**UNITED STATES****SECURITIES AND EXCHANGECOMMISSION**

**WASHINGTON, D.C. 20549**

 

**FORM 10-QSB/A**

 

**AMENDMENT NO. 1**

 
| **ý****Quarterly Report pursuant to Section 13 or 15(d) of the  Securities Exchange Act of 1934.**                                                  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **For the quarterly period ended     June 30, 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)

 

Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

 

ý  Yes    o  No

 

APPLICABLE ONLY TOCORPORATE ISSUERS:

 

As of August 8, 2003, Registrant had 2,144,889 shares of commonstock, $.03 Par Value, outstanding.

 

 

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## INDEX

 
| **Part I.**                           | **Financial Information**                            |
|---------------------------------------|------------------------------------------------------|
|                                  |                                                 |
| Item I.                               | Financial  Statements                                |
|                                  |                                                 |
|                                  | Balance Sheets as  of June 30, 2003 (Unaudited) |
|                                  | and December 31, 2002                           |
|                                  |                                                 |
|                                  | Statements  of Operations for the Three Months       |
|                                  | Ended June 30, 2003 and  2002                   |
|                                  | (Unaudited)                                          |
|                                  |                                                 |
|                                  | Statements  of Operations for the Six Months         |
|                                  | Ended June 30, 2003 and  2002                   |
|                                  | (Unaudited)                                          |
|                                  |                                                 |
|                                  | Statements of Cash  Flows for the Six Months         |
|                                  | Ended  June 30, 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 theSecurities Exchange Act of 1934, as amended, and Section 27A of theSecurities Act of 1933, as amended, and is subject to the safe harbors createdby those sections.  Theseforward-looking statements are subject to significant risks and uncertainties,including those identified in the section of this Form 10-QSB entitled“Factors That May Affect Future Operating Results,” which may cause actualresults to differ materially from those discussed in such forward-lookingstatements.  The forward-lookingstatements within this Form 10-QSB are identified by words such as “believes,”“anticipates,” “expects,” “intends,” “may,” “will” and other similarexpressions.  However, these words arenot 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.

This amendment No. 1on form 10-Q/A is being filed to give effect to the restatement of theCompany’s unaudited interim financial statements as of and for the three monthand six month periods ended June 30, 2003 as discussed in Note 7 tothe unaudited interim financial statements. 

 

2

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RENAISSANCE ENTERTAINMENTCORPORATION

BALANCE SHEETS

ASSETS

 
|                                                                                                  |   | **June 30,  2003** |      | **December 31,  2002** |   |
|-------------------------------------------------------------------------------------------------------|--------|-------------------------|-----------|-----------------------------|--------|
|                                                                                                  |   | **(Unaudited)**         |      |                        |   |
| Current Assets:                                                                                       |   |                    |      |                        |   |
| Cash and equivalents                                                                                  |   | $                       | 385,109   |                        | $      | 642,061 |   |
| Accounts receivable (net)                                                                             |   | 10,441                  |      | 23,530                      |   |
| Inventory                                                                                             |   | 249,726                 |      | 160,500                     |   |
| Note receivable, current portion                                                                      |   | 76,266                  |      | 90,862                      |   |
| Prepaid expenses and other                                                                            |   | 1,049,842               |      | 275,520                     |   |
| Total Current Assets                                                                                  |   | 1,771,384               |      | 1,192,473                   |   |
|                                                                                                  |   |                    |      |                        |   |
| Property and equipment, net of accumulated  depreciation                                              |   | 2,867,176               |      | 2,874,954                   |   |
| Investments                                                                                           |   | 21,992                  |      | 0                           |   |
| Other assets                                                                                          |   | 385,090                 |      | 382,617                     |   |
| TOTAL ASSETS                                                                                          |   | $                       | 5,045,642 |                        | $      | 4,450,044 |   |
|                                                                                                  |   |                    |      |                        |   |
| LIABILITIES AND  STOCKHOLDERS’ (DEFICIT)                                                         |   |                    |      |                        |   |
|                                                                                                  |   |                    |      |                        |   |
| Current Liabilities:                                                                                  |   |                    |      |                        |   |
| Accounts payable and accrued expenses                                                                 |   | $                       | 1,074,983 |                        | $      | 369,466 |   |
| Notes payable, current portion                                                                        |   | 509,325                 |      | 414,738                     |   |
| Lease obligation payable, current portion                                                             |   | 32,382                  |      | 9,220                       |   |
| Unearned income                                                                                       |   | 467,611                 |      | 447,746                     |   |
| Total Current Liabilities                                                                             |   | 2,084,301               |      | 1,241,170                   |   |
|                                                                                                  |   |                    |      |                        |   |
| Lease obligation payable                                                                              |   | 3,945,135               |      | 3,969,582                   |   |
| Notes payable, net of current portion                                                                 |   | 6,075                   |      | 13,055                      |   |
| Other                                                                                                 |   | 210,935                 |      | 166,844                     |   |
| Total Liabilities                                                                                     |   | 6,246,446               |      | 5,390,651                   |   |
|                                                                                                  |   |                    |      |                        |   |
| Stockholders’ (Deficit):                                                                         |   |                    |      |                        |   |
| Preferred  stock, $1.00 par value, 1,000,000 shares authorized, none issued and  outstanding          |   |                    |      |                        |   |
| Common stock, $.03 par value, 50,000,000 shares  authorized, 2,144,889 shares issued and outstanding. |   | 64,346                  |      | 64,346                      |   |
| Additional paid-in capital                                                                            |   | 9,435,827               |      | 9,435,827                   |   |
| Accumulated (deficit)                                                                                 |   | (10,700,977             | )         | (10,440,780                 | )      |
| Total Stockholders’ (Deficit)                                                                    |   | (1,200,804              | )         | (940,607                    | )      |
|                                                                                                  |   |                    |      |                        |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT)                                                    |   | $                       | 5,045,642 |                        | $      | 4,450,044 |   |

