**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

** **

**FORM 10-QSB**

** **

| **ý****       Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange  Act of 1934.**                                                                                        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                           |   |
|                                                                                                                                                                                                                           | **For the quarterly period ended  March 31, 2003** |
|                                                                                                                                                                                                                           |   |
| **or**                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                           |   |
| **o****      Transition  Report Pursuance to Section 13 or 15(d) of the Securities Exchange act of  1934.**                                                                                           |
|                                                                                                                                                                                                                           |   |
| **For the transition period from                   to                 ** |
|                                                                                                                                                                                                                           |   |
| **Commission File Number 0-23782**                                                                                                                                                                                             |

** **

**RENAISSANCE ENTERTAINMENT CORPORATION**

(Exact name of registrant as specified in its charter)

 

| **Colorado**                                                   |   | **84-1094630**                        |
|----------------------------------------------------------------|--------|---------------------------------------|
| (State or other jurisdiction of  incorporation or organization |   | (I.R.S. Employer  Identification No.) |
|                                                           |   |                                  |
| **275  Century Circle, Suite 102, Louisville, Colorado**       |   | **80027**                             |
| (Address of principal executive offices)                       |   | (Zip Code)                            |
|                                                           |   |                                  |
| **(303)  664-0300**                                            |
| (Registrant’s telephone number, including area code)      |
|                                                           |   |                                  |
|                                                           |   |                                  |
| (Former Address)                                               |

 

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.

 

ýYes        oNo

 

APPLICABLE ONLY TOCORPORATE ISSUERS:

 

As ofMay 13, 2003, Registrant had 2,144,889 shares of common stock, $.03 Par Value,outstanding.

 

 

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INDEX

 
| **Part I.**                                | **Financial Information** |
|--------------------------------------------|---------------------------|
|                                       |                      |
|                                       | Item I.                   | Financial  Statements |
|                                       |                      |   |
|                                       |                      | Balance Sheets as  of March 31, 2003 (Unaudited) and December 31, 2002 |
|                                       |                      |   |
|                                       |                      | Statements  of Operations for the Three Months Ended March 31, 2003 and 2002 (Unaudited) |
|                                       |                      |   |
|                                       |                      | Statements of Cash  Flows for the Three Months Ended March 31, 2003 and 2002 (Unaudited) |
|                                       |                      |   |
|                                       |                      | Notes to Financial  Statements |
|                                       |                      |   |
|                                       | Item 2.                   | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |
|                                       |                      |   |
| **Part II.   Other Information** |
|                                            |                           |  |  |

 

 

This report containsforward-looking statements within the meaning of Section 21E of the SecuritiesExchange Act of 1934, as amended, and Section 27A of the Securities Act of1933, as amended, and is subject to the safe harbors created by those sections.  These forward-looking statements are subjectto significant risks and uncertainties, including those identified in thesection of this Form 10-QSB entitled “Factors That May Affect Future OperatingResults,” which may cause actual results to differ materially from thosediscussed in such forward-looking statements. The forward-looking statements within this Form 10-QSB are identified bywords such as “believes,” “anticipates,” “expects,” “intends,” “may,” “will”and other similar expressions.  However,these words are not the exclusive means of identifying such statements.  In addition, any statements which refer toexpectations, projections or other characterizations of future events orcircumstances are forward-looking statements. The Company undertakes no obligation to publicly release the results ofany revisions to these forward-looking statements which may be made to reflectevents or circumstances occurring subsequent to the filing of this Form 10-QSBwith the Securities and Exchange Commission (“SEC”).  Readers are urged to carefully review and consider the variousdisclosures made by the Company in this report and in the Company’s otherreports filed with the SEC that attempt to advise interested parties of therisks and factors that may affect the Company’s business.

 

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RENAISSANCEENTERTAINMENT CORPORATION

