Price         Date
----                 --------------   ---------------     -----         ----
<S>                 <C>              <C>                <C>          <C>
Charles S. Leavell    48,000 shs.           38%          $1.50       12/11/04
</TABLE>


AGGREGATED OPTION EXERCISES DURING FISCAL 1997 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, 1997
retroactively adjusted for the February 1998 one-for-five reverse stock split.
The Company does not have any outstanding stock appreciation rights.


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

     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.


                                          21
<PAGE>

DIRECTOR COMPENSATION

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

GELLER AGREEMENT

Effective April 1, 1994, the Company appointed Robert M. Geller to serve 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 $4,420 in the 1997 fiscal year, $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 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 31 1998,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.

<TABLE>
<CAPTION>
Name and Address                                             Percent of
of Beneficial Owner                   Number of Shares        Class (1)
-------------------                   ----------------       -----------
<S>                                   <C>                    <C>
Charles S. Leavell                        251,474 (2)            12.2%
1881 Ninth Street, Suite 319
Boulder, Colorado 80302

Legacy Fund, LLC                          180,000 (3)            8.8%
4900 Woodway
Suite 650
Houston, Texas 77056

Robert M. Geller                           45,333 (4)            2.2%

Sanford L. Schwartz                           870 (5)              *


                                          22
<PAGE>

Dean Petkanas                                   0                *

Charles J. Weber                                0                *

All Directors & Officers as a Group       389,432 (6)            18.2%
(7 Persons)
</TABLE>

  *  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 31, 1998, or within 60 days
     of such date, are treated as outstanding when determining the percent of
     the class owned by such individual and when determining the percent owned
     by the group.

(2)  Includes 155,600 shares of Common Stock held of record by Leavell
     Management Group, Inc., a controlled corporation of Mr. Leavell who would
     be deemed to exercise the voting and investment power with respect to the
     securities held by LMG.  26,667 shares of Common Stock held of record by
     LMG are subject to an option granted in favor of Mr. Leavell, exercisable
     at a price of $4.69 per share.  Mr. Leavell disclaims beneficial ownership
     of the securities held by LMG for purposes of Section 16 under the Exchange
     Act.  Includes options to purchase 20,000 shares at $2.85 per share.

(3)  Represents shares issuable upon conversion of Notes at an assumed
     conversion price of $1.25 per share.  See "Description of Securities --
     Convertible Secured Notes."

(4)  Includes non-qualified options to purchase 33,333 shares of Common Stock at
     an exercise price of $5.625 per share and non-qualified options to purchase
     12,000 shares of Common Stock at an exercise price of $17.50 per share.

(5)  Includes 870 shares owned by Creative Business Strategies, Inc., a
     corporation of which Mr. Schwartz is an officer, director and shareholder.

(6)  Includes 85,333 shares issuable upon exercise of stock options exercisable
     within 60 days of March 31, 1998.

              ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CONVERTIBLE DEBENTURES

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

CREATIVE FAIRES, LTD. AGREEMENT

On February 5, 1996, the Company, its newly-created and wholly-owned subsidiary
Cfaires Acquisition Corp., Creative Faires, Ltd., and Barbara Hope and Donald C.
Gaiti, the sole shareholders of Creative Faires, Ltd., entered into an Agreement
and Plan of Merger pursuant to which Cfaires Acquisition Corp. was merged with
and into


                                          23
<PAGE>

Creative Faires, Ltd.  In connection with the merger, Ms. Hope and Mr. Gaiti who
are married to each other, received an aggregate of 108,000 shares of the
Company's Common Stock, and the Company became the sole shareholder of Creative
Faires, Ltd.  The Company also agreed to employ Mr. Gaiti and Ms. Hope as
officers of Creative Faires, Ltd. for two-year periods ended February 5,1998.
The market value for the 108,000 shares of Common Stock at the time of the
transaction was $3,071,250.  The shares were "restricted" shares as defined in
Rule 144 promulgated by the Securities and Exchange Commission.