 

The accompanying notes are an integral part of the financialstatements.

 

3

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RENAISSANCE ENTERTAINMENT CORPORATION 

STATEMENTS OFOPERATIONS

(Unaudited)

 
|                                                  |   | **Three  Months Ended  June 30** |      |
|-------------------------------------------------------|--------|---------------------------------------|-----------|
|                                                  |   | **2003**                              |      | **2002** |   |
| REVENUE:                                              |   |                                  |      |   |   |
| Sales                                                 |   | $                                     | 3,560,648 |   | $ | 3,779,489 |   |
| Faire  operating costs                                |   | 885,190                               |      | 878,638 |   |
| Gross  Profit                                         |   | 2,675,458                             |      | 2,900,851 |   |
|                                                  |   |                                  |      |   |   |
| OPERATING  EXPENSES:                                  |   |                                  |      |   |   |
| Salaries                                              |   | 973,636                               |      | 977,314 |   |
| Depreciation  and amortization                        |   | 90,066                                |      | 82,351 |   |
| Advertising                                           |   | 424,570                               |      | 472,592 |   |
| Other  operating expenses                             |   | 935,538                               |      | 811,101 |   |
| Total  Operating Expenses                             |   | 2,423,810                             |      | 2,343,358 |   |
|                                                  |   |                                  |      |   |   |
| Net  Operating (Loss) Income                          |   | 251,648                               |      | 557,493 |   |
|                                                  |   |                                  |      |   |   |
| Other  Income (Expenses):                             |   |                                  |      |   |   |
| Interest  income                                      |   | 7,617                                 |      | 8,913 |   |
| Interest  (expense)                                   |   | (138,530                              | )         | (136,453 | ) |
| Other  income (expense)                               |   | 42,120                                |      | 30,219 |   |
| Total  Other Income (Expenses)                        |   | (88,793                               | )         | (97,321 | ) |
|                                                  |   |                                  |      |   |   |
| Net  Income (Loss) before (Provision)                 |   |                                  |      |   |   |
| Credit  for Income Taxes                              |   | 162,855                               |      | 460,172 |   |
|                                                  |   |                                  |      |   |   |
| (Provision)  Credit for Income Taxes                  |   | —                                |      | — |   |
|                                                  |   |                                  |      |   |   |
| Net  Income (Loss) to Common Stockholders             |   | $                                     | 162,855   |   | $ | 460,172 |   |
|                                                  |   |                                  |      |   |   |
| Net  Income (Loss) per Common Share                   |   | $                                     | 0.08      |   | $ | 0.21 |   |
|                                                  |   |                                  |      |   |   |
| Weighted  Average Number of Common Shares Outstanding |   | 2,144,889                             |      | 2,144,889 |   |

 

The accompanying notesare an integral part of the financial statements.

