<PAGE>
                                     FORM 10-K/A
                                           
                          SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.  20549
                                           
                    [ ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
                         THE SECURITIES EXCHANGE ACT OF 1934
                                          OR
                                           
                [X] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
                                           
          For the transition period from April 1, 1996 to December 31, 1996
                                           
                            Commission file number 0-23782
                                           
                        RENAISSANCE ENTERTAINMENT CORPORATION

                           --------------------------------
             (Name of Small Business Issuer as Specified in its Charter)
                                           
               Colorado                                    84-1094630
-----------------------------------------         ---------------------------
(State or other jurisdiction                             I.R.S.  Employer
of incorporation or organization)                      Identification number
               
4410 Arapahoe Avenue, Suite 200, Boulder, Colorado          80303
-----------------------------------------------------   ---------------
(Address of principal executive offices)                  (Zip Code)

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

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

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

             Securities registered pursuant to Section 12(g) of the Act:
                                           
                             Common Stock, $.03 par value
                        Class A Common Stock Purchase Warrants
                        Class B Common Stock Purchase Warrants
                                           
Units, each Unit consisting of one (1) Share of Common Stock, one (1) Class A
Common Stock Purchase Warrant and one (1) Class B Common Stock Purchase Warrant

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Registrant was required 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.  [  ]

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As of March 31, 1997, the aggregate market value of the Common Stock of the
Registrant based upon the average of the closing bid and asked prices of the
Common Stock as quoted on the NASDAQ National Market held by non-affiliates of
the Registrant was approximately $55,285,358.  As of March 31, 1997, 10,787,387
shares of the Common Stock of the Registrant were outstanding.

                         DOCUMENTS INCORPORATED BY REFERENCE
                                           
None.


                                        PART I
                                           
                                  ITEM 1:  BUSINESS
                                           
OVERVIEW

Renaissance Entertainment Corporation operates five Renaissance Faires in the
United States, and is engaged in a strategy to develop and acquire additional
Renaissance Faires nationwide.  The newest Faire opened on May 4, 1996 in
Fredericksburg, Virginia, a project which was designed and constructed by the
Company.  On February 5, 1996, the Company acquired Creative Faires, Ltd., the
owner and operator of the New York Renaissance Faire.  With its five Faires
currently drawing close to 750,000 visitors annually, the Company believes that
it is the largest operator of Renaissance Faires and Renaissance entertainment
events in the United States.  The Renaissance entertainment industry consists of
over 100 separate events of varying size with a Renaissance theme and has an
estimated attendance in excess of 4,000,000 visitors annually.

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

STRATEGIC PLAN

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

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

EXISTING RENAISSANCE FAIRES AND SITES

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

     The following table shows the attendance, number of vendors and net
operating income for the Company's faires during the 1996 and 1995 faire
seasons.


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                                       Approximate
                    Attendance      Number of Vendors   Net Operating Income
                -----------------   -----------------  ----------------------
                  1995     1996       1995    1996        1995       1996
               --------  --------   ------- ---------  ----------  ----------

Bristol        165,174   190,604     150     150       $422,544   $987,660
Northern CA    184,444   184,548     150     150              *    352,964
Southern CA    193,761   166,283     150     150              *    745,634
New York       114,403   150,773     100     100          9,179   (301,291)
Virginia             0    60,943       0      50             --   (644,813)
               -------   -------                     ---------- ----------
  Total        657,782   753,151                     $1,163,634 $1,140,154

------------
*    Combined net operating income for the Northern and Southern California
     faires for the 1995 faire season was $731,911.


BRISTOL RENAISSANCE FAIRE.  The Bristol Renaissance Faire is conducted at the
Kenosha, Wisconsin site owned by the Company.  It has been in existence for 10
years.  The Bristol Renaissance Faire is presented annually for nine weekends
beginning the last weekend in June and ending the third weekend in August.

The Bristol Renaissance Faire 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.  See "Property." As the
site of the Bristol Renaissance Faire is owned, the structures and improvements
which have been constructed on the site, including the vendor booths, are
permanent.  Craft shops and vendor booths are built by the individual craft
vendors at their cost.  In many cases, vendors invest substantial sums of money
in the construction of these shops, which represent permanent improvements and
value added to the Company's real estate.

While the Company believes that the property is amenable to some
income-producing off-season activity, historically, the Company has only
utilized the site for the Renaissance Faire, and the property has been vacant
during the off-season.  The Company is considering year-round uses which could
include campgrounds, a micro-brewery, an Octoberfest and music festivals.  To
date, however, there exist no agreements, arrangements or other understandings
with respect to alternate year-round uses, and there can he no assurance that
the Company will be successful in developing any income-producing, off-season
activities.

NORTHERN CALIFORNIA RENAISSANCE PLEASURE FAIRE.  The Northern Renaissance
Pleasure Faire has been held in the San Francisco Bay area for the past 30
years.  This Faire is conducted annually for six to seven weekends, typically
beginning Labor Day weekend and running through the first or second weekend of
October.

The Northern California Faire is located on leased property in Novato,
California.  The lease is currently on a year-by-year basis.  The rent was
$350,000 in 1996 and is $300,000 for the 1997 Faire.  The Company is
investigating new sites for the Faire which, if acceptable and available, will
not be available until at least 1998.  The Company estimates that it will be
required to spend 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.  Due to
the time required to locate a site, obtain approval to hold a faire on the site
and to prepare the site for a faire, the Company believes it will be difficult
to hold this faire on a new site for the 1998 faire season.


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.

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

The Southern Renaissance Pleasure Faire is held in Glenn Helen Regional Park
located near Devore, California.  The site is leased from the San Bernardino
County Parks and Recreation Department, under a one year lease for the 1997
Faire.  Rental under the lease is equal to 3.5% of gross revenues.  The Company
has the option of leasing the San Bernardino site in the future, but is
currently investigating new sites for the Southern Renaissance Pleasure Faire.

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

Although the Company has operated that Faire during the past three years at a
profit, management believes that it will either have to relocate the Faire or
obtain a long-term lease for the current faire site in order to improve its
profitability in the future.  On November 4, 1996, the Company entered into a
non-binding letter of intent with the owner of a site in Pomona, California
which contemplates that the Company will commence operation of the Southern
California Faire at that site starting in 1998.  The letter of intent calls for
the Company to construct a new village for the Faire.  The Company estimates
that the cost of such construction would be approximately $2,000,000.  The
Company would need additional funds from one or more third parties to finance
such construction.  Following execution of the letter of intent, the owner of
the current site for this faire indicated that it would be 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 Prospectus,
determined whether it should relocate this faire to the new proposed site in
Pomona or enter into a long-term lease for the existing faire 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
540,000 shares of the Company's Common Stock in consideration for all of the
outstanding shares of Creative Faires, Ltd.  The Company valued this faire based
on the Company's estimate of net operating income which could be achieved under
the Company's management, the cost of developing a new faire in the New York
metropolitan area and the benefits of having a renaissance faire in the greater
New York metropolitan area.  Since the faire was acquired during the 1996 faire
season, the Company did not have a significant opportunity to affect the results
of this faire during the 1996 faire season.  A new manager has been hired for
this faire and a number of new promotional activities and entertainment acts
have been 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.

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

VENDORS

Approximately 13% of the revenues realized from presenting the Company's
Renaissance Faires are generated from the Company's relationships with vendors
and craftsmen who sell food and crafts, and offer games and rides.  During the
1996 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 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.  Since the
structures are permanent, once built they become the property of the Company and
increase the value of the Company's asset at that location.

At the Virginia Renaissance Faire site, shops and booths are constructed by the
vendors.  All buildings so constructed become a permanent part of the Faire and
are the property of the Company.  All vendors at the Virginia Renaissance Faire
pay the Company a fee of 6% to 15% 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 past two faire seasons from each of these
activities.

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                                            1995              1996
                                      ------------        ------------

Gate Admissions                       $ 6,143,974         $ 6,443,461
Beverage Revenue                        2,495,423           2,797,683
Parking Revenue                           833,342             808,008
Food Revenue                            1,125,489           1,328,339
Craft Fees                              1,072,043           1,319,805
Game Fees                                 133,327             224,542
Souvenir Revenue                          536,972             724,518
Sponsorship Fees                          121,540             230,020
Camping Fees                              173,688             241,084
Miscellaneous Fees                        171,819             436,117
                                      -----------         -----------
    Total                             $12,810,617         $14,553,577

GATE ADMISSIONS.  Gate admissions are set from $14.00 to $17.50 for adults,
$5.95 to $6.95 for children, with children under the age of five admitted free. 
Discounts for senior's and military personnel are $1.00 to $2.00.  Off premises
discount ticket sales are available at Cub Foods, K-Mart, Sentry Foods, Shoprite
and Kits Camera.  Discount coupons are available at retail outlets operated by
the Company's sponsors, including McDonalds, Subway, White Castle, Vons super
markets and Amoco Stations.  The Company has a large group sale and advance sale
program that provides discounted tickets.  Admission provides the guest with
all-day continuous entertainment on multiple stages.  Major entertainment acts
include full contact jousting, falconry, variety acts, sword duels,
Shakespearean vignettes and authentic belly-dancing.

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.

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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.

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 

                                          7
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revenues substantially greater than the Company's fairs in such markets.  The
Company competes on the basis of entertainment value and uniqueness of the
Renaissance event.  The Company emphasizes its fairs 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 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.