SHORT-TERM NOTES

During February and March 1998, eight private investors loaned the Company an
aggregate of $498,000 pursuant to short-term loans payable July 1, 1998 through
August 31, 1998.  The loans were secured by substantially all of the Company's
assets other than its real estate and bear interest at 6% per quarter.  In
addition, the lenders were granted a five-year warrant to purchase one share of
the Company's Common Stock at $1.50 per share for each $2.50 loaned to the
Company.  Charles S. Leavell, Chairman of the Board of Directors, loaned
$100,000 to the Company pursuant to this arrangement and two directors and two
officers of the Company loaned, in the aggregate, an additional $198,000 to the
Company pursuant to this arrangement.

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

                                      PART IV
          ITEM 14:  EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K

    EXHIBITS

<TABLE>
<CAPTION>
  Exhibit No  Title
  ----------  -----
<S>           <C>
     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    Office Lease with Diana Wilkins dated August 15, 1996.


                                          24
<PAGE>

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

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

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

*    10.6    Specimen Bristol Renaissance Faire Concession Agreement.

*    10.7    Specimen Bristol Renaissance Faire Games Concession Agreement.

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

     10.9    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.

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

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

     10.12   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.

     10.13   Subscription and Purchase Agreement for 9% Convertible Debentures,
             incorporated herein by reference from the Registrant's
             Registration Statement on Form S-1 (No. 333-26677).

     10.14   Consulting and Warrant Compensation Agreement dated November 4,
             1997 between the Company and Wall Street Financial, incorporated
             by reference from Registrant's Registration Statement on Form S-1
             (No. 333-43503).

     10.15   Supplemental Agreement & Subscription and Purchase Agreement for
             10% Convertible Secured Notes, incorporated by reference from
             Registrant's Registration Statement on Form S-1 (No. 333-43503).

     10.16   Purchase Agreement dated November 12, 1997 between Faire Partners,
             LLC and Renaissance Entertainment Corporation, including Lease
             Agreement and Warrant to Purchase Common Stock as exhibits
             thereto, incorporated by reference from Registrant's Registration
             Statement on Form S-1 (No. 333-43503).

     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.
</TABLE>

*    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.


                                          25
<PAGE>

(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, 1997.


                                          26
<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, 1998               /s/ Charles S. Leavell
                                   -------------------------------------------
                                   Charles S. Leavell, Chief Executive Officer


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

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

/s/ Charles S. Leavell           Chairman of the Board,        April 14, 1998
-------------------------      Chief Executive and Chief
Charles S. Leavell                 Financial Officers

/s/ Sue Brophy                  Chief Accounting Officer       April 14, 1998
-------------------------
Sue Brophy

/s/ Sanford L. Schwartz                 Director               April 14, 1998
-------------------------
Sanford L. Schwartz

/s/ Robert M. Geller                    Director               April 14, 1998
-------------------------
Robert M. Geller

/s/ Charles J. Weber                    Director               April 14, 1998
-------------------------
Charles J. Weber

/s/ Dean Petkanas                       Director               April 14, 1998
-------------------------
Dean Petkanas
</TABLE>

                                          27

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION

                                 FINANCIAL STATEMENTS

                                         with

                  REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

               March 31, 1996, December 31, 1996 and December 31, 1997


                                         F-1

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION

                                FINANCIAL STATEMENTS

                                         with

                  REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

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

     Audited Financial Statements:

          Balance Sheets                                         F-4

          Statements of Operations                               F-5

          Statement of Changes in Stockholders' Equity           F-6

          Statements of Cash Flows                               F-8

          Notes to Financial Statements                          F-9
</TABLE>


                                         F-2

<PAGE>

                  REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors
Renaissance Entertainment Corporation

We have audited the balance sheets of Renaissance Entertainment Corporation as
of December 31, 1996 and 1997 and the related statements of operations and
changes in stockholders' equity, and cash flows for the year ended December 31,
1997, for the nine month period ended December 31, 1996 and for the year ended
March 31, 1996.  These financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion of these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Renaissance Entertainment
Corporation as of December 31, 1996 and 1997 and the results of operations,
changes in stockholders' equity and cash flows for the year ended December 31,
1997, for the nine month period ended December 31, 1996 and for the year ended
March 31, 1996 in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  As described in Note 1, the Company
has suffered recurring losses from operations and has a net working capital
deficiency that raise substantial doubts about its ability to continue as a
going concern.  The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