BALANCE SHEETS

 
|                                                                                                                                                                      |   | **March 31,  2003** |      | **December  31,  2002** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|-----------|-------------------------|------------|
|                                                                                                                                                                      |   | **(Unaudited)**     |      |                    | ** ** |
| ASSETS                                                                                                                                                                    |   |                |      |                    |       |
| Current Assets:                                                                                                                                                           |   |                |      |                    |       |
| Cash and equivalents                                                                                                                                                      |   | $                   | 165,726   |                    | $          | 642,061 |   |
| Accounts receivable (net)                                                                                                                                                 |   | 16,164              |      | 23,530                  |       |
| Inventory                                                                                                                                                                 |   | 160,500             |      | 160,500                 |       |
| Note receivable, current portion                                                                                                                                          |   | 86,124              |      | 90,862                  |       |
| Prepaid expenses and other                                                                                                                                                |   | 648,226             |      | 275,520                 |       |
| Total Current Assets                                                                                                                                                      |   | 1,076,740           |      | 1,192,473               |       |
|                                                                                                                                                                      |   |                |      |                    |       |
| Property and equipment, net of accumulated  depreciation                                                                                                                  |   | 2,802,565           |      | 2,874,954               |       |
| Investments                                                                                                                                                               |   | 7,155               |      | 0                       |       |
| Other assets                                                                                                                                                              |   | 381,383             |      | 382,617                 |       |
| TOTAL ASSETS                                                                                                                                                              |   | $                   | 4,267,843 |                    | $          | 4,450,044 |   |
|                                                                                                                                                                      |   |                |      |                    |       |
| LIABILITIES AND  STOCKHOLDERS’ EQUITY                                                                                                                                |   |                |      |                    |       |
|                                                                                                                                                                      |   |                |      |                    |       |
| Current Liabilities:                                                                                                                                                      |   |                |      |                    |       |
| Accounts payable and accrued expenses                                                                                                                                     |   | $                   | 686,204   |                    | $          | 369,466 |   |
| Notes payable, current portion                                                                                                                                            |   | 413,613             |      | 414,738                 |       |
| Lease obligation payable, current portion                                                                                                                                 |   | 20,045              |      | 9,220                   |       |
| Unearned income                                                                                                                                                           |   | 284,907             |      | 447,746                 |       |
| Total Current Liabilities                                                                                                                                                 |   | 1,404,769           |      | 1,241,170               |       |
|                                                                                                                                                                      |   |                |      |                    |       |
| Lease obligation payable                                                                                                                                                  |   | 3,956,944           |      | 3,969,582               |       |
| Notes payable, net of current portion                                                                                                                                     |   | 8,087               |      | 13,055                  |       |
| Other                                                                                                                                                                     |   | 261,702             |      | 166,844                 |       |
| Total Liabilities                                                                                                                                                         |   | 5,631,502           |      | 5,390,651               |       |
|                                                                                                                                                                      |   |                |      |                    |       |
| Stockholders’ Equity:                                                                                                                                                |   |                |      |                    |       |
| Common stock, $.03 par value, 50,000,000 shares  authorized, 2,144,889 and 2,144,889 shares issued and outstanding at March  31, 2002 and December 31, 2001, respectively |   | 64,346              |      | 64,346                  |       |
| Additional paid-in capital                                                                                                                                                |   | 9,435,827           |      | 9,435,827               |       |
| Accumulated earnings (deficit)                                                                                                                                            |   | (10,863,832         | )         | (10,440,780             | )          |
| Total Stockholders’ Equity                                                                                                                                           |   | (1,363,659          | )         | (940,607                | )          |
|                                                                                                                                                                      |   |                |      |                    |       |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                           |   | $                   | 4,267,843 |                    | $          | 4,450,044 |   |

 

The accompanyingnotes are an integral part of the financial statements.

 

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RENAISSANCE ENTERTAINMENT CORPORATION

 

STATEMENTS OF OPERATIONS

(Unaudited)

 
|                                                  |   | **Three  Months Ended  March 31** | ** ** |
|-------------------------------------------------------|--------|-----------------------------------|------------|
|                                                  |   | **2003**                          |       | **2002** | ** ** |
| REVENUE:                                              |   |                              |       |   |   |
| Sales                                                 |   | $                                 | 1,125,577  |   | $ | 8,308 |   |
| Faire  operating costs                                |   | 47,025                            |       | 2,641 |   |
| Gross  Profit                                         |   | 1,078,552                         |       | 5,667 |   |
|                                                  |   |                              |       |   |   |
| OPERATING  EXPENSES:                                  |   |                              |       |   |   |
| Salaries                                              |   | 681,147                           |       | 364,446 |   |
| Depreciation  and amortization                        |   | 82,361                            |       | 62,371 |   |
| Advertising                                           |   | 26,159                            |       | 0 |   |
| Other  operating expenses                             |   | 613,620                           |       | 398,270 |   |
| Total  Operating Expenses                             |   | 1,403,287                         |       | 825,087 |   |
|                                                  |   |                              |       |   |   |
| Net  Operating (Loss) Income                          |   | (324,735                          | )          | (819,420 | ) |
|                                                  |   |                              |       |   |   |
| Other  Income (Expenses):                             |   |                              |       |   |   |
| Interest  income                                      |   | 8,546                             |       | 9,803 |   |
| Interest  (expense)                                   |   | (126,632                          | )          | (126,165 | ) |
| Other  income (expense)                               |   | 19,769                            |       | 10,079 |   |
| Total  Other Income (Expenses)                        |   | (98,317                           | )          | (106,283 | ) |
|                                                  |   |                              |       |   |   |
| Net  Income (Loss) to Common Stockholders             |   | $                                 | (423,052   | ) | $ | (925,703 | ) |
|                                                  |   |                              |       |   |   |
| Net  Income (Loss) per Common Share                   |   | $                                 | (0.20      | ) | $ | (0.43 | ) |
|                                                  |   |                              |       |   |   |
| Weighted  Average Number of Common Shares Outstanding |   | 2,144,889                         |       | 2,144,889 |   |

 

The accompanying notes are an integral part of thefinancial statements.

 

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RENAISSANCE ENTERTAINMENT CORPORATION

 

STATEMENTS OF CASH FLOWS (Unaudited)

