<PAGE>
FORM 10-QSB - Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the period ended June 30, 1996
-------------------------------------
or
[] 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 (I.R.S. Employer
incorporation or organization Identification No.)
4440 ARAPAHOE AVENUE, SUITE 200, BOULDER, COLORADO 80303
(Address of principal executive offices) (Zip Code)
(303) 444-8273
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
<PAGE>
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
[ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of July 31, 1996, Registrant had 4,437,097 shares of common stock, $.03 Par
Value, outstanding.
2
<PAGE>
INDEX
Page
Number
------
Part I. Financial Information
Item I. Financial Statements
Balance Sheets as of March 31, 1996
and June 30, 1996 (Unaudited) 4
Statements of Operations, Three Months
Ended June 30, 1996 and 1995
(Unaudited) 5
Statements of Cash Flows, Three Months
Ended June 30, 1996 and 1995
(Unaudited) 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Conditions and Results of Operations 8
Part II. Other Information 11
3
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RENAISSANCE ENTERTAINMENT CORPORATION AND CONSOLIDATED SUBSIDIARY
BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
June 30, March 31,
1996 1996
----------- -----------
<S> <C> <C>
Current Assets:
Cash and equivalents $ 345,598 $ 631,063
Accounts receivable 321,837 392,814
Note receivable, current portion 30,123
Inventory 227,289 116,221
Prepaid expenses and other 567,818 979,769
----------- -----------
Total Current Assets 1,492,665 2,119,867
Property and equipment, net of accumulated depreciation 7,212,563 5,156,217
Note receivable, net of current portion 154,524
Construction in progress 1,080,895
Covenant not to compete 55,000 60,000
Goodwill 646,165 1,046,285
Restricted cash 860,342 848,296
Other assets 149,921 121,909
----------- -----------
TOTAL ASSETS $10,571,180 $10,433,469
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 2,035,823 $ 1,181,090
Notes payable, current portion 1,132,459 437,956
Unearned income 303,295 485,798
----------- -----------
Total Current Liabilities 3,471,577 2,104,844
Note payable, net of current portion 2,498,793 2,531,187
----------- -----------
Total Liabilities 5,970,370 4,636,031
----------- -----------
Stockholders' Equity:
Common stock, $.03 par value, 50,000,000
shares authorized, 4,385,264 shares
issued and outstanding at June 30, 1996 131,558 130,826
Additional paid-in capital 7,215,486 7,108,082
Accumulated earnings (deficit) (2,746,234) (1,441,470)
----------- -----------
Total Stockholders' Equity 4,600,810 5,797,438
----------- -----------
Total Liabilities and Stockholders' Equity $10,571,180 $10,433,469
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION AND CONSOLIDATED SUBSIDIARY
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
June 30
-------------------------
1996 1995
----------- -----------
REVENUE:
Sales $ 5,316,083 $4,486,726
Cost of sales 2,147,219 1,864,687
----------- ----------
Gross Profit 3,168,864 2,622,039
----------- ----------
OPERATING EXPENSES:
Salaries 1,472,431 1,184,184
Depreciation and amortization 160,677 103,657
Goodwill writedown 380,000
Advertising 875,601 402,550
Other operating expenses 1,570,959 746,945
----------- ----------
Total Operating Expenses 4,459,668 2,437,336
----------- ----------
Net Operating (Loss) Income (1,290,804) 184,703
----------- ----------
Other Income (Expenses):
Interest income 16,725 35,563
Interest expense (81,933) (48,940)
Miscellaneous income 51,248 1,513
----------- ----------
Total Other (13,960) (11,864)
----------- ----------
Net Income (Loss) before Taxes (1,304,764) 172,839
Income Taxes 116,415
----------- ----------
Net Income (Loss) to Common Stockholders $(1,304,764) $ 56,424
----------- ----------
----------- ----------
Net Income (Loss) per Common Share $ (.30) $ .02
----------- ----------
----------- ----------
Weighted Average Number of Common
Shares Outstanding 3,996,189 3,750,297
----------- ----------
----------- ----------
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION AND CONSOLIDATED SUBSIDIARY
STATEMENTS OF CASH FLOWS
Three Months ended
June 30,
--------------------------
1996 1995
----------- -----------
Cash Flows from Operating Activities:
Net income (Loss) $(1,304,764) $ 56,424
----------- -----------
Adjustments to reconcile net income (Loss)
to net cash provided by operating activities:
Depreciation and amortization 540,677 103,657
(Increase) decrease in:
Inventory (111,068) (18,601)
Receivables (113,670) (312,609)
Prepaid expenses and other 383,939 459,817
Increase (decrease) in:
Accounts payable and accrued expenses 854,733 522,761
Unearned revenue and other (182,503) (362,286)
----------- -----------