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

March 13, 1998


                                         F-3

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                                           
                                    BALANCE SHEETS
                                          
                                        ASSETS


<TABLE>
<CAPTION>
                                                       December 31,        December 31,
                                                          1996                 1997    
                                                       ----------          ----------
<S>                                                   <C>                 <C>
Current Assets:
     Cash and equivalents                                 374,289         $   590,022
     Stock subscription receivable (Note 13)              133,749                   -
     Accounts receivable, net of allowance 
      for doubtful accounts of $2,950                      99,551              21,710
     Inventory, at lower of cost or market                184,695             143,554
     Prepaid expenses and other current assets            139,167             480,320
                                                       ----------          ----------
  Total Current Assets                                    931,451           1,235,606

     Property and equipment, net of accumulated
       depreciation of $1,982,765 and $2,544,665 
       at December 31, 1996 and 1997 respectively
       (Note 7)                                         7,176,755           6,886,872
     Goodwill, net of accumulated amortization    
       of $206,410 and $257,095 at December 31,
       1996 and 1997 respectively (Note 5)                620,826             570,150
     Covenant not to compete, net of accumulated
       amortization of $55,000 and $75,000 at
       December 31, 1996 and 1997 respectively 
       (Note 5)                                            45,000              25,000
     Restricted cash (Note 11)                            890,116             314,078
     Other assets                                         208,201             845,977
                                                       ----------          ----------

Total Assets                                           $9,872,349          $9,877,683
                                                       ----------          ----------
                                                       ----------          ----------
</TABLE>

                        LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S>                                                   <C>                 <C>
Current Liabilities:
     Accounts payable and accrued expenses             $1,068,028          $1,182,789
     Notes payable, current portion (Note 3)            1,209,119             115,135
     Unearned income                                      160,588             142,503
                                                       ----------          ----------
  Total Current Liabilities                             2,437,735           1,440,427

     Lease obligation payable (Note 12)                                     3,909,696
     Notes payable, net of current
      portion (Note 3)                                  2,341,987             918,277
     Other                                                 37,175              35,525
                                                       ----------          ----------
  Total Liabilities                                     4,816,897           6,303,925
                                                       ----------          ----------

     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, 1,846,754 and 2,051,679 
       issued and outstanding at December 31, 1996
       and 1997 respectively                              277,013              61,550
     Additional paid-in capital                         8,071,634           9,372,500
     Accumulated (deficit)                             (3,293,195)         (5,860,292)
                                                       ----------          ----------
  Total Stockholders' Equity                            5,055,452           3,573,758
                                                       ----------          ----------

Total Liabilities and Stockholders' Equity             $9,872,349          $9,877,683
                                                       ----------          ----------
                                                       ----------          ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.

                                         F-4

<PAGE>

                       RENAISSANCE ENTERTAINMENT CORPORATION

                               STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                           Nine Month                      
                                                      Year Ended          Period Ended           Year Ended
                                                       March 31,          December 31,         December 31,
                                                         1996                 1996                 1997    
                                                     ------------         ------------         ------------
<S>                                                <C>                  <C>                  <C>
REVENUE:
     Sales                                            $12,810,617         $14,553,577         $14,158,590
     Faire operating costs                              3,826,868           4,812,616           4,606,602
                                                      -----------         -----------         -----------
       Gross Profit                                     8,983,749           9,740,961           9,551,988
                                                      -----------         -----------         -----------

OPERATING EXPENSES:
     Salaries and wages                                 4,082,271           4,048,603           4,745,507
     Depreciation and amortization                        500,203             633,819             701,599
     Advertising                                        1,546,701           2,511,973           2,435,229
     Other operating expenses                           4,329,713           4,300,062           3,957,844
                                                      -----------         -----------         -----------
       Total Operating Expenses                        10,458,888          11,494,457          11,840,179
                                                      -----------         -----------         -----------

Net Operating (Loss)                                   (1,475,139)         (1,753,496)         (2,288,191)
                                                      -----------         -----------         -----------