 
|                                                                                      |   | **Three  Months ended  March 31,** |     |
|-------------------------------------------------------------------------------------------|--------|------------------------------------|----------|
|                                                                                      |   | **2003**                           |     | **2002** | ** ** |
| Cash Flows from Operating Activities:                                                     |   |                               |     |   |   |
| Net income (Loss)                                                                         |   | $                                  | (423,052 | ) | $ | (925,703 | ) |
| Adjustments to reconcile net income (Loss) to net  cash provided by operating activities: |   |                               |     |   |   |
| Depreciation and amortization                                                             |   | 82,361                             |     | 62,371 |   |
| (Increase) decrease in:                                                                   |   |                               |     |   |   |
| Accounts Receivable                                                                       |   | 12,104                             |     | 105,556 |   |
| Inventory                                                                                 |   | 0                                  |     | 0 |   |
| Prepaid expenses and other                                                                |   | (371,472                           | )        | (57,453 | ) |
| Increase (decrease) in:                                                                   |   |                               |     |   |   |
| Accounts payable and accrued expenses                                                     |   | 316,738                            |     | 175,351 |   |
| Unearned revenue and other                                                                |   | (67,981                            | )        | 162,695 |   |
| Total adjustments                                                                         |   | (28,250                            | )        | 448,520 |   |
| Net Cash Provided by Operating Activities                                                 |   | (451,302                           | )        | (477,183 | ) |
|                                                                                      |   |                               |     |   |   |
| Cash Flows from Investing Activities:                                                     |   |                               |     |   |   |
|                                                                                      |   |                               |     |   |   |
| Acquisition of property and equipment                                                     |   | (9,972                             | )        | (123,333 | ) |
| (Increase) in cash value of life insurance                                                |   | (7,155                             | )        | 0 |   |
| Net Cash (Used in) Investing Activities                                                   |   | (17,127                            | )        | (123,333 | ) |
|                                                                                      |   |                               |     |   |   |
| Cash Flows from Financing Activities:                                                     |   |                               |     |   |   |
|                                                                                      |   |                               |     |   |   |
| Proceeds from notes payable                                                               |   | 0                                  |     | 50,000 |   |
| Principal payments on notes payable                                                       |   | (7,906                             | )        | (8,625 | ) |
| Net Cash Provided by Financing Activities                                                 |   | (7,906                             | )        | 41,375 |   |
|                                                                                      |   |                               |     |   |   |
| Net Increase (Decrease) in Cash                                                           |   | (476,335                           | )        | (559,141 | ) |
|                                                                                      |   |                               |     |   |   |
| Cash, beginning of period                                                                 |   | $                                  | 642,061  |   | $ | 834,257 |   |
| Cash, end of period                                                                       |   | $                                  | 165,726  |   | $ | 275,116 |   |
| Interest paid                                                                             |   | $                                  | 126,632  |   | $ | 126,165 |   |

 

The accompanying notes are an integral part of thefinancial statements.

 

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RENAISSANCE ENTERTAINMENT CORPORATION

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2003(Unaudited)

 

1.                                       UnauditedStatements

 

The balance sheetas of March 31, 2003, the statements of operations and the statements of cashflows for the three month periods ended March 31, 2003 and 2002, have beenprepared by Renaissance Entertainment Corporation (Company) without audit,pursuant to the rules and regulations of the Securities and ExchangeCommission.  Certain information andfootnote disclosures, normally included in the financial statements prepared inaccordance with accounting principles generally accepted in the United Statesof America, have been condensed or omitted as allowed by such rules andregulations, and the Company believes that the disclosures are adequate to makethe information presented not misleading. In the opinion of management, all adjustments (which include only normalrecurring adjustments) necessary to fairly present the financial position,results of operations and changes in financial position at March 31, 2003 andfor all periods presented, have been made.

 

It is suggestedthat these statements be read in conjunction with the December 31, 2002 auditedfinancial statements and the accompanying notes included in the Company’sAnnual Report on Form 10-KSB, filed with the Securities and ExchangeCommission.

 

2.                                       Calculationof Earnings (Loss) Per Share

 

The earnings(loss) per share is calculated by dividing the net income (loss) to commonstockholders by the weighted average number of common shares outstanding.

 

3.                                       Basisof Presentation – Going Concern

 

The accompanyingfinancial statements have been prepared in conformity with generally acceptedaccounting principles, which contemplates continuation of the Company as agoing concern.  However, the Company hassuffered recurring losses from operations, has a negative stockholders’ equityand a working capital deficit that raise substantial doubts about its abilityto continue as a going concern. Management is attempting to raise additional capital.

 

Inview of these matters, realization of certain assets in the accompanyingbalance sheet is dependent upon continued operations of the Company which, inturn, is dependent upon the Company’s ability to meet its financialrequirements, raise additional capital as needed, and the success of its futureoperations.

 

Managementbelieves that its ability to raise additional capital provides an opportunityfor the Company to continue as a going concern.

 

4.                                       SubsequentEvent

 

During April 2003, theCompany authorized the issuance of short-term, 12% unsubordinated promissorynotes that mature at various dates through the beginning of July, 2003.  During April and May of 2003, the Companyraised capital in the amount of $120,000 through the issuance of thesenotes.  The funds were provided byCharles S. Leavell ($70,000), CEO and Chairman of the Board of Directors andone Board Director ($50,000).

 

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5.                                     Commitment

 

TheCompany’s lease for its Southern California Faire site requires the Company tocomplete certain capital projects over the term of the lease.  The Company estimates that the cost of thecapital projects for 2003 will be approximately $50,000.

 

**MANAGEMENT’SDISCUSSION AND ANALYSIS****OF****FINANCIALCONDITION AND RESULTS OF OPERATIONS**

 

**General**

 

The following discussionshould be read in conjunction with the Company’s Consolidated FinancialStatements, including the footnotes for the fiscal period ended December 31,2002.

 

The Company presentlyowns and produces four Renaissance Faires: the Bristol Renaissance Faire inKenosha, Wisconsin, serving the Chicago/Milwaukee metropolitan region; theNorthern California Renaissance Pleasure Faire, serving the San Francisco Bayand San Jose metropolitan areas; the Southern California Renaissance PleasureFaire in Devore, California serving the greater Los Angeles metropolitan area;and the New York Renaissance Faire serving the New York City metropolitan area.