                                          8
<PAGE>

EMPLOYEES

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

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


                                  ITEM 2:  PROPERTY
                                           
The Company's corporate headquarters are located at 4410 Arapahoe Avenue, Suite
200, in Boulder, Colorado.  This property measures 3,868 square feet and is
currently leased at $7,854 per month, with increases of 5% per annum each
November 1, expiring October 31, 2001.  The Company considers these offices to
be suitable for its needs for the duration of the lease term.  The Company has
an option to renew the lease for an additional five year period.

The Company owns approximately 160 acres in Kenosha County, Wisconsin, which is
home to the Bristol Renaissance Faire.  The land is subject to mortgages in the
original aggregate principal amount of $1.95 million.  On April 11, 1997, the
outstanding balance was $1.7 million, with $200,000 due on June 30, 1997,
$250,000 due on July 31, 1997, $300,000 due on August 31, 1997, $100,000 due on
September 1, 1997, $150,000 due on September 30, 1997, $50,000 due on each of
March 31, June 30 and September 30, 1998 and the balance of $550,000 due on
December 31, 1998.  The June 30, July 31, August 31, September 1 and September
30, 1997 payments have been made, leaving a balance owed at September 30, 1997
of $700,000.  The interest rates for these mortgages are 2% per annum over the
lenders prime rate.

The Company has leased the property where the Northern California Renaissance
Pleasure Faire is held, located at 1410 Highway 37, Novato, California 94945. 
Office quarters for all California personnel is included in the overall lease
covering the Faire site, which expires at the end of the 1997 faire season.  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.  The Company also leases offices in New
York City.

On July 27, 1995, the Company acquired approximately 250 acres of land in
Stafford County, Virginia, for a purchase price of $925,000.  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, 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.  Two former employees are alleging wrongful
termination.

                                          9
<PAGE>

              ITEM 4:  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
                                           
The 1996 Annual Meeting of the Stockholders of the Company was held on November
26, 1996.  At that meeting, the following five directors, constituting all
members of the Board of Directors, were elected.

                         VOTES CAST     VOTES CAST                    BROKER
NAME                        FOR           AGAINST   ABSTENTIONS     NON-VOTES
----                     ----------    -----------  -----------     ---------
Charles S. Leavell       3,492,895          (0-)     44,990          (0-)
Sanford L. Schwartz      3,492,895          (0-)     44,990          (0-)
Robert Geller            3,492,895          (0-)     44,990          (0-)
Gregg Adam Thaler        3,326,228          (0-)    211,657          (0-)
Dean Petkanas            3,326,228          (0-)    211,657          (0-)

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

                        ITEM 5:  MARKET FOR THE COMMON EQUITY
                           AND RELATED STOCKHOLDER MATTERS
                                           
PRICE RANGE OF COMMON STOCK

On September 1, 1995, the Company's Common Stock began trading on the NASDAQ
National Market.  From January 27, 1995 to August 31, 1995, it traded on the
NASDAQ Small-Cap Market and on the Boston Stock Exchange, and prior to that
time, the stock was traded over-the-counter on the OTC Electronic Bulletin
Board.  Since December 9, 1996, the Company's Common Stock has also been traded
on the Philadelphia Stock Exchange.  The following table reflects the high and
low prices of the Registrant's Common Stock for each quarterly period of the two
most recent calendar years and the subsequent interim quarter retroactively
adjusted for a 2-for-1 stock split in October 1996.  From the fourth quarter of
1995 forward, the prices reflect the high and low sales prices.  For the first,
second and third quarters of 1995, the prices reflect the high and low bid
prices as quoted by the National Quotation Bureau, Inc. The quotations represent
prices between broker-dealers and do not include retail mark-ups and mark-downs
or any commission to the broker-dealer and may not reflect prices in actual
transactions.

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

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

     1997
First Quarter ended March 31                         6.88           5.06

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

                                          10
<PAGE>

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 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.

<TABLE>
<CAPTION>

                                                                        NINE MONTHS
                                             YEARS ENDED MARCH 31,    ENDED DECEMBER 31,
                                            -----------------------   ------------------
INCOME STATEMENT DATA                        1994    1995    1996      1995      1996
                                             ----    ----    ----      ----      ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                        <C>     <C>      <C>      <C>        <C>
Revenue                                    $1,973  $12,540  $12,811  $10,470    $14,554
Gross Profit                                1,694    9,327    8,984    7,265      9,741
Net Operating Income (Loss)                   (39)     757   (1,475)     111     (1,753)
Net Income (Loss) After Taxes                 (98)     576   (1,274)     309     (1,852)
Net Income (Loss) to Common Shareholders      (98)     533   (1,274)     264     (1,852)
Net Income (Loss) Per Common Share           (.05)     .11     (.16)     .03       (.21)

Weighted Average Common Shares Outstanding  1,901    4,801    7,824    7,644      8,907


<CAPTION>



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

</TABLE>


                                          11
<PAGE>


                   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, 1996.  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.

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, and
a net loss of ($1,851,725) for the nine months ended December 31, 1996.  In
addition, the Company expects to incur a net loss for the fiscal year ending
December 31, 1997.  The New York and Virginia Faires operated at a loss during
1996.  The Company believes both of these Faire's results were adversely
affected by unusually inclement weather in their respective areas.  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 has hired a new manager for this
Faire and has introduced several new entertainment acts and implemented
additional promotional efforts for this faire's 1997 season.

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.  An extension of the
lease for this site for the 1997 faire season has been obtained.  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 1998 or following faire seasons.

The Company is also considering relocation of its Southern California Faire.  On
November 4, 1996, the Company entered into a non-binding letter of intent with
the owner of a site in Pomona, California, which contemplated that the Company
would commence operation of the Southern California Faire at that site starting
in 1998.  Subsequent to the signing of the letter of intent, the owner of the
current site for the Southern California Faire indicated that it was willing to
enter into a long-term lease for the current site.  The ability to enter into a
long-term lease for this site increases its value to the Company, as the Company
could construct structures on the site and significantly reduce setup costs for
the faire.  As of the date of this report, the Company has not decided if it
should enter into a long-term lease for the current site or relocate the Faire
to the proposed site in Pomona.  The Company estimates that the cost of the
construction and relocation to the new site would be approximately $2,000,000.

The Company had a working capital deficit ($1,506,284) as of December 31, 1996. 
During the first five months of fiscal 1997, the Company obtained $1,350,000 of
additional working capital.  While the Company believes that it has adequate
working capital to fund anticipated operations for fiscal 1997, it believes it
must obtain additional working capital for future fiscal periods.  See
"LIQUIDITY AND CAPITAL RESOURCES."

PROSPECTIVE INFORMATION

This report contains certain forward-looking statements and information relating
to the Company that are based on the beliefs and assumptions made by the
Company's management as well as information currently available to management. 
When used in this document, the words "anticipate," "believe," "estimate,"
"expect," and similar expressions, are intended to identify forward-looking
statements.  Such statements reflect the current views of the 

                                          12
<PAGE>


Company with respect to future events and are subject to certain risks,
uncertainties and assumptions.  Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated or expected.  The Company does not intend to update these
forward-looking statements.

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 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 

                                          13
<PAGE>


and amortization expense increased 88% from $337,208 in 1995 to $633,819 in
1996.  This increase is primarily the result of depreciation on the
approximately $3,200,000 investment in buildings and improvements to the
Virginia property, as well as the New York Faire, both of which were not
included in the same period of 1995.  Advertising expenditures increased 142%
from $1,036,508 in 1995 to $2,511,973 in 1996, again reflecting the necessary
advertising for the two additional faires as well as moderate increases in
advertising and rates for the other three faires.  Additionally, due to
contracting out certain advertising activities previously done by faire
personnel, additional advertising expenses of approximately $136,000 were
charged to advertising expenses during the 1996 period.

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

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

MARCH 31 FISCAL 1996 COMPARED TO FISCAL 1995

Comparisons of the fiscal year ended March 31, 1996 with the fiscal year ended
March 31, 1995 include Creative Faires, Ltd.  (owner of the New York Renaissance
Faire) acquired February 5, 1996.  The acquisition has been accounted for as a
pooling of interests, which means that the financial results of Creative Faires,
Ltd.  have been retroactively merged into those of the Company.  Accordingly,
the Company's results of operations for fiscal 1995 and fiscal 1996 include the
results of Creative Faires.  Because the Company's fiscal year previously ended
on March 31 and Creative Faires' fiscal year ended on December 31, the income
statements of Creative Faires for the fiscal years ended December 31, 1994 and
December 31, 1995 have been consolidated into the Company's income statements
for the fiscal years ended March 31, 1995 and March 31, 1996, respectively. 
Results of operations for Creative Faires, Ltd.  includes three crafts shows and
a Halloween Forest of Fear in addition to the New York Renaissance Faire,
although the Faire represents most of its revenue.