Other Income (Expenses):
     Interest income                                      109,652              68,571              61,031
     Interest (expense)                                  (138,036)           (253,740)           (370,813)
     Other income (expense)                                36,049              86,940              30,876
                                                      -----------         -----------         -----------
       Total Other Income (Expenses)                        7,665             (98,229)           (278,906)
                                                      -----------         -----------         -----------

Net (Loss) before (Provision)
 Credit for Income Taxes                               (1,467,474)         (1,851,725)         (2,567,097)

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

Net (Loss) to Common Stockholders                     $(1,273,671)        $(1,851,725)        $(2,567,097)
                                                      -----------         -----------         -----------
                                                      -----------         -----------         -----------

Net (Loss) per Common Share                           $      (.81)        $     (1.04)        $     (1.32)
                                                      -----------         -----------         -----------
                                                      -----------         -----------         -----------

Weighted Average Number of
 Shares Outstanding                                     1,564,836           1,781,410           1,949,217
                                                      -----------         -----------         -----------
                                                      -----------         -----------         -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.

                                         F-5

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION

                    STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                    From March 31, 1995 through December 31, 1997

<TABLE>
<CAPTION>
                                                                               Additional
                                                        Common Stock             Paid-in      Accumulated
                                                      ----------------
                                                    Shares         Amount        Capital       (Deficit)        Total
                                                 -----------    -----------    -----------    -----------   -----------
<S>                                             <C>            <C>            <C>            <C>           <C>
     Balance March 31, 1995                        1,585,548    $    47,566    $ 5,701,599    $  (167,799)  $ 5,581,366
     Treasury stock acquired in a cashless 
     transaction and retired                          (4,125)          (124)       (82,380)             -       (82,504)
     Cashless exercise of stock option                13,333            400         82,104              -        82,504
     Common stock issued for cash                    135,640          4,069      1,350,679              -     1,354,748
     Exercise of options                              13,945            419        134,576              -       134,995
     Net Loss for the year ended
     March 31, 1996                                        -              -              -     (1,273,671)   (1,273,671)
                                                 -----------    -----------    -----------    -----------   -----------
     Balance March 31, 1996                        1,744,341         52,330      7,186,578     (1,441,470)    5,797,438
     Exercise of Class A warrants                     25,066            752        249,904              -       250,656
     Exercise of Class B warrants                      6,800            204         89,046              -        89,250
     Exercise of stock options                        65,000          1,950        618,023              -       619,973
     Issuance of stock for services                    5,547            167        151,783              -       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                     1,846,754         55,403      8,293,244     (3,293,195)    5,055,452
     Stock issued for services                        16,496            495        415,790              -       416,285
     Conversion of notes payable to stock            125,397          3,762        180,153              -       183,915
     Exercise of Class A warrants                     28,058            842        279,742              -       280,584
     Exercise of Class B warrants                     13,600            408        176,890              -       177,298
     Exercise of options                              21,374            640         26,681              -        27,321
     Net loss for the year ended
     December 31, 1997                                     -              -              -     (2,567,097)   (2,567,097)
                                                 -----------    -----------    -----------    -----------   -----------
     Balance December 31, 1997                     2,051,679    $    61,550    $ 9,372,500    $(5,860,292)  $ 3,573,758)
                                                 -----------    -----------    -----------    -----------   -----------
                                                 -----------    -----------    -----------    -----------   -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.

                                         F-6

<PAGE>

                       RENAISSANCE ENTERTAINMENT CORPORATION
                                          
                              STATEMENTS OF CASH FLOWS
                                          
<TABLE>
<CAPTION>
                                                                                    Nine Months
                                                                Year Ended             Ended            Year Ended
                                                                  March 31,          December 31,       December 31,
                                                                    1996                 1996               1997    
                                                                ------------        ------------        ------------
<S>                                                            <C>                 <C>                 <C>
Cash Flows from Operating Activities:
     Net Income (loss)                                          $(1,273,671)        $(1,851,725)        $(2,567,097)
     Adjustments to reconcile net income to net
      cash provided by operating activities:
         Common stock issued for services                                 -             151,950             416,255
         Depreciation and amortization                              500,200             633,819             701,599
         Impairment of goodwill                                           -             380,000                   -
         (Increase) decrease in:
           Income tax refund receivable                            (323,380)            323,380                   -
           Accounts receivable                                      (19,310)           (163,866)             77,841
           Prepaid expenses                                        (396,276)           840,602             (341,153)
           Inventory                                                (33,321)            (68,474)             41,141
           Other assets                                             (38,811)            (86,292)           (206,406)
         Increase (decrease) in:
           Income taxes payable                                     (48,175)                  -                   -
           Accounts payable and accrued
            expenses                                                742,368            (113,062)            114,761
           Unearned revenue and other                                42,681            (445,980)           (317,422)
                                                                -----------         -----------         -----------
     Net Cash (Used in) Operating Activities                       (847,695)           (399,648)         (2,080,481)
                                                                -----------         -----------         -----------