 

The Renaissance Faire isa re-creation of a Renaissance village, a fantasy experience transporting thevisitor back into sixteenth century England. This fantasy experience is created through authentic craft shops, foodvendors and continuous live entertainment throughout the day, both on thestreet and the stage, including actors, jugglers, jousters, magicians, dancersand musicians.

 

On April 1, 2002, FairePartners, Ltd., the Company’s landlord for the Wisconsin site, purchasedproperty in New York from Sterling Forest Corporation.  The property has long been the home of theNew York Renaissance Faire.  In April2002, Faire Partners Ltd. leased the property to the Company for a twenty-yearterm with rent payments of $425,000 in years 1 through 5, $435,000 for years 6through 15 and $450,000 for lease years 16 through 20.  The leased property includes a site for a SkiCenter that the Company opened to the public in December 2002.  The lease allows Faire Partners to sell partof the leased property including the land on which the ski area operates.  Should Faire Partners sell any property, thelease provides that the Company’s rent payments and the buyout provision wouldbe decreased in an amount proportional to the selling price of the property.

 

On May 3, 2002, theCompany signed a long-term lease for the Northern California Faire.  The new site for the Northern Faire islocated at Casa de Fruta, near Gilroy, California.  The lease is for 20 years, 5-years with a 15-year extension.  Lease payments in the first year include$1.00 per patron, with a $150,000 minimum and increasing each year thereafter.

 

The Company had a workingcapital deficit of ($328,029) as of March 31, 2003.  While the Company believes that it has adequate capital to fundanticipated operations for 2003, it believes it may need additional capital forfuture fiscal periods.   See “*Liquidityand Capital Resources*.”

 

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**Resultsof Operations - Three Months Ended March 31, 2003, Compared to Three MonthsEnded March 31, 2002**

 

Historically,the results of operations of the Company for the quarter ended March 31 havereflected a significant loss, due to the fact that there were no substantialrevenues during this period, while some expenses at each of the Company’s Fairelocations continued throughout the year, as did corporate expenses.  From December 2002 through March 2003 theCompany operated the Sterling Forest Ski Center in Tuxedo, New York therebygenerating additional revenue and expense during the first quarter of 2003.

 

Revenueincreased $1,117,269 from $8,308 in 2002 to $1,125,577 in 2003.  This increase is the result of operation ofthe Ski Center that generated revenue in the amount of $1,124,742 during thefirst quarter of 2003.  Cost of salesincreased $44,384 from $2,641 in 2002 to $47,025 in 2003 as a result of theoperation of the Ski Center.

 

Operating expensesincreased $578,200 or 70%, from $825,087 in 2002 to $1,403,287 in 2003.  The Ski Center operating expenses totaling$524,981 explains this increase.  Salaryand wage expense increased $316,701 or 87% from $364,446 in 2002 to $681,147 in2003, the Ski Center accounted for $297,715 of this increase.  Advertising expense for the Ski Centertotaled $26,159 in 2003.  Otheroperating expenses increased $215,350 or 54% from $398,270 in 2002 to $613,620in 2003, the Ski Center accounted for $201,107 of this increase.  Depreciation and amortization expenseincreased $19,990 or 32% from $62,371 in 2002 to $82,361 in 2003.

 

As aresult of the foregoing, net operating loss (before interest charges and otherincome) decreased $494,685 or 60% from a loss of ($819,420) for the 2002 periodto a loss of ($324,735) for the 2003 period. The Ski Center generated net operating income in the amount of $551,292for the quarter ended March 31, 2003 and reduced the overall net operating lossaccordingly.

 

Interest income decreased$1,257 from $9,803 in 2002 to $8,546 in 2003. Interest expense increased slightly from $126,165 in 2002 to $126,632 in2003.  Other income increased $9,690from $10,079 in 2002 to $19,769 in 2003.

 

Netloss to common stockholders decreased $502,651 or 54%, from a loss of ($925,703)for the 2002 period, to a loss of ($423,052) for the 2003 period.  This decrease is the result of a $550,210net profit for the Ski Center. Consequently, net (loss) per common share decreased from ($0.43) for the2002 period to ($0.20) for the 2003 period, based on 2,144,889 weighted averageshares outstanding during the 2002 and 2003 periods.

 

**Liquidityand Capital Resources**

 

The Company’s workingcapital deficit widened during the first quarter of 2003 from a ($48,697)deficit at December 31, 2002 to a ($328,029) deficit at March 31, 2003.  The Company’s working capital requirementsare greatest during the period from January 1 through May 1, when it isincurring start-up expenses for its first Faire of the season, the SouthernCalifornia Faire.

 

During the first fourmonths of fiscal 2003, the Company raised short-term capital in the amount of$120,000 through the issuance of 12% unsubordinated promissory notes. The fundswere provided by Charles S. Leavell ($70,000), Chairman of the Board of Directorsand one Board Director ($50,000).  Thesenotes mature at various dates through July 2003.

 

While the Companybelieves it has adequate capital to fund anticipated operations for fiscal2003, it believes it may need to obtain additional working capital for futureperiods.