The results of operations of the Company for the fiscal year ended March 31,
1996 reflect the nineteen-day run of the Los Angeles Faire, the eighteen-day run
of the Wisconsin Faire, the fifteen-day run of the San Francisco Faire, and the
seventeen-day run of the New York Faire.  The comparable period of fiscal 1995
included the same number of days for 

                                          14
<PAGE>


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

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

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

Operating expenses (year-round operating costs and corporate overhead) increased
$1,888,568 or 22%, from $8,570,320 for fiscal 1995 to $10,458,888 for fiscal
1996.  Of these amounts, salaries increased 17% from $3,474,799 in fiscal 1995
to $4,082,271 in fiscal 1996, representing a modest expansion of staffing levels
Company wide.  Depreciation and amortization expense increased 42% from $351,215
in fiscal 1995 to $500,203 in fiscal 1996.  This increase is largely the result
of the Company's increased investment in property and equipment for the expanded
Wisconsin Faire, as well as investment in furniture and equipment for the
corporate office, which moved to new quarters in April 1995.  The approximately
$3,200,000 investment in buildings and improvements to the Virginia property
were not subject to depreciation in fiscal 1996, because at March 31, 1996 the
Virginia Faire had not yet opened.  Under accounting rules those assets
(categorized on the balance sheet as construction-in-progress) were not yet
depreciable.  Advertising expenditures increased 28% from $1,211,798 in fiscal
1995 to $1,546,701 in fiscal 1996.

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

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


                                          15
<PAGE>

miscellaneous income (rental income and vendor refunds) in fiscal 1996. 
Combining net operating income with other income resulted in a $2,190,898
decrease in net income before taxes, from income of $723,424 for fiscal 1995 to
a loss of $1,467,474 in fiscal 1996.

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

Net income to common stockholders decreased $1,806,980, from $533,309 in fiscal
1995 to a loss of $1,273,671 for fiscal 1996.  Net income to common stockholders
for fiscal 1995 is net of $43,115 paid in dividends on preferred stock.  The
Company's preferred stock was fully redeemed on January 27, 1995 in conjunction
with the public offering, and there has been no preferred stock outstanding
since that date.  Finally, net income per common share decreased from $0.11
during fiscal 1995 to a loss of $0.16 during fiscal 1996, based on 4,801,044
weighted average number of shares outstanding during fiscal 1995 and 7,824,182
weighted average number of shares outstanding during fiscal 1996.

LIQUIDITY AND CAPITAL RESOURCES

The most significant events of the past year were the purchase of Creative
Faires, Ltd.  (owner of the New York Renaissance Faire), the completion of
construction of the Virginia Renaissance Faire and the first year of operations
of those two faires under the Company's ownership and management.  As a result
of significant cost overruns in the construction of the Virginia Faire due to
extremely inclement weather during the construction period, overall
disappointing results from faire operations in 1996 and certain corporate
overhead expenses, the Company's working capital decreased from $15,023 at March
31, 1996 to a working capital deficit of ($1,506,284) at December 31, 1996.  In
order to reduce the Company's working capital requirements, management has
implemented a number of cost reductions which it estimates will reduce operating
expenses during the fiscal year ending December 31, 1997.

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.  Subsequent to year
end, the Company entered into an agreement with the banks which requires the
Company to pay these lines from 1997 operations ($300,000 of which was paid in
the six-month period ended June 30, 1997, leaving a balance of $700,000).  Since
December 31, 1996, the Company has 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 in April 1997 of the Notes to a number of
private investors.  The debentures are secured by mortgages on the Company's
Wisconsin and Virginia Faire sites, and the Notes are secured by a mortgage on
the Company's Wisconsin Faire site.  The debentures are 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, and the Notes are convertible into Common Stock at the
lesser of $1.75 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 at the lesser of $3.00
per share or 70% of the fair market value of the Company's Common Stock.  In
addition, management believes that the Company should raise additional working
capital in order to more adequately fund its operations.  The Company is
pursuing various funding alternatives.  However, there can be no assurance that
such funds will be available to the Company or, if available, available on terms
acceptable to the Company.

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


                                          16
<PAGE>

Reviewing the change in financial position over the previous year, current
assets, largely comprised of cash and prepaid expenses, decreased from
$2,119,867 at March 31, 1996 to $931,451 at December 31, 1996, a decrease of
$1,188,416 or 56%.  Of those amounts, cash and cash equivalents decreased from
$631,063 at March 31, 1996 to $374,289 at December 31, 1996, due to cash outflow
from operations during the year.  Accounts receivable increased from $69,434 at
March 31, 1996 to $99,551 at December 31, 1996.  Inventory, comprised of
merchandise sold at the faires and various food and beverage supplies, increased
from $116,221 at March 31, 1996 to $184,695 at December 31, 1996, largely
reflecting merchandise remaining from the previous season and the purchase of
new products for upcoming faires.  Prepaid expenses decreased from $979,769 at
March 31, 1996 to $139,167 at December 31, 1996.  These costs represent expenses
incurred on behalf of the Southern California and Virginia Faires, which are
expensed once those faires are operating.

Current liabilities increased from $2,104,844 at March 31, 1996 to $2,437,735 at
December 31, 1996, an increase of $332,891 or 16%.  This increase is largely due
to construction spending on the Virginia Faire and operation of the two
additional faires.  Accounts payable and accrued expenses decreased from
$1,181,090 at March 31, 1996 to $1,068,028 at December 31, 1996, a decrease of
$113,062 or 10%.  The current portion of notes payable increased from $437,956
at March 31, 1996 to $1,209,119 at December 31, 1996, primarily due to
short-term borrowings on two lines of credit in 1996.  Unearned income, which
consists of the sale of admission tickets to upcoming faires and deposits
received from craft vendors for future faires, decreased from $485,798 at March
31, 1996 to $160,588 at December 31, 1996.  This decrease reflects the
seasonality of the Company's business.  March 31 is only a few weeks before the
opening of the first two faires of the faire season, whereas December 31 is more
than 14 weeks before the opening of the next faire season.

Total assets decreased from $10,433,469 at March 31, 1996 to $9,872,349 at
December 31, 1996, a decrease of $561,120 or 5%.  Of those amounts, property and
equipment (net of depreciation) increased 39% from $5,156,217 at March 31, 1996
to $7,176,755 at December 31, 1996.  Most of this increase was the result of the
purchase of the New York Faire and the completion of the construction of the
Virginia Faire.  Goodwill, which arose from the purchase of the two California
Faires and is being amortized over 15 years, decreased from $1,046,285 at March
31, 1996 to $620,826 at December 31, 1996.  This was primarily due to the
Company writing down this account by an additional $380,000 as the result of two
consecutive years of disappointing performance for the Southern California
Faire.  Other miscellaneous assets (organizational costs and vendor deposits)
increased from $121,909 at March 31, 1996 to $208,201 at December 31, 1996.

Total liabilities increased from $4,636,031 at March 31, 1996 to $4,816,897 at
December 31, 1996.  This increase is primarily due to increased borrowings
required to fund the Company's losses.  Total liabilities at December 31, 1996
include $2,437,735 in current liabilities (discussed above), plus $2,341,987
from the long-term portion of the following bank loans:  an $800,000 mortgage on
the Bristol Faire property, a $1,500,000 mortgage on the Virginia Faire
property, and a $250,000 loan for construction of vendor booths in Virginia.

Stockholders' Equity decreased from $5,797,438 at March 31, 1996 to $5,055,452
at December 31, 1996, a decrease of $741,986 or 13%.  This decrease resulted
from the net loss of $1,851,725, partially offset by additional contributed
capital received as the result of the exercise of 125,328 Class A Warrants at
$2.00 per share; the exercise of 34,000 Class B Warrants at $2.625 per share;
and the exercise of 324,998 employee stock options at prices ranging from $1.125
to $3.50 per share.  As of December 31, 1996, the Company had outstanding
9,233,772 shares of common stock, 1,813,856 Class A Warrants representing the
right to purchase common stock at $2.00 per share, and 2,049,966 Class B
Warrants representing the right to purchase common stock at $2.625 per share.

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

                                          17
<PAGE>

                 ITEM 8:  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                                           
         The following financial statements are filed as part of this report:

    1.   Report of Independent Certified Public Accountants;
    
    2.   Consolidated Balance Sheets as of December 31, 1996 and March 31,
         1996, (audited);
    
    3.   Consolidated Statements of Operations for the Fiscal Years Ended March
         31, 1995 and March 31, 1996, and the nine-month period ended December
         31, 1996 (audited);
    
    4.   Consolidated Statements of Changes in Stockholders' Equity for the
         Fiscal Years Ended March 31, 1995 and March 31, 1996, and the
         nine-month period ended December 31, 1996 (audited);
    
    5.   Consolidated Statements of Cash Flows for the Fiscal Years Ended March
         31, 1995 and March 31, 1996 and the nine-month period ended December
         31, 1996 (audited); and
    
    6.   Notes to the Consolidated Financial Statements.


                ITEM 9:  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                        ON ACCOUNTING AND FINANCIAL DISCLOSURE
                                           
None.