     Cash Flows from Investing Activities:
        Investment in (reduction of)
         restricted cash                                           (848,296)            (41,820)            576,038
        Construction in progress costs                           (1,046,285)          1,080,895                   -
        Acquisition of property and equipment,
         goodwill and covenant not to compete                    (3,873,738)         (2,587,903)           (341,040)
                                                                -----------         -----------         -----------
     Net Cash Provided by (Used in) Investing
      Activities                                                 (5,768,319)         (1,548,828)            234,998
                                                                -----------         -----------         -----------

     Cash Flows from Financing Activities:
        Common stock issued and additional
         paid-in capital                                          1,489,743           1,109,739             669,118
        Proceeds from lease obligation
         payable                                                          -                   -           3,909,696
        Proceeds from notes payable                               2,518,018           1,000,000                   -
        Principal payments on notes payable                         (59,429)           (418,037)         (2,517,598)
                                                                -----------         -----------         -----------
     Net Cash Provided by Financing
      Activities                                                  3,948,332           1,691,702           2,061,216
                                                                -----------         -----------         -----------

     Net Increase (Decrease) in Cash                             (2,667,682)           (256,774)            215,733

     Cash, beginning of period                                    3,298,745             631,063             374,289
                                                                -----------         -----------         -----------
     Cash, end of period                                        $   631,063         $   374,289         $   590,022
                                                                -----------         -----------         -----------
                                                                -----------         -----------         -----------
     Interest paid                                              $   112,248         $   268,605         $   370,813
                                                                -----------         -----------         -----------
                                                                -----------         -----------         -----------
     Income tax paid                                            $   237,752         $         -         $         -
                                                                -----------         -----------         -----------
                                                                -----------         -----------         -----------
</TABLE>

Note: During the year ended March 31, 1996 the Company issued 108,000 shares of
its common stock to consummate the business combination with CFL.

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


                                         F-7

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1997

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

     (a)  GENERAL

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

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

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

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

     All subsidiaries of the Company were merged into REC as of March 31, 1996
     with the exception of Creative Faires, Ltd. which was merged into REC
     during 1997.

     The Company has changed its year end to December 31.
     


                                         F-8

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1997

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     (b)  PER SHARE INFORMATION

     Per share information is determined using the weighted average number of
     shares outstanding during the periods after giving effect to the stock
     splits, including the subsequent one for five reverse stock split effective
     February 23, 1998.

     (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.  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.


                                         F-9

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1997

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     (e)  STOCK SPLITS

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

     (f)  CONCENTRATIONS OF CREDIT RISKS

     Financial instruments that potentially subject the company to
     concentrations of credit risk consist principally of temporary cash
     investments and cash equivalents and trade accounts receivables.  At
     December 31, 1997, the Company had approximately $262,790 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.


                                         F-10

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1997

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     (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.

     (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)  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.

     (m)  BASIS OF PRESENTATION - GOING CONCERN

     The accompanying financial statements have been prepared in conformity with
     generally accepted accounting principles, which contemplates continuation
     of the Company as a going concern.  However, the Company has sustained
     operating losses since its inception and has a net capital deficiency. 
     Management is attempting to raise additional capital.

     In view of these matters, realization of certain of the assets in the
     accompanying balance sheet is dependent upon continued operations of the
     Company, which in turn is dependent upon the Company's ability to meet its
     financial requirements, raise additional capital, and the success of its
     future operations.  