 

4

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RENAISSANCE ENTERTAINMENT CORPORATION

STATEMENTS OFOPERATIONS

 
|                                                  |   | **Six Months  Ended  June 30** |     |
|-------------------------------------------------------|--------|-------------------------------------|----------|
|                                                  |   | **2003**                            |     | **2002** |   |
| REVENUE:                                              |   |                                |     |   |   |
| Sales                                                 |   | 4,686,225                           |     | 3,787,797 |   |
| Faire  operating costs                                |   | 932,215                             |     | 881,279 |   |
| Gross  Profit                                         |   | 3,754,010                           |     | 2,906,518 |   |
|                                                  |   |                                |     |   |   |
| OPERATING  EXPENSES:                                  |   |                                |     |   |   |
| Salaries                                              |   | 1,654,783                           |     | 1,341,760 |   |
| Depreciation  and amortization                        |   | 172,427                             |     | 144,722 |   |
| Advertising                                           |   | 450,729                             |     | 472,592 |   |
| Other  operating expenses                             |   | 1,549,265                           |     | 1,209,370 |   |
| Total  Operating Expenses                             |   | 3,827,204                           |     | 3,168,444 |   |
|                                                  |   |                                |     |   |   |
| Net  Operating (Loss) Income                          |   | (73,194                             | )        | (261,926 | ) |
|                                                  |   |                                |     |   |   |
| Other  Income (Expenses):                             |   |                                |     |   |   |
| Interest  income                                      |   | 16,164                              |     | 18,717 |   |
| Interest  (expense)                                   |   | (265,162                            | )        | (262,619 | ) |
| Other  income (expense)                               |   | 61,995                              |     | 40,298 |   |
| Total  Other Income (Expenses)                        |   | (187,003                            | )        | (203,604 | ) |
|                                                  |   |                                |     |   |   |
| Net  Income (Loss) before (Provision)                 |   |                                |     |   |   |
| Credit  for Income Taxes                              |   | $                                   | (260,197 | ) | (465,530 | ) |
|                                                  |   |                                |     |   |   |
| (Provision)  Credit for Income Taxes                  |   | —                              |     | — |   |
|                                                  |   |                                |     |   |   |
| Net  Income (Loss) to Common Stockholders             |   | $                                   | (260,197 | ) | $ | (465,530 | ) |
|                                                  |   |                                |     |   |   |
| Net  Income (Loss) per Common Share                   |   | $                                   | (0.12    | ) | $ | (0.22 | ) |
|                                                  |   |                                |     |   |   |
| Weighted  Average Number of Common Shares Outstanding |   | 2,144,889                           |     | 2,144,889 |   |

 

The accompanying notesare an integral part of the financial statements

 

5

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RENAISSANCE ENTERTAINMENT CORPORATION

STATEMENTS OF CASHFLOWS (Unaudited)

 
|                                                                                            |   | **Six Months ended  June 30** |     |
|-------------------------------------------------------------------------------------------------|--------|------------------------------------|----------|
|                                                                                            |   | **2003**                           |     | **2002** |   |
| Cash Flows from Operating Activities:                                                           |   |                               |     |   |   |
| Net income (Loss)                                                                               |   | $                                  | (260,197 | ) | $ | (465,530 | ) |
| Adjustments to reconcile net income (Loss)  to net cash provided by operating  activities: |   |                               |     |   |   |
| Depreciation and amortization                                                                   |   | 172,427                            |     | 144,722 |   |
| Gain (loss) on disposal of assets                                                               |   | (366                               | )        | 0 |   |
| (Increase) decrease in:                                                                         |   |                               |     |   |   |
| Accounts Receivable                                                                             |   | 13,089                             |     | 46,587 |   |
| Notes Receivable                                                                                |   | 14,596                             |     | 8,686 |   |
| Inventory                                                                                       |   | (89,226                            | )        | (86,934 | ) |
| Prepaid expenses and other                                                                      |   | (776,795                           | )        | (683,963 | ) |
| Increase (decrease) in:                                                                         |   |                               |     |   |   |
| Accounts payable and accrued expenses                                                           |   | 705,517                            |     | 810,752 |   |
| Unearned revenue and other                                                                      |   | 63,956                             |     | 260,331 |   |
| Total adjustments                                                                               |   | 103,198                            |     | 500,181 |   |
| Net Cash Provided by (Used in) Operating Activities                                             |   | (156,999                           | )        | 34,651 |   |
|                                                                                            |   |                               |     |   |   |
| Cash Flows from Investing Activities:                                                           |   |                               |     |   |   |
| (Increase) in cash value of life insurance                                                      |   | (21,992                            | )        |   |   |
| Acquisition of property and equipment                                                           |   | (164,283                           | )        | (332,768 | ) |
| Net Cash (Used in) Investing Activities                                                         |   | (186,275                           | )        | (332,768 | ) |
|                                                                                            |   |                               |     |   |   |
| Cash Flows from Financing Activities:                                                           |   |                               |     |   |   |
| Common stock issued and additional paid-in capital                                              |   | 0                                  |     | 0 |   |
| Proceeds from notes payable                                                                     |   | 220,000                            |     | 101,250 |   |
| Principal payments on notes payable                                                             |   | (133,678                           | )        | (14,025 | ) |
| Net Cash Provided by (Used in) Financing Activities                                             |   | 86,322                             |     | 87,225 |   |
|                                                                                            |   |                               |     |   |   |
| Net (Decrease) in Cash                                                                          |   | (256,952                           | )        | (210,892 | ) |
| Cash, beginning of period                                                                       |   | 642,061                            |     | 834,257 |   |
| Cash, end of period                                                                             |   | $                                  | 385,109  |   | $ | 623,365 |   |
| Interest paid                                                                                   |   | $                                  | 265,162  |   | $ | 262,619 |   |

 

The accompanying notesare an integral part of the financial statements.