               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:

NAME(1)            AGE  POSITION                                     SINCE
-------            ---  --------                                     -----

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

Sanford L. Schwartz 47   Director                                     1993

Robert M. Geller    44   Director                                     1994

Gregg Adam Thaler   31   Director                                     1996

Dean Petkanas       33   Director                                     1996

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

James R. McDonald   51   Chief Financial Officer                       --

Howard Hamburg      60   Vice President                                --

Kevin Patterson     36   Vice President                                --

Gloria Constantin   46   Secretary                                     --

                                          18
<PAGE>

Sue Brophy          41   Controller                                    --

CHARLES S. Leavell was elected Chief Executive Officer effective June 20, 1996. 
From April 1993 to March 31, 1995, he was Chief Executive Officer, and from
April 1, 1995 to present he has served as Chairman of the Board of the Company. 
From 1988 to present, Mr. Leavell has served as President and Chairman of the
Board of Leavell Management Group, Inc. and Ellora Corporation.  In that
capacity, he has acquired, developed, and managed numerous ventures, including
the Bristol Renaissance Faire; the 4UR Guest Ranch in Creede, Colorado, a 3,000
acre luxury ranch; and South Meadow, an exclusive 96 unit single family
development in Boulder, Colorado.  Prior to his affiliation with Leavell
Management Group and Ellora Corporation, Mr. Leavell worked with Columbia
Pictures in Los Angeles, California, where he was producer of the feature film,
"The Quick and the Dead," about Grand Prix automobile racing, and was the
executive producer of another film, "Evil Ways," about street gangs in East Los
Angeles.  Mr. Leavell also produced a rock musical for the stage entitled
"Goosebumps." Mr. Leavell currently sits on the Board of Directors of The
Leavell Company and CK Properties, L.C., of El Paso, Texas, both of which are
real estate development and management corporations with extensive holdings in
apartments and office buildings.  Mr. Leavell's former affiliations include
Board of Directors of the Denver International Film Festival, Denver, Colorado,
and Vice-Chair of Colorado Venture Capital Corporation, a regional investment
firm.  Mr. Leavell graduated from Stanford University in 1965 with a Bachelor of
Arts degree in history.

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

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

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

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

J. STANLEY GILBERT became President and Chief Operating Officer in January,
1997.  In 1996 Mr. Gilbert was a Vice President of the Company and he managed
the 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.

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

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

KEVIN PATTERSON, General Manager of RPFI since April 1, 1994, has 18 years
experience in the administration and production of Renaissance Faires.  From
1993 to 1994 he served as Vice President & Assistant General Manager of the
Living History Center, a non-profit public benefit corporation which previously
produced the California Renaissance Pleasure Faires.  Mr. Patterson served as
Production Manager of The Living History Centre in 1992, as Community Outreach
Director during 1989 to 1992, and in other positions with the organization
continuously since 1977.  Mr. Patterson holds a B.A. degree in Economics from
Moorpark College and attended the B.S.M.  program at Pepperdine University.  He
is a founding Board Member of the Historic Oaks Foundation and the St.  Andrew's
Society of San Francisco.  GLORIA CONSTANTIN has been Secretary of the Company
since 1993.  She has also been in-house Investor Relations since 1993.  From
1991 to 1993, she was employed by Leavell Management Group, Inc. Ms. Constantin
holds degrees in English and Theatre, and is an honors graduate of the Denver
Paralegal Institute.

SUE BROPHY has been Controller of the Company since August, 1995.  From 1994
until 1995, Ms. Brophy was employed by Clifton, Gunderson & Co., a public
accounting firm in accounting services.  From 1990 to 1993, she was
self-employed.  From 1991 to 1992, she was an accountant with Rigden, Inc., a
software development company.  Each Director is elected to serve for a term of
one year until the next Annual Meeting of Shareholders or until a successor is
duly elected and qualified.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.

To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal period ended December 31, 1996, all
required reports were timely filed, except that due to administrative oversight,
J. Stanley Gilbert filed one late Form 4 reporting one transaction.


                           ITEM 11.  EXECUTIVE COMPENSATION
                                           
The following table sets forth certain information for the Company's fiscal
periods ended December 31, 1996 (D1996), March 31, 1996 (M1996) and 1995 (M1995)
regarding compensation earned by or awarded to the Company's chief executive
officer and the other executive officers whose total annual salary and bonus
exceeded $100,000 (the "Named Executive Officers").

                                          20
<PAGE>
                                       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/ Compens-
Principal                        Salary       Bonus   sation    Award(s)              Payouts  ation
Position                 Year     ($)          ($)    ($)(1)      ($)       SARs       ($)      ($)
-------------------------------------------------------------------------------------------------------
<S>                     <C>    <C>       <C>        <C>        <C>       <C>         <C>      <C>
Charles S. Leavell
Chairman,               D1996      (0-)      (0-)      (0-)      (0-)      (0-)      (0-)      (0-)
CEO and                 M1996      (0-)      (0-)   $48,000(1)   (0-)      (0-)      (0-)      (0-)
President               M1995  $ 92,000  $ 23,984      (0-)      (0-)      (0-)      (0-)      (0-)

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

Howard Hamburg,
COO,VP                  D1996  $ 78,182      (0-)      (0-)      (0-)      (0-)      (0-)      (0-)
                        M1996  $114,392      (0-)      (0-)      (0-)      (0-)      (0-)      (0-)
                        M1995  $ 84,359      (0-)      (0-)      (0-)    30,000      (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 1996

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


AGGREGATED OPTION EXERCISES DURING FISCAL 1996 AND FISCAL YEAR-END OPTION VALUES

The following table provides information related to the number and value of
options held by the Named Executive Officers as of December 31, 1996.  The
Company does not have any outstanding stock appreciation rights.

                                          21
<PAGE>

                                               Value of Number of  Unexercised
                                                    Unexercised   In-the-Money
                                                Option/SARs at     Option/SARs
                                        Value       FY-end(#)    at FY-End($)(1)
                      Shares Acquired  Realized    Exercisable/   Exercisable/
Name                     on Exercise(#)   ($)    Unexercisable    Unexercisable
--------------------------------------------------------------------------------
Charles S. Leavell         (0-)          $-0-        0/0            $0/$0
Miles Silverman            (0-)          $-0-        0/0            $0/$0
Howard Hamburg             (0-)          $-0-  84,266/30,000   $296,502/$67,500

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

EMPLOYMENT AGREEMENTS

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

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

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

BARBARA HOPE.  On February 5, 1996, the Company entered into an Employment
Agreement with Ms. Hope as an officer of Creative Faires, Ltd.  in connection
with the acquisition of Creative Faires, Ltd.  The Agreement has a term of two
years, subject to termination only for cause, and provides for a base salary of
$100,000, with bonuses and salary increases payable at the discretion of the
Company.  Ms. Hope and Mr. Gaiti are in charge of the Company's faire
merchandise program.

DONALD C. GAITI.  On February 5, 1996, the Company entered into an Employment
Agreement with Mr. Gaiti as an officer of Creative Faires, Ltd.  in connection
with the acquisition of Creative Faires, Ltd.  The Agreement has a term of two
years, subject to termination only for cause, and provides for a base salary of
$100,000, with bonuses and salary increases payable at the discretion of the
Company.  Ms. Hope and Mr. Gaiti are in charge of the Company's faire
merchandise program.

DIRECTOR COMPENSATION

During the fiscal period ended December 31, 1996, outside Directors, other than
Mr. Geller and Mr. Leavell, received no cash compensation for their services as
such, however they were reimbursed for their expenses associated with attendance
at meetings or otherwise incurred in connection with the discharge of their
duties as Directors of the Company.  Directors who are also executive officers
of the Company receive no additional compensation for their services as
Directors.
                                          22
<PAGE>

GELLER AGREEMENT

Effective April 1, 1994, the Company appointed Robert M. Geller to serve as a
director of the Company and entered into an Agreement with him pursuant to which
the Company agreed to include his name on the slate of nominees to be elected to
serve as directors of the Company, and Mr. Geller consented to the inclusion of
his name as a nominee through the 1996 annual meeting of shareholders.  Pursuant
to the terms of the agreement, Mr. Geller was granted non-qualified options
exercisable to acquire up to 83,333 shares of the Company's Common Stock at an
exercise price of $2.25 per share.  Further, the Company has agreed to pay him
$300 for each Board of Directors meeting he attends and to reimburse him for
out-of-pocket expenses incurred in connection with attending those meetings. 
The Company has also agreed to reimburse Mr. Geller for his out-of-pocket
expenses incurred in connection with his services rendered as a consultant to
the Company for which he also receives $75 an hour.  Under this agreement, Mr.
Geller received $30,137 in the 1996 fiscal year and $9,421 in the nine-month
period ended December 31, 1996.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

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


       ITEM 12:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                                           
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock, as of March 26, 1997, by:(i)
each of the directors of the Company, (ii) all officers and directors of the
Company as a group, and (iii) holders of 5% or more of the Company's Common
Stock.  Each person has sole voting and investment power with respect to the
shares shown, except as noted.
                                          23
<PAGE>


Name and Address                                            Percent of
Of Beneficial Owner                Number of Shares         Class (1)
-----------------------------------------------------------------------
Charles S. Leavell
1881 Ninth Street, Suite 319
Boulder, Colorado 80302                 1,399,374 (2)            12.9%

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

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

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

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

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


* Less than one percent

(1)  Shares not outstanding but deemed beneficially owned by virtue of the
     individual's right to acquire them as of March 24, 1997, or within 60 days
     of such date, are treated as outstanding when determining the percent of
     the class owned by such individual and when determining the percent owned
     by the group.

(2)  Includes 1,020,000 shares of Common Stock held of record by Leavell
     Management Group, Inc., a controlled corporation of Mr. Leavell who would
     be deemed to exercise the voting and investment power with respect to the
     securities held by LMG.  133,334 shares of Common Stock held of record by
     LMG are subject to an option granted in favor of Mr. Leavell, exercisable
     at a price of $.937 per share.  Mr. Leavell disclaims beneficial ownership
     of the securities held by LMG for purposes of Section 16 under the Exchange
     Act.

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

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

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

                                          24
<PAGE>

               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 are secured by
mortgages on the Company's Wisconsin and Virginia faire sites and are
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
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.