 

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Reviewingthe change in financial position over the quarter, current assets, largelycomprised of cash and prepaid expenses, decreased from $1,192,473 at December31, 2002 to $1,076,740 at March 31, 2003, a decrease of $115,733 or 10%.  Of these amounts, cash and cash equivalentsdecreased from $642,061 at December 31, 2002 to $165,726 at March 31,2003.  Accounts and notes receivabledecreased $12,104 from $114,392 at December 31, 2002 to $102,288 at March 31,2003.  Prepaid expenses (expensesincurred on behalf of the Faires) increased from $275,520 at December 31, 2002to $648,226 at March 31, 2003.  Thesecosts are expensed once the Faires are operating.

 

Currentliabilities increased from $1,241,170 at December 31, 2002, to $1,404,769 atMarch 31, 2003, an increase of $163,599 or 13%. During the quarter, accountspayable and accrued expenses increased $316,738 or 86%.  Unearned income, which consists of the saleof admission tickets to upcoming Faires and deposits received from craftvendors for future Faires, decreased $162,839 from $447,746 at December 31,2002 to $284,907 at March 31, 2003.  Therevenue is recognized once the Faires are operating.

 

Stockholders’Deficit increased from ($940,607) at December 31, 2002 to ($1,363,659) at March31, 2003, an increase of $423,052.  This increase is due to the net loss incurred during the first quarter.

 

Although inflation canpotentially have an effect on financial results, during 2002 and the firstthree months of fiscal 2003 it caused no material effect on the Company’soperations, since the change in prices charged by the Company and by theCompany’s vendors has not been significant.

 

Thelease with the County of San Bernardino requires the Company to completecertain capital projects.  Theseprojects include items such as the construction of a perimeter fence, plantingtrees, developing flower and water gardens, planting grass, installing infrastructureand constructing buildings for use at the Faire.  The Company estimates that the cost of these items should notexceed $50,000 for calendar year 2003. The Company has no additional significant commitments for capitalexpenses during the fiscal year ending December 31, 2003.  See *“Factors That May Affect Future OperatingResults-Need for Additional Capital”* regarding the Company’sfinancing requirements.

 

**FACTORS THAT MAY AFFECT FUTUREOPERATING RESULTS**

 

In addition to the otherinformation contained in this report, prospective investors should carefullyconsider the following factors in evaluating the Company and its business.

 

*Recent Losses. *TheCompany has incurred operating losses in all fiscal periods except 1995 and2000. For the quarter ended March 31, 2003, the Company reported a net loss of($423,052).  The Company typicallyreports a loss for the first quarter of any operating season because ongoingoperating expenses are incurred without any offsetting revenue generatingactivities.  In December 2002, theCompany opened the Sterling Forest Ski Center that generated in excess of$1,000,000 revenue and $550,000 net profit in the first quarter of 2003.  There is no assurance that the Company willremain profitable in any subsequent period.

 

*Need for Additional Capital. *The Company had a working capital deficit of($328,029) as of March 31, 2003.  See “*Management’sDiscussion and Analysis of Financial Condition and Results of Operations.”*Based on the Company’s planned operations for 2003, the Company believes it hasadequate capital to fund operations, repay debt, and to fund required capitalexpenditures during the 2003 fiscal year. To the extent that operations do notprovide the necessary working capital during 2003, the Company may need toobtain additional capital for 2003 and future fiscal periods.  Additional capital may be sought throughborrowing or from additional equity financing. Such

 

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additional equityfinancing may result in additional dilution to investors.  In any case, there can be no assurance thatany additional capital can be satisfactorily obtained, if and when required.

 

*Competition. *TheCompany faces significant competition from numerous organizations throughoutthe country which offer Renaissance Faires and other entertainment events,including amusement and theme parks, local and county fairs and festivals, someof which possess significantly greater resources than the Company, and in manycases, greater expertise and industry contacts.  The Company estimates that there are currently 20 majorRenaissance Faires produced each year. In addition, the Company estimates that there are more than 100 minorRenaissance Faire events held throughout the United States each year, rangingin duration from one day to two weekends.

 

*Lack of Trademark Protection. *Because of the large number of existingRenaissance Faires, the Company is not able to rely upon trademark or servicemark protection for the name “Renaissance Faire.”  As a result, there is no protection against others using the name“Renaissance Faire” for the production of entertainment events similar to thoseproduced by the Company.  The Company’sown Faires could be negatively impacted by association with substandard productions.

 

*Public Liability and Insurance. *As a producer of a public entertainment event,the Company has exposure for claims of personal injury and property damagesuffered by visitors to the Faires.  Todate, the Company has experienced only minimal claims, which it has been ableto resolve without litigation.  TheCompany maintains comprehensive liability insurance which it considers to beadequate against this risk; however, there can be no assurance that acatastrophic event or claim which could result in damage or liability in excessof this coverage will not occur.  See*“OtherInformation- Legal Proceedings”*for additional information.

 

*Dependence Upon Vendors. *A substantial portion of the Company’s revenuesgenerated at each Faire is derived from arrangements that the Company has withvendors who construct elaborate booths at the Faires and sell a variety offood, crafts and souvenirs.  Thisarrangement consists of either a fixed rental paid by the vendors to theCompany, or a percent of revenues.  Ineither case, the success of a Faire is dependent upon the Company’s ability toattract responsible vendors who sell high quality goods.

 

*Seasonality. *TheCompany’s Renaissance Faires are located in traditionally seasonal areas whichattract the greatest number of visitors during the warm weather months in thespring, summer, and early fall.  Withthe operation of the Sterling Forest Ski Center in New York, the potential forcounter-seasonal revenue should help smooth the seasonality of the Company’srevenue stream from the Renaissance Faires.  Unless the Company acquires or develops additional Faire sites orevents in areas that are counter-seasonal to the present sites located intemperate climates, the Company’s revenue and income will be highly concentratedin the six months ending October 31st of each year.