 

6

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RENAISSANCE ENTERTAINMENT CORPORATION

NOTES TO FINANCIALSTATEMENTS

June 30, 2003 (Unaudited)

 

1.             UnauditedStatements

 

The balance sheet as of June 30, 2003, thestatements of operations and the statements of cash flows for the six monthperiods ended June 30, 2003 and 2002, have been prepared by RenaissanceEntertainment Corporation (Company) without audit, pursuant to the rules andregulations of the Securities and Exchange Commission.  Certain information and footnotedisclosures, 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 June 30, 2003and for all periods presented, have been made.

 

It is suggested that these statements be read inconjunction with the December 31, 2002 audited financial statements andthe accompanying notes included in the Company’s Annual Report on Form 10-KSB,filed with the Securities and Exchange Commission. 

 

2.             Calculation ofEarnings (Loss) Per Share

 

The earnings (loss) per share is calculated bydividing the net income (loss) to common stockholders by the weighted averagenumber of common shares outstanding.

 

3.             Basis ofPresentation – Going Concern

 

The accompanying financialstatements have been prepared in conformity with generally accepted accountingprinciples, which contemplates continuation of the Company as a goingconcern.  Since 1998, the Company’sfinancial statements have contained a going concern clause.  The Company has suffered recurring lossesfrom operations, has a negative stockholders’ equity and a working capitaldeficit that raise substantial doubts about its ability to continue as a goingconcern.  Management is attempting toraise 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.             Subsequent Event

 

In July, 2003, Charles S.Leavell, CEO and Chairman of the Board of Directors extended the Company a lineof credit in the amount of $100,000.  Asof this filing, the terms and conditions of this loan have not been set.

 

5.             Commitment

 

The Company’s lease for itsNorthern California Faire sites require the Company to complete certain capitalprojects over the term of the lease. The Company estimates that the cost of these capital projects for 2003will be approximately $50,000.

 

7

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6.             Notes Payable

 

Duringthe first four months of fiscal 2003, the Company raised short-term capital inthe amount of $220,000 through the issuance of 12% unsubordinated promissorynotes. The funds were provided by Charles S. Leavell ($70,000), Chairman of theBoard of Directors, J. Stanley Gilbert ($100,000), Officer and Board Director,and another Board Director ($50,000). Of the total outstanding, $120,000 was retired in June and $100,000in July of 2003.

 

7.             Restatement

 

Subsequent to the issuance of the Company’s unauditedconsolidated financial statements for the quarter ended June 30, 2003, theCompany determined that certain costs of the Wisconsin fair were incorrectlycapitalized as Prepaid Expenses and Other on the balance sheet. These costsinclude amortization of the leaseback that had been incurred by the Company andshould have been recorded as expense as incurred. The Prepaid Expense and Otheramount in the balance sheet at June 30, 2003 has been restated to expensethe capitalized amount of $194,413. This amount was expensed in the restatedthree month and six month periods ended June 30, 2003. A summary of thesignificant effects of the restatement is as follows: 

 
|                                              |   | **June 30,  2003**      |      |
|---------------------------------------------------|--------|------------------------------|-----------|
|                                              |   | **As  Previously  Reported** |      | **As  Restated** |   |
| Prepaid  expense and other                        |   | $                            | 1,244,255 |   | $ | 1,049,842 |   |
| Total  current assets                             |   | 1,965,797                    |      | 1,771,384 |   |
| Total  assets                                     |   | 5,240,058                    |      | 5,045,642 |   |
| Accumulated  deficit                              |   | (10,506,561                  | )         | (10,700,977 | ) |
| Total  shareholders’ deficit                 |   | (1,006,388                   | )         | (1,200,804 | ) |
| Total  liabilities and shareholders’ deficit |   | 5,240,058                    |      | 5,045,642 |   |
|                                                   |        |                              |           |  |  |  |  |