CBSI CONSULTATION AGREEMENT

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

CREATIVE FAIRES, LTD. AGREEMENT

On February 5, 1996, the Company, its newly-created and wholly-owned 
subsidiary Cfaires Acquisition Corp., Creative Faires, Ltd., and Barbara Hope 
and Donald C. Gaiti, the sole shareholders of Creative Faires, Ltd., entered 
into an Agreement and Plan of Merger pursuant to which Cfaires Acquisition 
Corp.  was merged with and into Creative Faires, Ltd.  In connection with the 
merger, Ms. Hope and Mr. Gaiti who are married to each other, received an 
aggregate of 540,000 shares of the Company's Common Stock, and the Company 
became the sole shareholder of Creative Faires, Ltd.  The Company also agreed 
to employ Mr. Gaiti and Ms. Hope as officers of Creative Faires, Ltd.  for 
two-year periods.  The market value for the 540,000 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.

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

     Exhibit No     Title
     ----------     -----
         3.0(i)     Amended and Restated Articles of Incorporation, incorporated
                    by reference from the Amendment No.  1 to Registrant's
                    Registration Statement on Form 8-A filed with the Commission
                    on April 12, 1994.

        3.0(ii)     By-Laws, incorporated by reference from the Amendment No. 1
                    to Registrant's Registration Statement on Form 8-A filed
                    with the Commission on April 12, 1994.

                                          25
<PAGE>

*     3.1           Articles of Amendment to the Articles of Incorporation.

      4.1           Specimen Certificate of Common Stock, incorporated by
                    reference from the Amendment No.  1 to Registrant's
                    Registration Statement on Form 8-A filed with the Commission
                    on April 12, 1994.

*     4.2           Specimen Class A Warrant Certificate.

*     4.3           Specimen Class B Warrant Certificate.

*     4.4           Warrant Agreement.

*     4.5           Certificate of Designations, Preferences, and Rights of
                    Series A Convertible Preferred Voting Stock of Renaissance
                    Entertainment Corporation.

*     4.6           Renaissance Entertainment Corporation 1993 Stock Incentive
                    Plan.  (1)

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

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

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

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

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

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

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

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

*    10.8           Specimen Bristol Renaissance Faire Concession Agreement.

*    10.9           Specimen Bristol Renaissance Faire Games Concession
                    Agreement.

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

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

     10.12          Lease Agreement between Creative Faires, Ltd.  and Sterling
                    Forest Corporation dated June 12, 1996 incorporated by
                    reference from the Registrant's Annual Report on Form 10-KSB
                    for the year ended March 31, 1996.

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

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

                                          26
<PAGE>

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

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

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

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

     10.19          Mortgage with Union Bank & Trust in the amount of $1,500,000
                    with respect to the Virginia property, incorporated by
                    reference from the Registrant's Annual Report on Form 10-KSB
                    for the year ended March 31, 1996.

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

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

**   23.1           Independent Auditor's Consent

**   27.0           Financial data schedule.

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

**   Filed with Form 10-K for the transition period ended December 31, 1996,
     filed on April 15, 1997.

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

REPORTS ON FORM 8-K

The Registrant filed no Current Reports on Form 8-K during the final quarter of
the fiscal period ended December 31, 1996.

                                          27
<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:  October 28, 1997
                                   /S/ James R. McDonald    
                                   --------------------------------------
                                   James R. McDonald, Chief Financial Officer

                                          28
<PAGE>

                       RENAISSANCE ENTERTAINMENT CORPORATION
                            AND CONSOLIDATED SUBSIDIARY

                          CONSOLIDATED FINANCIAL STATEMENTS

                                                                    Page

Report of Independent Certified Public Accountants                  F-2

Audited Financial Statements:
         
        Consolidated Balance Sheets                                 F-3

        Consolidated Statements of Operations                       F-5

        Consolidated Statement of Changes in Stockholders' Equity   F-6

        Consolidated Statement of Cash Flows                        F-8

        Notes to Consolidated Financial Statements                  F-9


                                       F-1

<PAGE>


                  REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors
Renaissance Entertainment Corporation
 and Consolidated Subsidiary

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

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Renaissance Entertainment
Corporation and Consolidated Subsidiary as of March 31, 1996 and December 31,
1996 and the combined results of operations, changes in stockholders' equity and
cash flows for the nine period ended December 31, 1996 and the years ended March
31, 1995 and 1996 in conformity with generally accepted accounting principles.





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

March 31, 1997

                                         F-2
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                              CONSOLIDATED BALANCE SHEET

                                        ASSETS

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

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

                                         F-3
<PAGE>

                         LIABILITIES AND STOCKHOLDERS' EQUITY


                                                     March 31,    December 31,
Current Liabilities:                                  1996            1996
                                                  -------------    -----------

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

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

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

Stockholders' Equity (Notes 2, 8, 10, 12 and 13):
    Preferred stock, $1.00 par value, 1,000,000
      shares authorized, none issued and
      outstanding                                            -               -

    Common stock, $.03 par value, 50,000,000
      shares authorized, 8,721,706 and
      9,233,772 issued and outstanding
      at March 31, 1996 and December 31, 1996
      respectively                                     261,652         277,013
    Additional paid-in capital                       6,977,256       8,071,634

 Accumulated (deficit)                              (1,441,470)     (3,293,195)
                                                  -------------    -----------
  Total Stockholders' Equity                         5,797,438       5,055,452
                                                  -------------    -----------

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

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

                                         F-4
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                           Year Ended                       Nine Month Period Ended
                                              ----------------------------------   -------------------------------------
REVENUE:                                     March 31, 1995      March 31, 1996   December 31, 1995   December 31, 1996
                                             --------------      --------------   -----------------   -----------------
                                                                                         (Unaudited)
<S>                                           <C>                 <C>              <C>                 <C>
  Sales                                         $12,539,653         $12,810,617         $10,469,824         $14,553,577
  Faire operating costs                           3,212,491           3,826,868           3,205,152           4,812,616
                                                -----------         -----------         -----------         -----------
  Gross Profit                                    9,327,162           8,983,749           7,264,672           9,740,961
                                                -----------         -----------         -----------         -----------

OPERATING EXPENSES:
  Salaries and wages                              3,474,799           4,082,271           3,030,205           4,048,603
  Depreciation and amortization                     351,215             500,203             337,708             633,819
  Advertising                                     1,211,798           1,546,701           1,036,508           2,511,973
  Other operating expenses                        3,532,508           4,329,713           2,749,254           4,300,062
                                                -----------         -----------         -----------         -----------
  Total Operating Expenses                        8,570,320          10,458,888           7,153,674          11,494,457
                                                -----------         -----------         -----------         -----------

Net Operating Income (Loss)                         756,842          (1,475,139)            110,999          (1,753,496)
                                                -----------         -----------         -----------         -----------

Other Income (Expenses):
  Interest income                                    48,312             109,652              94,090              68,571
  Interest (expense)                                (53,223)           (138,036)           (100,266)           (253,740)
  Other income (expense)                            (28,327)            (36,049)            204,612             (98,229)
                                                -----------         -----------         -----------         -----------
  Total Other Income (expenses)                     (33,418)              7,665             198,436             (98,229)
                                                -----------         -----------         -----------         -----------

Net Income (Loss) before (Provision)
Credit for Income Taxes                             723,424          (1,467,474)            309,434          (1,851,725)

(Provision) Credit for Income Taxes                (147,000)            193,803              45,470
                                                -----------         -----------         -----------         -----------

Net Income (Loss)                                   576,424          (1,273,671)            263,964          (1,851,725)
                                                -----------         -----------         -----------         -----------

Dividends on Preferred Stock                        (43,115)          
                                                -----------         -----------         -----------         -----------

Net Income (Loss) to Common
Stockholders                                    $   533,309         $(1,273,671)        $   263,964         $(1,851,725)
                                                -----------         -----------         -----------         -----------
                                                -----------         -----------         -----------         -----------

Net Income (Loss) per Common Share              $       .11         $      (.16)        $       .03         $      (.21)
                                                -----------         -----------         -----------         -----------
                                                -----------         -----------         -----------         -----------

Weighted Average Number of Shares
Outstanding                                       4,801,044           7,824,182           7,643,702           8,907,049
                                                -----------         -----------         -----------         -----------
                                                -----------         -----------         -----------         -----------
</TABLE>

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

                                         F-5
<PAGE>

<TABLE>
<CAPTION>

                                           RENAISSANCE ENTERTAINMENT CORPORATION AND CONSOLIDATED SUBSIDIARY

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

                                                          Common Stock       
                                                  ------------------------- Additional Paid-in  Accumulated
                                                     Shares         Amount       Capital         (Deficit)         Total
                                                 ----------      ---------     ----------       -----------     ----------
<S>                                               <C>             <C>           <C>             <C>             <C>
Balance, March 31, 1994                           3,204,356      $  96,130     $  966,585       $  (701,108)    $  361,607
                                                                                               
Common stock issued, acquisition of assets        1,136,666         34,100        498,711                --        532,811
                                                                                               
Common stock issued, private placements             800,000         24,000        216,000                --        240,000
                                                                                               
Common stock issued, services                       133,384          4,002        120,998                --        125,000
                                                                                               
Common stock issued, public offering, net of                                                   
offering costs of $646,056                        2,070,000         62,100      2,914,344                --      2,976,444
                                                                                               
Common stock issued in exchange for preferred                                                  
stock issued                                        583,334         17,500        794,695                --        812,195
                                                                                               
Preferred dividends                                      --             --             --           (43,115)       (43,115)
                                                                                               
Net income for the year ended March 31, 1995             --             --             --           576,424        576,424
                                                 ----------      ---------     ----------       -----------     ----------
                                                                                               