                                         F-11

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1997

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     (m)  BASIS OF PRESENTATION - GOING CONCERN, CONTINUED

     Management is in the process of attempting to raise additional capital and
     reduce operating expenses.  Management believes that its ability to raise
     additional capital and reduce operating expenses provide an opportunity for
     the Company to continue as a going concern.

(2)  COMMON AND PREFERRED STOCK

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

     During January, 1995 the Company sold in a public offering 1,035,000 units
     of its securities 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 purchase one share of common stock
     at a price of $5.25 per share through January 27, 2000.  These warrants
     were changed based upon the reverse one-for-five stock split effective
     February 23, 1998, decreasing the number of warrants on a one-for-five
     basis and increasing the exercise price to $20.00 and $26.25 per share,
     respectively.  These warrants were immediately exercisable.  The warrants
     are redeemable by the Company at a price of $.05 per warrant upon 30 days'
     notice mailed within ten days after the closing bid price of the Company's
     common stock has equaled or exceeded 150% of the then current respective
     warrant exercise price for a period of 20 consecutive trading days.  The
     holders of the warrants called for redemption are granted exercise rights
     until the close of business on the date preceding the date fixed for
     redemption.

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


                                         F-12

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1997

(3)  NOTES PAYABLE

     Notes payable at December 31, 1997 are summarized as follows:

<TABLE>
<S>                                                   <C>
     Note payable to bank at 8.95%, 
     monthly principal and interest
     payment currently of $15,156,
     increasing over the term of the loan
     through May, 2011 collateralized by
     land, improvements and certificates
     of deposit.                                       $  990,297

     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%.                              43,115
                                                       ----------
     
     Total                                              1,033,412
     Less current portion                                 115,135
                                                       ----------
     Long-term portion                                 $  918,277
                                                       ----------
                                                       ----------
</TABLE>


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

<TABLE>
<S>                                         <C>
          1998                               $  115,135
          1999                                   61,806
          2000                                   61,656
          2001                                   55,896
          2002                                   60,930
          Thereafter                            677,989
                                             ----------
                                             $1,033,412
                                             ----------
                                             ----------
</TABLE>

(4)  Leases

     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 


                                         F-13

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1997

(4)  LEASES, CONTINUED

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
$327,000.

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

<TABLE>
<CAPTION>
       Year Ending
       December 31,
<S>                               <C>
          1998                        372,334
          1999                        390,951
          2000                        410,499
          2001                         87,601
                                             
                                   ----------
          Total                    $1,261,385
                                   ----------
                                   ----------
</TABLE>

     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:

<TABLE>
<CAPTION>
       Year ending
       December 31,
<S>                               <C>
          1998                     $   31,179
          1999                         32,738
          2000                          8,283

                                   ----------
          Total                    $   72,200
                                   ----------
                                   ----------
</TABLE>

     Rent expense for the year ended December 31, 1997, for the nine month
     period ended December 31, 1996 and for the year ended March 31, 1996
     totalled approximately $995,494, $831,757 and $804,495, respectively.  See
     Note 14 for subsequent event.


                                         F-14

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1997

(5)  GOODWILL AND COVENANT NOT TO COMPETE

     The cost of the acquisition of the California Faire assets and business as
     described in Note 1 in excess of the fair value of assets acquired has been
     recorded as goodwill in the accompanying financial statements.  Goodwill is
     being amortized on a straight-line basis over fifteen years.  Management
     reviews the carrying value of goodwill on a periodic basis, at least
     annually, to determine if there is any impairment in value.  If management
     determines that the carrying value is not recoverable over the remaining
     amortization term, the excess balance, if any, will be expensed.  During
     the period ended December 31, 1996, the Company determined that the
     goodwill was impaired and wrote off $380,000 as a charge to other operating
     expenses.  As of December 31, 1997 the Company's net carrying value for
     goodwill was $570,150 after amortization.

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

(6)  INCOME TAXES

     As of December 31, 1997, there are no current or deferred income taxes
     payable.  As of December 31, 1997, the Company has total deferred tax
     assets of approximately $1,180,000 due to operating loss carryforwards and
     the depreciation timing differences described above.  However, because of
     the uncertainty of potential realization of these tax assets, the Company
     has provided a valuation allowance for the entire $1,180,000.  Thus, no tax
     assets have been recorded in the financial statements as of December 31,
     1997.
     