 
|                        |   | **For the  Three Months Ended  June 30, 2003** |    |
|-----------------------------|--------|-----------------------------------------------------|---------|
|                        |   | **As  Previously  Reported**                        |    | **As  Restated** |   |
| Other  operating expenses   |   | $                                                   | 741,125 |   | $ | 935,538 |   |
| Operating  Income           |   | 446,061                                             |    | 251,648 |   |
| Income  Before Income Taxes |   | 357,268                                             |    | 162,855 |   |
| Net  income                 |   | 357,268                                             |    | 162,855 |   |
| Net  income per share       |   | $                                                   | .17     |   | $ | .08 |   |

 
|                      |   | **For the  Six Months Ended  June 30, 2003** |      |
|---------------------------|--------|---------------------------------------------------|-----------|
|                      |   | **As  Previously  Reported**                      |      | **As  Restated** |   |
| Other  operating expenses |   | $                                                 | 1,354,852 |   | $ | 1,549,265 |   |
| Operating  Income (Loss)  |   | 121,219                                           |      | (73,194 | ) |
| Loss  Before Taxes        |   | (65,784                                           | )         | (260,197 | ) |
| Net  loss                 |   | (65,784                                           | )         | (260,197 | ) |
| Net  loss per share       |   | $                                                 | (.03      | ) | $ | (.12 | ) |
|                           |        |                                                   |           |  |  |  |  |  |  |

 

8

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#### **MANAGEMENT’S DISCUSSION ANDANALYSIS 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 year 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,Faire Partners, 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.  InApril 2002, Faire Partners Ltd. leased the property to the Company for atwenty-year term with rent payments of $425,000 in years 1 through 5, $435,000for years 6 through 15 and $450,000 for lease years 16 through 20.  The lease allows Faire Partners to sell partof the leased property.  Should FairePartners sell any property, the lease provides that the Company’s rent paymentsand the buyout provision would be decreased in an amount proportional to theselling price of the property.

 

The leased property inNew York includes a site for a Ski Center that the Company chose to operate in2002.  The Company began operation ofthe Ski Center in April, 2002, incurring nine months operating expense duringthe 2002 fiscal year.  The Ski Centeropened its season in December, 2002, generating revenue into the month ofMarch, 2003.  The Company’s three-monthincome statement results are on a comparable basis for the 2002 to 2003operating seasons.  However, thesix-month income statement results are not comparable because the Company didnot take over operation of the Ski Center until April, 2002.  An explanation of the differences created bythe partial operating season of the Ski Center in 2002 will be disclosed in theaccompanying section titled “*Six Months Ended June 30, 2003 Compared to SixMonths Ended June 30, 2002”.*

 

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 ($312,917) as of June 30, 2003.  While the Company believes that it hasadequate capital to fund anticipated operations for 2003, it believes it mayneed additional capital for future fiscal periods.  See “*Liquidity and Capital Resources*.”

 

9

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**Three Months Ended June 30,2003, Compared to Three Months Ended June 30, 2002**

 

Revenues decreased  $218,841 or 6% from $3,779,489 in 2002 to$3,560,648 in 2003.  This decrease islargely the result of a one day closure in May 2003 of the Company’sSouthern California Faire due to rain. As a result of this closure, revenue and attendance for this event wasdown 8% as compared to the 2002 operating season.

 

Cost of sales increased$6,552 or 1% from $878,638 in 2002 to $885,190 in 2003.  Total operating expenses (year-roundoperating costs and corporate overhead) increased $80,452 or 3%, from$2,343,358 in 2002 to $2,423,810 in 2003. Of the operating expenses, salaries decreased less than 1%, from $977,314in 2002 to 973,636 in 2003 reflecting a $3,678 decrease for the 2003 period ascompared to the 2002 period. Advertising expense showed a decrease of $48,022 or 10%, from $472,592in 2002 to $424,570 in 2003.  This costsavings is, in large part, due to securing a new consulting firm used in theCompany’s media program.  Depreciationand amortization increased 9%, from $82,351 in 2002 to $90,066 in 2003.  Other operating expenses (all other generaland administrative expenses of the Company) increased $124,437 or 15%, from$811,101 in 2002 to $935,538 in 2003.

 

As a result of theforegoing, net operating income (before interest charges and other income)decreased $305,845 or 55%, from $557,493 for the 2002 period to $251,648 forthe 2003 period.

 

Interest expenseincreased $2,077 or 2%, from  $136,453in 2002 to $138,530 in 2003.  Otherincome increased $11,901, from $30,219 in 2002 to $42,120 in 2003.  Interest income decreased $1,296, from$8,913 in 2002 to $7,617 in 2003.

 

Combining net operatingincome with other income/expense resulted in a $297,317 decrease in net incomebefore taxes, from income of $460,172 for the 2002 period to income of $162,855for the 2003 period.