Balance March 31, 1995                            7,927,740        237,832      5,511,333          (167,799)     5,581,366
                                                                                               
Treasury stock acquired in cashless transaction 
and retired                                         (20,626)          (618)       (81,886)               --        (82,504)

Cashless exercise of stock option                    66,666          2,000         80,504                --         82,504

Common stock issued for cash                        678,200         20,346      1,334,402                --      1,354,748
                                                                                               
Exercise of stock options                            69,726          2,092        132,903                --        134,995
                                                                                               
Net Loss for the year ended March 31, 1996               --             --             --        (1,273,671)    (1,273,671)
                                                 ----------      ---------     ----------       -----------     ----------
                                                                                               
Balance March 31, 1996                            8,721,706        261,652      6,977,256        (1,441,470)     5,797,438
                                                                                               
Exercise of Class A warrants at $2.00 per share     125,328          3,760        246,896                --        250,656
                                                                                               
Exercise of Class B warrants at $2.63 per share      34,000          1,020         88,230                --         89,250
                                                                                               
Exercise of stock options                           324,998          9,749        610,224                --        619,973
                                                                                               
                                          F-6                                                  

<PAGE>                                                                                         
                                                                                               
<CAPTION>                                                                                      
                                                                                               
<S>                                               <C>             <C>           <C>              <C>             <C>
Issuance of stock for services                       27,740            832        151,118                --        151,950
                                                                                               
Fees incurred in connection with exercising                                                    
warrants                                                 --             --         (2,090)               --         (2,090)
                                                                                               
Net loss for the nine month period ended                                                       
December 31, 1996                                        --             --             --        (1,851,725)    (1,851,725)
                                                 ----------      ---------     ----------       -----------     ----------
                                                                                               
Balance December 31, 1996                        $9,233,772      $ 277,013     $8,071,634       $(3,293,195)    $5,055,452
                                                 ----------      ---------     ----------       -----------     ----------
                                                 ----------      ---------     ----------       -----------     ----------
</TABLE>

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

                                         F-7
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                              AND CONSOLIDATED SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>

                                                            Year Ended                          Nine Months Ended
                                              ----------------------------------   -------------------------------------
                                             March 31, 1995      March 31, 1996   December 31, 1995   December 31, 1996
                                             --------------      --------------   -----------------   -----------------
                                                                                      (Unaudited)
<S>                                           <C>                 <C>              <C>                 <C>
Cash Flows from Operating Activities:            $  576,424         $(1,273,671)         $  263,964         $(1,851,725)
  Net Income (loss)                                      --                  --                  --                  --
  Adjustments to reconcile net income
  to net cash provided by operating
  activities:
    Depreciation and amortization                   351,214             500,200             337,708             633,819
    Impairment of goodwill                               --                  --                  --             380,000
    Stock issued for services                       125,000                  --                  --             151,950
    (Increase) decrease in:
       Income tax refund receivable                      --            (323,380)                 --             323,380
       Accounts receivable                          (50,124)            (19,310)           (178,844)           (163,866)
       Prepaid expenses                            (570,332)           (396,276)            291,995             840,602
       Inventory                                    (82,900)            (33,321)            (13,134)            (68,474)
       Other assets                                 (49,657)            (38,811)                 --             (86,292)
    Increase (decrease) in:
       Income taxes payable                          48,175             (48,175)            (25,738)                 --
       Accounts payable and accrued
       expenses                                     274,940             742,368            (117,449)           (113,062)
       Unearned revenue and other                   322,083              42,681            (313,197)           (294,030)
                                                 ----------          ----------          ----------          ----------
Net Cash Provided by Operating
 Activities                                         946,823            (847,695)            245,305            (247,698)
                                                 ----------          ----------          ----------          ----------
Cash Flows from Investing Activities:
  Investment in restricted cash                          --            (848,296)           (846,449)            (41,820)
  Repayment of advances                             351,150                  --                  --                  --
  Acquisition and construction of
  property and equipment, goodwill
  and covenant note to compete                     (896,551)         (4,920,023)         (3,490,356)         (1,507,008)
Net Cash (Used in) Investing Activities            (545,401)         (5,768,319)         (4,336,775)         (1,548,828)
Cash Flows from Financing Activities:
  Common stock issued and additional
  paid-in capital                                 3,278,450           1,489,743           1,100,908             957,789
  Preferred dividends paid                          (43,115)                 --                  --                  --
  Advances from officers                             60,500                  --                  --                  --
  Proceeds from notes payable                            --           3,053,989           1,068,729           1,000,000
  Principal payments on notes payable              (438,793)           (595,400)           (593,340)           (418,037)
  Other                                                  --                  --             (36,458)                 --
                                                 ----------          ----------          ----------          ----------
Net Cash Provided by (Used in)
 Financing Activities                             2,857,042           3,948,332           1,539,839           1,539,752
                                                 ----------          ----------          ----------          ----------
Net Increase (Decrease) in Cash                   3,258,464          (2,667,682)         (2,551,631)           (256,774)
Cash beginning of period                             40,281           3,298,745           3,296,652             631,063
                                                 ----------          ----------          ----------          ----------
Cash, end of period                              $3,298,745          $  631,063          $  745,021          $  374,289
                                                 ----------          ----------          ----------          ----------
                                                 ----------          ----------          ----------          ----------
Interest paid                                    $   54,506          $  112,248          $  100,267          $  268,605
                                                 ----------          ----------          ----------          ----------
                                                 ----------          ----------          ----------          ----------
Income tax paid                                  $   98,825          $  237,752          $  129,577          $       --
                                                 ----------          ----------          ----------          ----------
                                                 ----------          ----------          ----------          ----------
Cashless exercise of stock option                $       --          $   82,504          $   82,504          $       --
                                                 ----------          ----------          ----------          ----------
                                                 ----------          ----------          ----------          ----------
</TABLE>


                                         F-8
<PAGE>

Note: The Company issued common and preferred stock for assets totaling
$1,408,000 during the year ended March 31, 1995.  During the year ended March
31, 1996 the Company issued 540,000 shares of its common stock to consummate the
business combination with CFL, which was accounted for as a pooling of
interests, effective for the fiscal year ended March 31, 1995.  The accompanying
notes are an integral part of the financial statements.

                                         F-9

<PAGE>


                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

    (a)  GENERAL

    REC was incorporated under the laws of the State of Colorado on June 24,
    1988.  On April 6, 1993, REC acquired one hundred percent of the common
    stock of Ellora Corporation, a Wisconsin corporation which owned and
    operated the Bristol Renaissance Faire located in Kenosha, Wisconsin.  In
    the acquisition, REC issued a total of 1,784,800 shares of common stock to
    the shareholders of Ellora Corporation, representing ninety-one percent of
    the total issued and outstanding shares of REC following the exchange.  The
    acquisition was accounted for as a reverse acquisition since the
    controlling shareholders of Ellora became the controlling shareholders of
    REC.  During the year ended March 31, 1994 REC formed a wholly-owned
    subsidiary called Heroes and Villains, Ltd.  This entity was formed to
    provide entertainment services and had limited activity during the year.
    During February, 1994 REC formed Renaissance Pleasure Faires, Inc. (RPFI)
    for the purpose of acquiring the assets and the business of two Renaissance
    Faires in California.  In connection with this acquisition and the
    formation of RPFI, the Company issued 1,136,666 shares of its common stock
    and 875,000 shares of Series A Convertible Preferred Voting Stock and
    assumed certain liabilities and guaranteed certain lease obligations of the
    seller.  The preferred shares were later exchanged for common stock.  Of
    the common shares issued, 524,000 common shares were issued to the seller
    and 612,666 common shares were issued to shareholders of Western
    Renaissance Fair Presentation, Inc. (Western) a newly formed California
    corporation, formed for the purpose of providing management services to
    operators of renaissance festivals.

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


                                         F-10
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

    (a)  GENERAL

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

    Effective December 31, 1995 REC acquired 100% ownership of Creative Faires,
    Ltd. (CFL) in exchange for the issuance of 540,000 restricted common shares
    of REC stock.  REC entered into employment agreements with the two former
    owners of CFL and one of the two former owners became a director of REC.
    The business combination with CFL was accounted for as a pooling of
    interests. The Company changed its year end to December 31, effective
    December 31, 1996.  The March 31, 1996 consolidated balance sheet includes
    the accounts of


                                         F-11
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

    (a)  GENERAL

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

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

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

    (b)  PER SHARE INFORMATION

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

    (c)  PROPERTY AND EQUIPMENT

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

                                             USEFUL LIVES (YEARS)

                   Computers                          5
                   Vehicles                           5
                   Trailers                           7
                   Office Furniture                   7
                   Costumes                           7
                   Faire Equipment                    7
                   Buildings - Temporary             15
                   Buildings - Permanent             30


                                         F-12
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

    (d)  REVENUE AND EXPENSE RECOGNITION AND COST OF SALES

    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.  Also, included
    in prepaid expenses at March 31, 1996 is $141,179 of advances from REC to
    CFL.  CFL has a December 31 year end and REC had a March 31 year end, which
    was changed to December 31, effective December 31, 1996.  These advances
    relate principally to cost related to setting up the New York Faire but
    also include operating expenses which apply to the short period after the
    CFL year end.  See a description above of the business combination with CFL
    accounts for a pooling of interest.