 

*Dependence Upon Weather. *Each Renaissance Faire operated by the Company isscheduled for a finite period, typically consecutive weekends during a seven tonine-week period, and are determined substantially in advance in order tofacilitate advertising and other promotional efforts.  The success of each Faire is directly dependent upon publicattendance, which is directly affected by weather conditions.  While each of the Company’s Faires are open,rain or shine, poor weather, or even the forecast of poor weather can result insubstantial declines in attendance and, as a result, loss of revenue.  Further, as the Renaissance Faires areoutdoor events, they are vulnerable to severe weather conditions that can causedamage to the Faire’s infrastructure and buildings, as well as injuries topatrons and employees.  Risks associatedwith the weather are beyond anyone’s control, but have a direct and materialimpact upon the relative success or failure of a given Faire.

 

10

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*Licensing and Other Governmental Regulation. *For each Faire operated bythe Company, it is necessary for the Company to apply for and obtain permitsand other licenses from local governmental authorities controlling the conduct ofthe Faire, service of alcoholic beverages and food, health, sanitation, andother matters at the Faire sites.  Eachgovernmental jurisdiction has its own regulatory requirements that can imposeunforeseeable delays or impediments in preparing for a Faire production.  While the Company has been able to obtainall necessary permits and licenses in the past, there can be no assurance thatfuture changes in governmental regulation or the adoption of more stringent requirementsmay not have a material adverse impact upon the Company’s future operations.

 

*Faire Sites. *TheCompany has long-term leases for all four of its Renaissance Faires.  The terms and conditions of each lease varyby location, and to a large extent, are beyond the control of the Company.  The Company’s dependence upon leasing Fairesites creates a certain risk of fluctuation in the Company’s operations fromyear to year.

 

PARTII. OTHER INFORMATION

 

Item 1.                                                             LegalProceedings

 

In 2002, a complaint wasfiled against the Company with the Supreme Court in Orange County NewYork.  The case contains a demand for$35,000,000 and is in excess of the $5,000,000 limit contained in the insurancepolicies.  The Company has been advisedby the insurance provider that, based on its initial review of this claim, theloss in this matter will not exceed the limit of the insurance policies.  A liability has not been accrued at thistime because the outcome of this claim lacks certainty.  The Company will continue to monitor theprogress of this complaint.

 

Item 2.                                                             Changesin Securities

 

During the first fourmonths of fiscal 2002, the Company raised $100,000 through the sale of 12%subordinated promissory notes.  Thenotes were issued in units, each unit consisting of two promissory notes ofequal principal, with one note being convertible into shares of the Company’scommon stock at a conversion price of $.30 per share.  The notes were sold without registration under the Securities Actof 1933 in reliance upon the exemption provided by Regulation D promulgated bythe Securities and Exchange Commission. No brokers were involved in the sale of the notes and no salescommissions were paid with respect to such sales.  See *Part I “Financial Condition and Results of Operations—Liquidity andCapital Resources.”*

 

Item 3.                                                             Defaultsupon Senior Securities

 

None.

 

Item 4.                                                             Submissionof Matters to a Vote of Security Holders

 

None.

 

Item 5.                                                             OtherInformation

 

None.

 

11

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Item 6.                                                             Exhibitsand Reports on Form 8-K

 