 

Net income to commonstockholders also decreased $297,317, from $460,172 for the 2002 period to$162,855 for the 2003 period.  Finally,net income per common share decreased from $0.21 for the 2002 period to $0.08for the 2003 period, based on 2,144,889 weighted average shares outstanding inboth years.

 

**Six Months Ended June 30, 2003Compared to Six Months Ended June 30, 2002**

** **

Revenues increased  $898,428 or 24% from $3,787,797 in 2002 to$4,686,225 in 2003. The Ski Center revenue for the first six months of 2003 wasapproximately $1.1 million.  Thisadditional revenue was offset by an approximate 8% decrease in revenue andattendance for the Company’s Southern California Faire as a result of a one-dayclosure in May 2003 due to rain.

 

 Cost of sales increased $50,936 or 6% from$881,279 in 2002 to $932,215 in 2003. The Ski Center cost of sales was approximately $80,000 for this timeperiod.

 

Total operating expenses(year-round operating costs and corporate overhead) increased $658,760 or 21%,from $3,168,444 in 2002 to $3,827,204 in 2003. Of the operating expenses, salary expense increased $313,023 or 23% from$1,341,760 in 2002 to $1,654,783 in 2003. Salary expense for the Ski Center was $301,054 for the first six-monthsof 2003.  Advertising expense showed adecrease of $21,863 or 5%, from $472,592 in 2002 to $450,729 in 2003.  Depreciation increased 19%, from $144,722 in2002 to $172,427 in 2003.  Otheroperating expenses (all other general and administrative expenses of theCompany) increased $339,895 or 28%, from $1,209,370 in 2002 to $1,549,265 in2003. Of the operating expense increase, approximately $200,000 is attributableto the 

 

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Ski Center, approximately$80,000 relates to an increase in insurance expense and finally approximately$30,000 is due to an increase in property taxes.

 

As a result of theforegoing, net operating (loss) (before interest charges and other income)decreased 72% from a loss of ($261,926) for the 2002 period to ($73,194) forthe 2003 period.

 

Interest expenseincreased $2,543 or 1%, from  $262,619in 2002 to $265,162 in 2003.  Other incomeincreased $21,697, from $40,298 in 2002 to $61,995 in 2003.  Interest income decreased $2,553, from$18,717 in 2002 to $16,164 in 2003.

 

Combining net operatingincome with other income/expense resulted in a $205,333 decrease in net lossbefore taxes, from loss of ($465,530) for the 2002 period to a loss of($260,197) for the 2003 period.

 

Net loss to commonstockholders also decreased $205,333, from ($465,530) for the 2002 period to($260,197) for the 2003 period. Finally, net loss per common share decreased from ($0.22) for the 2002period to ($0.12) for the 2003 period, based on 2,144,889 weighted averageshares outstanding in both years.

 

**Liquidity and Capital Resources**

** **

The Company’s workingcapital deficit widened during the six-months ended June 30, 2003, from$48,697 at December 31, 2002 to $312,917 at June 30, 2003. TheCompany’s working capital requirements are greatest during the period fromJanuary 1 through May 1, when it is incurring start-up expenses forits first Faire of the season, the Southern California Faire.

 

During the first fourmonths of fiscal 2002, the Company raised capital in the amount of $100,000through the issuance of 12% subordinated promissory notes. The funds wereprovided by Charles S. Leavell, Chairman of the Board of Directors ($50,000),and a party affiliated with the Chairman of the Board.  The notes were issued in units, each unitconsisting of two promissory notes of equal principal, identical in natureexcept that one note is convertible to common stock at a price of $0.30 pershare.  Interest is due and payablequarterly and the notes mature August 31, 2003.

 

During the first sixmonths of fiscal 2000, the Company raised capital in the amount of $575,000through the issuance of 12% subordinated promissory notes. The funds wereprovided by Charles S. Leavell, Chairman of the Board of Directors ($250,000),J. Stanley Gilbert, President and Director ($225,000), and one otherinvestor.  The notes were issued inunits, each unit consisting of two promissory notes of equal principal,identical in nature except that one note is convertible to common stock at aprice of $0.30 per share. Interest was due and payable quarterly and the notesmatured August 31, 2001.  On thematurity date, the non-convertible portion of the notes were retired.  The maturity date for the convertibleportion of the notes were extended until November of 2003 under the sameterms and conditions as the original offer.