     The Company has available at December 31, 1997, unused operating loss
     carryforwards of approximately $5,900,000 which may be applied against
     future taxable income, expiring in various years through 2012.  The
     available net operating loss carryforwards may be reduced if there is a 50%
     or more change in ownership.


                                         F-15

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1997

(7)  PROPERTY AND EQUIPMENT

<TABLE>
<S>                                         <C>
     Land                                    $ 3,474,885
     Buildings and Improvements                3,010,147
     Office Furniture and Equipment              469,703
     Costumes, Props and Other Assets          2,476,802
                                             -----------
          Sub-total                            9,431,537
     Less Accumulated Depreciation            (2,544,665)
                                             -----------
          Total                              $ 6,886,872
                                             -----------
                                             -----------
</TABLE>

(8)  WARRANTS ISSUED FOR SERVICES AND STOCK OPTIONS

     In January, 1994 the Company issued warrants to purchase an aggregate of
     53,333 shares of the Company's common stock at an exercise price of $9.35
     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 53,333 warrants were valued at
     $.75 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 216,264 shares of the Company's common stock.  Of this
     amount, 26,745 options have been exercised and 2,400 have expired during
     the year ended March 31, 1996.  The options are exercisable at prices
     ranging from $5.65 per share to $17.50 per share.  During the period ended
     December 31, 1996, 21,000 options were granted with a weighted average
     price of $28.70, 90,512 options were exercised at a weighted average price
     of $9.35 and 32,400 options terminated with a weighted average price of
     $20.45.  During the period ended December 31, 1997, 22,343 options were
     exercised at prices ranging from $5.63 to $17.50 per share.  The remaining
     number of options outstanding at December 31, 1997 totalled  314,566 with
     an average price of $11.44 per share which are exercisable at various dates
     through 2002.

(9)  BUSINESS COMBINATION, NEW YORK FAIRE

     Effective December 31, 1995 the Company issued 108,000 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.


                                         F-16

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1997

(9)  BUSINESS COMBINATION, NEW YORK FAIRE, CONTINUED

     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 227,333 shares of its
     common stock and 175,000 shares of its preferred stock as consideration for
     the net assets acquired.  The preferred stock was converted into common
     stock during January, 1995.  In addition to acquiring certain assets and
     liabilities of LHC, the Company has acquired the rights to operate two
     California Renaissance Faires.

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

(11) RESTRICTED CASH

     Certificates of Deposit in the amount of $314,078 at December 31, 1997 are
     collateral to a $990,297 loan maturing in 2011.
 
(12) COMMITMENTS

     Effective December 16, 1994 the Company entered into an agreement with a
     consulting firm to provide to the Company certain promotional services for
     the Company's 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 13,200 and a maximum of 26,400
     shares of the Company's common stock at $8.13 per share with the increase
     depending on the results of the services performed by the consulting firm.

     Subsequent to December 31, 1996 the Company issued 10,948 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.


                                         F-17

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1997

(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's lease for the site of its Northern California faire expired
     December 31, 1997.  The Company has an agreement with the owner of the
     property covering the 1998 faire season, although the agreement has not
     been signed.  If the lease is not renewed, it is doubtful that the Company
     would conduct a faire in Northern California in 1998.

(15) FOURTH QUARTER ADJUSTMENTS

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

(16) SALE LEASE BACK TRANSACTION

     During November, 1997, the Company sold its real property in Wisconsin to a
     related party for $4,000,000 and signed a 20 year non-cancelable lease back
     on this property with monthly lease payments in the initial amount of
     $33,333 increasing to $45,278 over the term of the lease.  The Company has
     an option to reacquire the property during the twenty year lease period  at
     fixed amounts as specified in the lease.  Since the Company continues to
     have an economic interest in the property due to the option, the Company
     treated the transaction as a financing arrangement.  As of December 31,
     1997, the outstanding balance on the finance obligation was $3,909,696
     using an effective interest rate of approximately 11%.  The purchaser was
     deemed to be a related party as a relative of the Chairman of the Board of
     the Company is a minority interest investor in the Company which purchased
     this property.


                                         F-18