    (e)  STOCK SPLIT

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


                                         F-13
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

    (f)  CONCENTRATIONS OF CREDIT RISKS

    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 March
    31, 1996 and December 31, 1996 respectively, the Company had approximately
    $1,370,000 and $1,065,000 of its cash and cash equivalents in financial
    institutions in excess of amounts insured by agencies of the U.S.
    Government.  Most of the trade receivables are from customers in one
    geographic location, principally California.  The Company does not require
    collateral for its trade accounts receivables.


    (g)  CASH EQUIVALENTS

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

    (h)  INVENTORY

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

    (i)  ALLOWANCE FOR BAD DEBTS

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

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

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


                                         F-14
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

    (k)  GEOGRAPHIC AREA OF OPERATIONS AND INTEREST RATES

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

    (l)  CONSTRUCTION IN PROGRESS

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

    (m)  IMPAIRMENT OF LONG-LIVED ASSETS

    The Company regularly evaluates the recoverability of assets for its faires
    and reviews its assets to assure that the amount therefor carried on the
    Company's financial statements is commensurate with the future economic
    benefit to be recovered over time from use of such 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, based on
    declining attendance for these faires in 1996 and prior periods, 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.  At December 31, 1996, the remaining goodwill
    associated with this acquisition was $620,826.

(2) COMMON AND PREFERRED STOCK

    The Articles of Incorporation of the Company authorize issuance of a
    maximum of 50,000,000 shares of $.03 par value common stock and 1,000,000
    shares of $1.00 par value preferred stock.  See note 1 for a description of
    the preferred stock issued and then subsequently converted to common stock.

    During January, 1995 the Company sold in a public offering 1,035,000 units
    of its securities at $3.50 per unit.  Each unit consisted of one share of
    common stock and one Class A warrant and one Class B warrant.  Each Class A
    warrant entitles the warrant holder thereof to purchase one share of common
    stock at a price of $4.00 per share through January 27, 2000.  Each Class B
    warrant entitles the holder thereof to



                                         F-15
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

(2) COMMON AND PREFERRED STOCK, CONTINUED

    purchase one share of common stock at a price of $5.25 per share through
    January 27, 2000.  These warrants were immediately exercisable.  The
    warrants are redeemable by the Company after 24 months from January 27,
    1995, the date of the prospectus, or sooner with the consent of the
    Underwriter, at a price of $.01 per warrant upon 30 days' notice mailed
    within ten days after the closing bid price of the Company's common stock
    has equaled or exceeded 150% of the then current respective warrant
    exercise price for a period of 20 consecutive trading days.  The holders of
    the warrants called for redemption are granted exercise rights until the
    close of business on the date preceding the date fixed for redemption.

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

(3) NOTES PAYABLE

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

                                                  March 31,     December 31,
                                                    1996             1996
                                                ------------    ------------
    Note payable to bank at 8.65%,
    interest quarterly until June, 1996
    then monthly principal and interest
    payment of $5,082 through May, 2011
    collateralized by land, improvements
    and jumbo CD's.  See Note 11.               $ 1,500,000     $1,475,950

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


                                         F-16
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

(3) NOTES PAYABLE, CONTINUED

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

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

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

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

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

    In March 1997, the Company entered into a loan workout agreement with Bank
    One Colorado and Bank One Kenosha (Bank One Wisconsin).  The agreement
    provides that


                                         F-17
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY


                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

(3) NOTES PAYABLE, CONTINUED

    the Company make principal payments of $50,000 each to Bank One Colorado
    and Bank One Wisconsin.  Upon execution of this agreement, the Company
    executed a real estate mortgage in favor of Bank One Colorado subordinated
    to the Bank One Wisconsin's mortgage.  Bank One Colorado agreed to
    subordinate its mortgage to a potential new loan from a third party lender
    to the Company in the amount of from $750,000 to $1.5 million, so long as
    the new loan is funded prior to June 1, 1997 and the Company is not
    otherwise in default under the loans.  As part of this agreement, Bank One
    Colorado changed the terms of its loan agreement to provide the Company
    interest monthly on its loan starting April 30, 1997 with principal
    payments of $150,000 on June 30, 1997, $200,000 on July 31, 1997, $250,000
    on August 31, 1997 and final principal payment of $90,189 on September  30,
    1997.  Additionally Bank One Wisconsin modified the terms of its loan
    agreement to provide for monthly interest payments starting April 30, 1997
    with four monthly principal payments of $50,000 starting June 30, 1997.  If
    the Company complies with all terms of this agreement, Bank One Wisconsin
    agrees to renew its real estate mortgage to provide for quarterly principal
    payments of $50,000 beginning in March 1998 with the remaining balance due
    and payable in December 1998.  The Company agreed, if it obtains
    alternative financing in excess of $2.5 million during calendar year 1997,
    then the Company will immediately pay off all amounts then due and owing
    Bank One Colorado and Bank One Wisconsin, excluding the Bank One Wisconsin
    mortgage.

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

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

(4) LEASES

The Company leases a vehicle under a four year lease which commenced June 8,
1992 with monthly lease payments of $336.  Effective April 1, 1995 the Company
entered into an operating lease at 4440 Arapahoe in Boulder, Colorado for office
facilities.  Initial monthly rental payments are $3,066 with annual increases of
5% per annum. Commencing November 1, 1996,


                                         F-18
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

(4) LEASES, CONTINUED

    the Company leased additional office space at 4410 Arapahoe in Boulder,
    Colorado and subleased its original office space at 4440 Arapahoe.  This
    lease provides initial monthly lease payments of $5,969 increasing to
    $7,255 for the five year term of the lease.  In addition the Company will
    be allocated certain operating expenses.  The Company also leases various
    other properties in New York with terms expiring through the year 2001.
    Annual lease payments on the New York Faire site range from approximately
    $270,000 to $312,000 over the next five years.

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


        Year Ending
        December 31,
               1997                            436,177
               1998                            456,623
               1999                            476,237
               2000                            468,370
               2001                             79,807
                                            ----------
              Total                         $1,917,214
                                            ----------
                                            ----------
    Effective January 1, 1997, the Company entered into a three year sublease
    agreement to sublease its old office space at 4440 Arapahoe.  The sublessee
    assumes every obligation of the Company under its lease.  The Company
    remains liable under its lease.

    Future minimum sublease rentals are as follows:

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


                                         F-19
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

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

(5) GOODWILL AND COVENANT NOT TO COMPETE

    The cost of the acquisition of the California Faire assets and business as
    described in Notes 1 and 10 in excess of the fair value of assets acquired
    has been recorded as goodwill in the accompanying financial statements.
    Goodwill is being amortized on a straight-line basis over fifteen years.
    Management reviews the carrying value of goodwill on a periodic basis, at
    least annually, to determine if there is any impairment in value.  If
    management determines that the carrying value is not recoverable over the
    remaining amortization term, the excess balance, if any, will be expensed.
    During the period ended December 31, 1996, the Company determined that the
    goodwill was impaired and wrote off $380,000 as a charge to other operating
    expenses.  As of March 31, 1996 and December 31, 1996 the Company's net
    carrying value for goodwill was $1,046,285 and $620,826 after amortization
    and write down of $160,960 and $586,419 respectively.

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

(6) INCOME TAXES

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



                                         F-20
<PAGE>

                           RECONCILIATION OF STATUTORY TAX
                        TO ACTUAL INCOME TAX EXPENSE (BENEFIT)

The following is a reconciliation of the statutory tax rates to actual income
tax expense:

For the year ended March 31, 1995:

    Expected tax at statutory rates                               $311,072

    Benefit of Net Operating Loss                                  (93,124)
    Benefit of graduated tax rates                                 (28,937)
    Benefit of Federal deduction for state income taxes            (13,745)
    All other differences                                          (28,266)

    Provision for Income Taxes                                    $147,000
                                                                  --------
                                                                  --------

For the year ended March 31, 1996:

    Expected tax at statutory rates                               $    -0-

    Benefit of carryback of Net Operating Loss                    (193,803)
                                                                  --------

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


                                         F-21
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

(7) PROPERTY AND EQUIPMENT
                                            December 31, 1996   March 31, 1996
                                            -----------------   --------------
    Land                                        $3,415,798         $2,888,350
    Buildings and Improvements                   3,018,450          1,171,794
    Office Furniture and Equipment                 490,975            366,171
    Costumes, Props and Other Assets             2,180,297          2,101,962
                                                ----------         ----------
    Sub-total                                    9,105,520          6,528,277
    Less Accumulated Depreciation               (1,928,765)        (1,372,060)
                                                ----------         ----------
    Total                                       $7,176,755         $5,156,217
                                                ----------         ----------
                                                ----------         ----------

(8) WARRANTS ISSUED FOR SERVICES AND STOCK OPTIONS

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

    Pursuant to the Company's stock option plans, the Company has granted
    options to acquire 1,186,318 shares of the Company's common stock.  Of this
    amount 136,392 options have been exercised and 11,998 have expired during
    the year ended March 31, 1996.  The options are exercisable at prices
    ranging from $1.13 per share to $3.50 per share.  During the period ended
    December 31, 1996, 105,000 options were granted with a weighted average
    price of $5.74, 324,998 options were exercised at a weighted average price
    of $1.87 and 150,000 options terminated with a weighted average price of
    $4.09.  The remaining number of options outstanding at December 31, 1996
    totaled 571,762 with a weighted average price of $2.60 which are
    exercisable at various dates through 2001.