 

During the first fourmonths of fiscal 2003, the Company raised short-term capital in the amount of$220,000 through the issuance of 12% unsubordinated promissory notes. The fundswere provided by Charles S. Leavell ($70,000), Chairman of the Board ofDirectors, J. Stanley Gilbert ($100,000), Officer and Board Director, andanother Board Director ($50,000).  Ofthe total outstanding, $120,000 was retired in June and $100,000 inJuly of 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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Reviewing the change infinancial position over the six months, current assets, largely comprised ofcash and prepaid expenses, increased from $1,192,473 at December 31, 2002to $1,771,384 at June 30, 2003, an increase of $578,911 or 49%.  Of these amounts, cash and cash equivalentsdecreased from $642,061 at December 31, 2002 to $385,109 at June 30,2003.  Accounts receivable decreasedfrom $23,530 at December 31, 2002 to $10,441 at June 30, 2003.  Inventory increased from $160,500 atDecember 31, 2002 to $249,726 at June 30, 2003.  Prepaid expenses (expenses incurred on behalfof the Faires) increased from $275,520 at December 31, 2002 to $1,049,842at June 30, 2003.  These costs areexpensed once the Faires are operating.

 

Current liabilitiesincreased from $1,241,170 at December 31, 2002, to $2,084,301 atJune 30, 2003, an increase of $843,131 or 68%. During the quarter,accounts payable and accrued expenses increased $705,517 or 191% from $369,466at December 31, 2002 to $1,074,983 at June 30, 2003.  Unearned income, which consists of the saleof admission tickets to upcoming Faires, passes for the Sterling Forest SkiCenter and deposits received from craft vendors for future Faires, increasedfrom $447,746 at December 31, 2002 to $467,611 at June 30, 2003.  This revenue is recognized once the Fairesand the Ski Center are operating.  TheCompany’s notes payable accounts for $509,325 of the total current liabilities atJune 30, 2003.  This amount islargely attributable to the aforementioned subordinated promissory notes thatmature in August and November, 2003.

 

Stockholders’ Deficitincreased from ($940,607) at December 31, 2002 to ($1,200,804) atJune 30, 2003, an increase of $260,197. This increase is due to the net loss incurred during the firstsix-months of 2003.

 

The lease for theNorthern California Faire requires the Company to complete certain capitalprojects.  The Company estimates thecost of these capital improvements at approximately $50,000 for 2003.  The Company has no additional significantcommitments for capital expenses during the fiscal year endingDecember 31, 2003.  See “FactorsThat May Affect Future Operating Results-Need for Additional Capital”regarding the Company’s financing requirements.

** **

### **FACTORSTHAT MAY AFFECT FUTURE OPERATING 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. *The Company has incurredoperating losses in all fiscal periods since 1995 except fiscal 2000. For thesix months ended June 30, 2003, the Company reported a net loss of($260,197).  There is no assurance that theCompany will be profitable in any subsequent period.

 

*Need for Additional Capital. *The Company had a workingcapital deficit of $312,917 as of June 30, 2003.  See “*Management’s Discussion and Analysis of FinancialCondition and Results of Operations.”* Based on the Company’s plannedoperations for 2003, the Company believes it has adequate capital to fundoperations, repay debt and fund required capital expenditures during the 2003fiscal year. To the extent that operations do not provide the necessary workingcapital during 2003, the Company may need to obtain additional capital for 2003and future fiscal periods.  Additionalcapital may be sought through borrowings or from additional equity financing.  Such additional equity financing may resultin additional dilution to investors.  Inany case, there can be no assurance that additional capital can besatisfactorily obtained, if and when required.

 

*Competition. *The Company facessignificant competition from numerous organizations throughout the country whichoffer Renaissance Faires and other entertainment events, including 

 

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amusement parks, theme parks, local and county fairs and festivals,some of which possess significantly greater resources than the Company, and inmany cases, 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 100 minor RenaissanceFaire events held throughout the United States each year, ranging in durationfrom one day to two weekends.

 

*Lack of Trademark Protection. *Because of the largenumber of existing Renaissance Faires, the Company is not able to rely upontrademark or service mark protection for the name “Renaissance Faire.”  As a result, there is no protection againstothers using the name “Renaissance Faire” for the production of entertainmentevents similar to those produced by the Company.  The Company’s own Faires could be negatively impacted byassociation with substandard productions.

** **

*Public Liability and Insurance. *As a producer of a publicentertainment event, the Company has exposure for claims of personal injury andproperty damage suffered by visitors to the Faires.  To date, the Company has experienced only minimal claims, whichit has been able to resolve without litigation.  The Company maintains comprehensive liability insurance which itconsiders to be adequate against this risk; however, there can be no assurancethat a catastrophic event or claim which could result in damage or liability inexcess of this coverage will not occur.