(A)           **EXHIBITS**

 
| Exhibit No |   | Title                                                                                                                                                                                                                                                                                                          |
|------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |   |                                                                                                                                                                                                                                                                                                           |
| 3.0(i)     |   | Amended and Restated  Articles of Incorporation, incorporated by reference from the Amendment No. 1  to Registrant’s Registration Statement on Form 8-A filed with the Commission  on April 12, 1994.                                                                                                     |
|       |   |                                                                                                                                                                                                                                                                                                           |
| 3.0(ii)    |   | By-Laws, incorporated  by reference from the Amendment No. 1 to Registrant’s Registration Statement  on Form 8-A filed with the Commission on April 12, 1994.                                                                                                                                             |
| *3.1       |   | Articles of Amendment  to the Articles of Incorporation.                                                                                                                                                                                                                                                       |
|       |   |                                                                                                                                                                                                                                                                                                           |
| 4.1        |   | Specimen Certificate of  Common Stock, incorporated by reference from the Amendment No. 1 to  Registrant’s Registration Statement on Form 8-A filed with the Commission on  April 12, 1994.                                                                                                               |
|       |   |                                                                                                                                                                                                                                                                                                           |
| *4.2       |   | Renaissance  Entertainment Corporation 1993 Stock Incentive Plan.  (1)                                                                                                                                                                                                                                    |
|       |   |                                                                                                                                                                                                                                                                                                           |
| *10.1      |   | Specimen Vendor and  Exhibitor Agreement for the Bristol Renaissance Faire.                                                                                                                                                                                                                                    |
|       |   |                                                                                                                                                                                                                                                                                                           |
| *10.2      |   | Specimen Vendor and  Exhibitor Agreement for the Northern and Southern Renaissance Pleasure  Faires.                                                                                                                                                                                                           |
|       |   |                                                                                                                                                                                                                                                                                                           |
| *10.3      |   | Specimen Bristol  Renaissance Faire Concession Agreement.                                                                                                                                                                                                                                                      |
|       |   |                                                                                                                                                                                                                                                                                                           |
| *10.4      |   | Specimen Bristol  Renaissance Faire Games Concession Agreement.                                                                                                                                                                                                                                                |
|       |   |                                                                                                                                                                                                                                                                                                           |
| 10.9       |   | Purchase Agreement  dated November 12, 1997 between Faire Partners, LLC and Renaissance  Entertainment Corporation, including Lease Agreement and Warrant to Purchase  Common Stock as exhibits thereto, incorporated by reference from Registrant’s  Registration Statement on Form S-1 (No. 333-43503). |
|       |   |                                                                                                                                                                                                                                                                                                           |
| 10.10      |   | Lease dated January 21,  1998 by and between Attache Publishing Services, Inc. and the Company,  incorporated by reference from the Registrants Quarterly Report on Form 10-Q  for the quarter ended March 31, 1998.                                                                                           |
|       |   |                                                                                                                                                                                                                                                                                                           |
| 10.11      |   | Employment Agreement  dated December 11, 1998 with Charles S. Leavell, incorporated by reference  from Registrant’s Annual Report on Form 10-KSB for the year ended December  31, 1998.                                                                                                                   |
|       |   |                                                                                                                                                                                                                                                                                                           |
| 10.12      |   | Employment Agreement  dated December 11, 1998 with J. Stanley Gilbert, incorporated by reference  from Registrant’s Annual Report on Form 10-KSB for the year ended December  31, 1998.                                                                                                                   |
|       |   |                                                                                                                                                                                                                                                                                                           |
| 10.15      |   | Warrant Agreement dated  December 17, 1999, incorporated by reference from Registrant’s Annual Report  on Form 10-KSB for the year ended December 31, 1999.                                                                                                                                               |
|       |   |                                                                                                                                                                                                                                                                                                           |
| 10.17      |   | Asset Purchase  Agreement between Jim and Marta Selway and the Company dated April 6, 2000,  incorporated by reference from Registrant’s Annual Report on Form 10-KSB for  the year ended December 31, 1999.                                                                                              |
|       |   |                                                                                                                                                                                                                                                                                                           |
|       |   | Form of Subordinated  Subscription and Purchase Agreement for 2000, including A Note and  Convertible B Note incorporated by reference from Registrant’s Quarterly  Report on Form 10-QSB for the period ended March 31, 2000.                                                                            |
|       |   |                                                                                                                                                                                                                                                                                                           |
| 10.20      |   | Lease dated June 27,  2000 by and between San Bernardino County Community and Cultural Resources  Department and the Company incorporated by reference from Registrant’s Annual  Report on Form 10-KSB for the year ended December 31, 2000.                                                              |
|       |   |                                                                                                                                                                                                                                                                                                           |
| 10.25      |   | Amendment dated October  30, 2000 to Lease with Faire Partners, LLC incorporated by reference from  Registrant’s Annual Report on Form 10-KSB for the year ended December 31,  2000.                                                                                                                      |

 

12

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|   |   |                                                                                                                                                                                                                                               |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.28  |   | Form of Subordinated  Subscription and Purchase Agreement for 2002, including A Note and  Convertible B Note filed herewith incorporated by reference from Registrant’s  Annual Report on Form 10-KSB for the year ended December 31, 2001.   |
|   |   |                                                                                                                                                                                                                                               |
|   |   | Amendment dated August  31, 2001 to Subordinated Subscription and Purchase Agreement for 2000  incorporated by reference from Registrant’s Annual Report on Form 10-KSB for  the year ended December 31, 2001.                                |
|   |   |                                                                                                                                                                                                                                               |
| 10.30  |   | Lease agreement dated  March 19,2002 by and between Faire Partners, Ltd. and the Company  incorporated by reference from Registrant’s Quarterly Report on Form 10-QSB  for the period ended March 31, 2002.                                   |
|   |   |                                                                                                                                                                                                                                               |
| 10.31  |   | Lease agreement dated  May 3, 2002 by and between Casa De Fruta and the Company incorporated by  reference from Registrant’s Quarterly Report on Form 10-QSB for the period  ended March 31, 2002.                                            |
|   |   |                                                                                                                                                                                                                                               |
| 10.32  |   | Amendment dated  February 28, 2002 to Faire Partners, Ltd. lease dated November, 1997  incorporated by reference from Registrant’s Quarterly Report on Form 10-QSB  for the period ended March 31, 2002.                                      |
|   |   |                                                                                                                                                                                                                                               |
| 10.33  |   | Amendment dated March  18, 2002 to Faire Partners, Ltd. lease dated November, 1997 incorporated by  reference from Registrant’s Quarterly Report on Form 10-QSB for the period ended  March 31, 2002.                                         |
|   |   |                                                                                                                                                                                                                                               |
| 10.34  |   | Amendment dated January  27, 2003 to lease dated January 21, 1998 by and between Attache Publishing  Service incorporated by reference from Registrant’s Annual Report on Form  10-KSB for the period ended December 31, 2002.                |
|   |   |                                                                                                                                                                                                                                               |
| 10.35  |   | School Days Contractual  Agreement dated December 9, 2002 by and between Sheridan Sechter &  Associates and the Company incorporated by reference from Registrant’s Annual  Report on Form 10-KSB for the period ended December 31, 2002. |
|   |   |                                                                                                                                                                                                                                               |
| 10.36  |   | Contractual Agreement  dated December 9, 2002 by and between Sheridan Sechter & Associates and  the Company incorporated by reference from Registrant’s Annual Report on Form  10-KSB for the period ended December 31, 2002.             |
|   |   |                                                                                                                                                                                                                                               |
| 10.37  |   | Agreement to Terminate  Contractal Relationships dated December 12, 2002 between Events Group  Corporation and the Company incorporated by reference from Registrant’s  Annual Report on Form 10-KSB for the period ended December 31, 2002.  |
|   |   |                                                                                                                                                                                                                                               |
| **99.1 |   | Officer Certification                                                                                                                                                                                                                              |

 

 

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*                                         Incorporatedby reference from the Company’s Registration Statement on Form SB-2, declaredeffective by the Commission on January 27, 1995, and the Post-Effectiveamendments thereto.