(9) BUSINESS COMBINATION, NEW YORK FAIRE

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


                                         F-22
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

(9)  BUSINESS COMBINATION, NEW YORK FAIRE, CONTINUED

     REC and consolidated subsidiaries previously reported revenue of
     $10,459,476 and net income of $624,609 during the year ended  March 31,
     1996.  The revenues  and net  loss of CFL included in the combined
     statement of operations for the year ended March 31, 1995 amounted to
     $2,081,177 and $(48,185), respectively.  Revenues of $2,308,378 and a net
     loss of $(37,756) of CFL, incurred prior to the business combination have
     been included in the combined statement of operations for the year ended
     March 31, 1996.

(10) BUSINESS COMBINATION, CALIFORNIA FAIRES

     Effective April 1, 1994 the Company acquired the assets and certain
     liabilities of The Living History Centre, (LHC) a California,
     not-for-profit corporation.  The Company issued 1,136,666 shares of its
     common stock and 875,000 shares of its preferred stock as consideration for
     the net assets acquired.  The preferred stock was converted into common
     stock during January, 1995.  In addition to acquiring certain assets and
     liabilities of LHC, the Company has acquired the rights to operate two
     California Renaissance Faires.
   
     See Note 1 financial statements for additional information related to the
     business combination.  The transaction was accounted for as a purchase by
     REC.  The results of operations of the LHC Faire operations are included in
     the income statement of REC commencing April 1, 1994.  The cost of this
     acquisition was approximately $2,534,000, including assumption of
     liabilities and issuance of the common and convertible preferred stock.
   
     The following table shows the allocation of the purchase price assets:
   
     Cash                                       $    63,000
     Prepaid faire costs                            318,000
     Inventory                                       56,000
     Accounts receivable                             87,000
     Property and equipment                         664,000
     Covenant not to compete                        100,000
     Goodwill                                     1,207,000
     Other assets                                    39,000
                                                -----------
                                                $ 2,534,000
                                                -----------
                                                -----------


                                         F-23
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

(10) BUSINESS COMBINATION, CALIFORNIA FAIRES, CONTINUED

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


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

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

    a.   In the fall of 1993, the Company sold 253,334 shares at a cash price
         of $.75 per share.  Following this private offering of a small number
         of shares, the Company incurred substantial operating losses and
         accumulated deficits.

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

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


                                         F-24
<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

(10) BUSINESS COMBINATION, CALIFORNIA FAIRES, CONTINUED

     d.   The public market of the Company's common stock was highly illiquid,
          with only 300,000 shares in the public float eligible for trading.
          Management believes that the price of $1.875 per share of the
          publicly-traded shares was not indicative of the fair market value 
          of substantially larger blocks of restricted shares.
     
     e.   The Company issued 77,688 shares and warrants to purchase an
          additional 133,334 shares at an exercise price of $.9375, to an entity
          affiliated with a director of the Company.  The shares and the
          exercise price of the warrants were valued at 100% of the public
          trading price due to (I) the transaction having been between the
          Company and a related party, and (ii) the fact that the shares were
          registered on a Form S-8 which rendered them free-trading.
     
     f.   The Company has granted to executive officers and key employees
          incentive stock options at an exercise price of $1.875 per share.  In
          order to qualify as incentive stock options under Section 422 of the
          Internal Revenue Code, the options must be priced at 100% of the
          public trading market of the Company's common stock.
     
     Management believes that recording the shares issued for the LHC
     acquisition at 50% of the publicly traded value is reasonable, appropriate
     and normal for this large of a block of restricted securities. Goodwill is
     being amortized on a straight-line basis over a fifteen year period and the
     covenant not to compete is being amortized on a straight-line basis over a
     five year period.  The Company believes that a 15 year estimated life over
     which goodwill is being amortized is reasonable due to the fact the
     California Faires have been in existence approximately 30 years and the
     fact that the average life of other currently successful Renaissance Faires
     in the United States is over 15 years and there is no reason to believe
     that those Faires will not be in existence for another 15 years.
    
     It is the Company's policy that management on a periodic basis, at least
     quarterly, will evaluate the Carrying value of goodwill and other
     intangibles to determine if there is an impairment of value or the
     remaining estimated life is less than the remaining unamortized period.  If
     the evaluation indicates write-downs or adjustments to the amortization are
     necessary, such write-downs or adjustments will be made immediately.
 
(11) RESTRICTED CASH
 
     Certificates of Deposit in the amount of $890,116 at December 31, 1996 are
     collateral to an 8.65% and a 9.5% loan maturing in 2011 and 2001,
     respectively, and Certificates of
 
 
 
                                          F-25
 <PAGE>
 
                         RENAISSANCE ENTERTAINMENT CORPORATION
                              AND CONSOLIDATED SUBSIDIARY
 
                             NOTES TO FINANCIAL STATEMENTS
                                   December 31, 1996
 
(11) RESTRICTED CASH, CONTINUED
 
     Deposit totaling $275,000 may be released annually beginning March 1, 1997
     and each year thereafter provided that projected net operating income goals
     are realized in each of the three operating seasons commencing in 1996.  If
     the Certificates of Deposit have not been released for any of the previous
     years but the projected income goal for the current year is reached, the
     Certificates of Deposit for the previous year and the current year shall be
     released.  If projected goals are not reached by year three, then the
     certificates shall be released in any subsequent year that the third year
     goal amount is reached.
 
(12) COMMITMENTS AND SUBSEQUENT EVENTS
 
     Effective December 16, 1994 the Company entered into an agreement with a
     consulting firm to provide to the Company certain promotional services for
     the Company's fairs.  The Company has agreed to pay commissions to the
     consulting firm of 17.65% of the actual net billings by advertisers for
     media placed pursuant to plans approved by the Company.  The Company has
     also agreed to pay $7,500 per month for the five year term of the
     agreement.  The Company has also granted an option to the consulting firm
     to allow the firm to acquire a minimum of 66,000 and a maximum of 132,000
     shares of the Company's common stock at $1.625 per share with the increase
     depending on the results of the services performed by the consulting firm.
 
     Effective October 1, 1994 the Company entered into a consulting agreement
     with a company owned by a director of Renaissance Entertainment
     Corporation.  The Company has agreed to pay the consulting company $4,500
     per month for twenty hours per month for services.  Additional hours will
     be compensated at $200 per hour.  The term of the agreement continues until
     December 31, 1996.  Effective April 1, 1995 the Company agreed to pay
     $4,000 per month for consulting services to a director of the Company which
     expired effective December 31, 1995.  The Company also has a consulting
     agreement with another company that is owned by a director of the Company.
     This agreement is for $75 per hour plus $300 per Board meeting and can be
     terminated at any time.
 
     On August 1, 1996, the Company entered into a one year agreement with a
     consultant.  The agreement provides that the Company pay the consultant a
     fee equal to 5% of any debt or equity infusion to the Company initiated or
     introduced to the Company
 
 
                                          F-26
<PAGE>
 
                         RENAISSANCE ENTERTAINMENT CORPORATION
                              AND CONSOLIDATED SUBSIDIARY
 
                             NOTES TO FINANCIAL STATEMENTS
                                   December 31, 1996
 
(12) COMMITMENTS AND SUBSEQUENT EVENTS, CONTINUED
 
     by the consultant.  Additionally, the Company will pay the consultant a fee
     equal to 5% of the total value of the merger or acquisition, including the
     value of stock, cash and other assets of the merged entities.
 
     Subsequent to December 31, 1996 the Company issued 54,738 shares of its
     common stock as payment of the Company's liabilities.
 
     During the year ended March 31, 1995 the Company adopted a non-qualified
     deferred compensation plan for ten employees of the Company.  Monthly
     contributions to the plan total approximately $3,500.  Beginning April 1,
     1996 monthly contributions are approximately $1,152.
 
(13) STOCK SUBSCRIPTIONS RECEIVABLE
 
     At December 31, 1996 the Company had stock subscriptions receivable in the
     amount of $133,749 which was collected in full in January, 1997.
 
(14) SUBSEQUENT EVENTS
 
     The Company incurred substantial losses from operations during 1995 and
     1996 and incurred significant cost overruns in the construction of its
     Virginia faire.  As described in note 3, the Company has entered into loan
     workout agreements with two banks which will require total bank principal
     loan payments of $1,100,000 during 1997.
 
     Subsequent to December 31, 1996, the Company raised $750,000 from an
     officer of the Company and a related party through the issuance of
     convertible debt and has commitments from investors for $600,000 of
     convertible debt and additional equity capital.  In order to reduce the
     Company's working capital requirements, management has implemented a number
     of cost reductions which it estimates will reduce the Company's operating
     expenses by approximately $1,300,000 during the fiscal year ending December
     31, 1997.
 
     Management believes that the additional capital raised, plus the additional
     capital to be received from investors, in conjunction with the reductions
     in operating expenses are sufficient for the Company to be able to meet its
     financial commitments in 1997.
 
 
                                         F-27

<PAGE>

                        RENAISSANCE ENTERTAINMENT CORPORATION
                             AND CONSOLIDATED SUBSIDIARY

                            NOTES TO FINANCIAL STATEMENTS
                                  December 31, 1996

(14) SUBSEQUENT EVENTS, CONTINUED

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

(15) FOURTH QUARTER ADJUSTMENTS

     The Company recognized as expense in the nine-month period ended December
     31, 1996, $450,000 of costs to be incurred in 1997, which costs are the
     result of changing conditions at the Company's Northern California Faire
     which became apparent to the Company in 1996.  This adjustment, which was
     made in the fourth quarter, was material to fourth quarter operation.



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                                         F-28