 

*Dependence Upon Vendors. *A substantial portion ofthe Company’s revenues generated at each Faire is derived from arrangementsthat the Company has with vendors who construct elaborate booths at the Fairesand sell a variety of food, crafts and souvenirs.  This arrangement consists of either a fixed rental or a percentof revenues paid by the vendors to the Company.  In either case, the success of a Faire is dependent upon theCompany’s ability to attract responsible vendors who sell high quality goods.

 

*Seasonality. *The Company’s RenaissanceFaires are located in traditionally seasonal areas that attract the greatestnumber of visitors during the warm weather months in the spring, summer, andearly fall.  With the operation of theSterling Forest Ski Center in New York, the counter-seasonal revenue may helpsmooth the seasonality of the Company’s revenue stream from the RenaissanceFaires.  Unless the Company acquires ordevelops additional Faire sites or other events in areas that arecounter-seasonal to the present sites located in temperate climates, theCompany’s revenues and income will be highly concentrated fromApril through October 31st of each year.

 

*Dependence Upon Weather. *Each Renaissance Faireoperated by the Company is scheduled for a finite period, typically consecutiveweekends during a seven to nine-week period, which are determined substantiallyin advance in order to facilitate advertising and other promotionalefforts.  The success of each Faire isdirectly dependent upon public attendance, which is directly affected byweather conditions.  While each of theCompany’s Faires are normally open, rain or shine, poor weather, or even theforecast of poor weather can result in substantial declines in attendance and,as a result, loss of revenues.  Further,as the Renaissance Faires are outdoor events, they are vulnerable to severeweather conditions that can cause damage to the Faire’s infrastructure andbuildings, as well as injuries to patrons and employees.  Risks associated with the weather are beyondanyone’s control, but have a direct and material impact upon the relativesuccess or failure of a given Faire.

 

*Licensing and Other GovernmentalRegulation. *For eachFaire operated by the Company, it is necessary to apply for and obtain permitsand other licenses from local governmental authorities regulating service ofalcoholic beverages, service of food, health, sanitation, and other matters atthe Faire sites.  Each governmentaljurisdiction has it’s own regulatory requirements that can impose unforeseeabledelays 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 that 

 

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future changes in governmental regulation or the adoption of morestringent requirements may not have a material adverse impact upon theCompany’s future operations.

 

*Faire Sites. *The Company has long-termleases for all four of its Renaissance Faires. The terms and conditions of each lease vary by location, and to a largeextent, are beyond the control of the Company. The Company’s dependence upon leasing Faire sites creates a certain riskof fluctuation in the Company’s operations from year to year.

 

PART II. OTHERINFORMATION

 

Item 6.            Exhibits and Reportson 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. |

 

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|   |   |   | 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.                                                          |
|   | 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.  |
| **     | 10.38  |   | Amendment dated  January 16, 2002 to. San Bernardino County Community and Cultural  Resources Department lease dated June 27, 2000 filed herewith.                                                                                                 |
| **     | 31.1   |   | Certification of Chief  Executive and Chief Financial Officer pursuant to Rule 13a-14(a) under the  Securities Exchange Act of 1934, as amended                                                                                                              |
| **     | 32.1   |   | Certification of Chief  Executive and Chief Financial Officer Pursuant to 18 U.S.C Section 1350, as  adopted pursuant in Section 906 of the Sarbanes Oxley Act of 2002.                                                                                      |

 

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

 

**           Filed herewith.

 

(b)  REPORTS ON FORM 8-K

 

The Registrant filed noCurrent Reports on Form 8-K during the quarter ended June 30, 2003.

 

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SIGNATURES

 

Pursuant to therequirements of Section 13 or 15(d) of the Securities Exchange Act of1934, the Registrant has duly caused this quarterly report to be signed on itsbehalf by the undersigned, thereunto duly authorized.

 

RENAISSANCE ENTERTAINMENTCORPORATION

 
| Date:  November 7, 2003            | /s/ Charles S. Leavell |   |
|----------------------------------------------|------------------------|--------|
| Charles  S. Leavell, Chief Executive Officer |

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, this report has been signed below by the followingpersons on behalf of the Registrant and in the capacities and on the datesindicated.

 
| **Signature**          |   | **Title**                                     |   | **Date**              |
|------------------------|--------|-----------------------------------------------|--------|-----------------------|
|                   |   |                                          |   |                  |
| /s/ Charles S. Leavell |   | Chairman of the Board,                        |   | November 7, 2003 |
| Charles S. Leavell     |   | Chief Executive and  Chief Financial Officers |   |                  |
|                   |   |                                          |   |                  |
| /s/ Sue Brophy         |   | Chief Accounting  Officer and Controller      |   | November 7, 2003 |
| Sue Brophy             |   |                                          |   |                  |

 

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