 

**                                  Filedherewith.

 

(b)              REPORTS ON FORM 8-K

 

The Registrant filed noCurrent Reports on Form 8-K during the quarter ended March 31, 2003.

 

13

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SIGNATURES

 

Pursuant to therequirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, theRegistrant has duly caused this quarterly report to be signed on its behalf bythe undersigned, thereunto duly authorized.

 
| RENAISSANCE  ENTERTAINMENT CORPORATION |                                         |
|----------------------------------------|----------------------------------------------|
|                                   |                                         |
|                                   |
| Date:  May   14, 2003        | /s/ Charles S. Leavell                       |   |
|                                   | Charles S. Leavell,  Chief Executive Officer |
|                                        |                                              |  |  |  |

 

Pursuant to therequirements of the Securities Exchange Act of 1934, this report has beensigned below by the following persons on behalf of the Registrant and in thecapacities and on the dates indicated.

 
| **Signature**          |   | **Title**                                     |                                     | **Date** |
|------------------------|--------|-----------------------------------------------|------------------------------------------|----------|
|                   |   |                                          |                                     |     |
| /s/ Charles S. Leavell |   |                                          | Chairman of the Board,                   |     | May 14, 2003 |
| Charles S. Leavell     |   | Chief Executive and  Chief Financial Officers |                                     |     |
|                   |   |                                          |                                     |     |
| /s/ Sue Brophy         |   |                                          | Chief Accounting  Officer and Controller |     | May 14, 2003 |
| Sue Brophy             |   |                                          |                                     |     |
|                        |        |                                               |                                          |          |  |  |

 

14

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CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THESARBANES-OXLEY ACT OF 2002

 

In connection with theQuarterly Report of Renaissance Entertainment Corporation (the “Company”) onForm 10-QSB for the period ended March 31, 2003, as filed with the Securitiesand Exchange Commission on the date hereof (the “Report”), I, Charles S.Leavell, Chief Executive and Chief Financial Officer of the Company, certify,pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, that to the best of my knowledge:

 

(1)                                  TheReport fully complies with the requirements of Section 13(a) or 15(d), asapplicable, of the Securities Exchange Act of 1934; and

 

(2)                                  Theinformation contained in the Report fairly presents, in all material respects,the financial condition and results of operations of the Company.

 

 
|   | /s/  Charles S. Leavell                                                       |   |
|--------|-------------------------------------------------------------------------------|--------|
|   | Charles S. Leavell  Chief Executive and Chief Financial Officer  May 14, 2003 |

 

15

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**EXHIBIT 99.1**

**CERTIFICATIONS**

 

I, Charles S. Leavell,certify that:

 

1.                                       Ihave reviewed this quarterly report on Form 10-QSB of Renaissance EntertainmentCorporation.

 

2.                                       Basedon my knowledge, this quarterly report does not contain any untrue statement ofa material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this quarterlyreport;

 

3.                                       Basedon my knowledge, the financial statements, and other financial informationincluded in this quarterly report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this quarterly report;

 

4.                                       Theregistrant’s other certifying officers and I are responsible for establishingand maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and have:

 

a)                                      designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

 

b)                                     evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

 

c)                                      presentedin this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the EvaluationDate.

 

5.                                       Theregistrant’s other certifying officers and I have disclosed, based on our mostrecent evaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunctions):

 

a)                                      allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

b)                                     anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls; and

 

6.                                       Theregistrant’s other certifying officers and I have indicated in this quarterlyreport whether there were significant changes in internal controls or in otherfactors that could significantly affect internal controls subsequent to thedate of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weaknesses.

 
| Date:  May 14, 2003 |
|--------------------------|
|                     |
|                     |
|                     | /s/ Charles S.  Leavell |   |
|                     | Charles S. Leavell  Chief Executive and Chief Financial Officer |   |

 

The undersigned herebycertifies, for the purposes of Section 1350 of Chapter 63 of Title XVIII of theUnited States Code, in his capacity as an officer of Renaissance EntertainmentCorporation, that, to his knowledge, the Quarterly Report of RenaissanceEntertainment Corporation on Form 10-QSB for the quarter ended March 31, 2003,fully complies with the requirements of Section 13a of the Securities ExchangeAct of 1934 and that the information contained in such report fairlyrepresents, in all material respects, the financial condition and results ofoperation of Renaissance Entertainment Corporation.

 

 
|                     | /s/ Charles S.  Leavell                                         |   |
|--------------------------|-----------------------------------------------------------------|--------|
|                     | Charles S. Leavell  Chief Executive and Chief Financial Officer |   |
|                     |                                                            |   |
|                     |                                                            |   |
| Date:  May 14, 2003 |

 

16

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