Total adjustments 1,372,108 392,739
----------- -----------
Net Cash Provided by Operating Activities 67,344 449,163
----------- -----------
Cash Flows from Investing Activities:
(Acquisition) of investments (12,046) (1,780,642)
(Acquisition) of property and equipment (1,111,008) (1,215,986)
----------- -----------
Net Cash (Used in) Investing Activities (1,123,054) (2,996,628)
----------- -----------
Cash Flows from Financing Activities:
Common stock issued and additional
paid-in capital 108,136 318,036
Proceeds from notes payable 675,000 1,000,000
Principal payments on notes payable (12,891) (465,584)
Other 50,933
----------- -----------
Net Cash Provided by Financing Activities 770,245 903,385
----------- -----------
Net Increase (Decrease) in Cash (285,465) (1,644,080)
Cash, beginning of period 631,063 3,296,652
----------- -----------
Cash, end of period $ 345,598 $ 1,652,572
----------- -----------
----------- -----------
Interest paid $ 81,933 $ 48,940
----------- -----------
----------- -----------
Income tax paid $ - $ -
----------- -----------
----------- -----------
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
RENAISSANCE ENTERTAINMENT CORPORATION AND
CONSOLIDATED SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 (Unaudited)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Renaissance Entertainment Corporation (the "Company") was organized on
June 24, 1988, as a Colorado Corporation.
2. UNAUDITED STATEMENTS
The balance sheet as of June 30, 1996 and March 31, 1996, the statement of
operations and the statement of cash flows for the three month periods
ended June 30, 1995 and 1996, have been prepared by the Registrant without
audit. In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
position, results of operations and changes in financial position at
June 30, 1996 and for all periods presented, have been made.
3. CALCULATION OF EARNINGS (LOSS) PER SHARE
The earnings (Loss) per share is calculated by dividing the net income
(Loss) to common stockholders by the weighted average number of common
shares outstanding.
7
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Company's Consolidated Financial Statements, including the footnotes.
The Company has changed its fiscal year end from March 31 to December
31. The current year will now end on December 31, 1996, and the Company will
now report results of operations for nine months rather than twelve months.
LIQUIDITY AND CAPITAL RESOURCES - JUNE 30, 1996 COMPARED TO MARCH 31, 1996
ASSETS
The Company substantially increased its investment in net property and
equipment during the quarter ended June 30, 1996. Property and equipment
increased 40% from $5,156,217 at March 31, 1996 to $7,212,563 at June 30,
1996. This increase reflects the Company's substantial investment at the
Virginia Renaissance Faire. Note receivables increased by $184,647 as a
result of promissory notes issued to the Company by craft vendors for the
Virginia Faire to reimburse the Company for capital improvements it made for
the benefit of certain craft vendors.
Cash and equivalents decreased by $285,465 from $631,063 at March 31,
1996 to $345,598 at June 30, 1996. The decrease in cash and equivalents is
due in part to the operating losses for the quarter and in part due to the
increased purchases of property and equipment for the Virginia Renaissance
Faire. Accounts receivable was reduced by $70,977, reflecting payment from
outside vendors as the Faires in Southern California and Virginia ended their
seasonal runs in mid-June. Inventory increased by $111,068 from $116,222 to
$227,289. The Company's merchandise division purchased additional inventory
to gear up for its Bristol Renaissance Faire in Wisconsin, the New York
Renaissance Faire in Tuxedo, and the Northern California Renaissance Pleasure
Faire near San Francisco. Prepaid expenses decreased 42% from $979,769 to
$567,818. This change reflects the recognition of expenses as the Faire
season progresses. Goodwill decreased by $400,120 from $1,046,285 to
$646,165. This is due to yearly amortization and a decrease in goodwill of
$380,000 for the Southern California Faire. The lack of operating profits in
Southern California for the past two years caused management to reduce
goodwill. In summary, CURRENT ASSETS decreased by 30%, from $2,119,867 as of
March 31, 1996 to $1,492,665 as of June 30, 1996. TOTAL ASSETS increased by
1.3% from $10,433,469 to $10,571,180. This is due to the capital construction
of the Virginia Renaissance Faire.
LIABILITIES
The Company's TOTAL LIABILITIES increased by $1,334,339 or 28.8%, for
the quarter ended June 30, 1996. Accounts payable increased by $854,733 to
$2,035,823, in part due to the cyclical increase in accounts payable owing to
the completion of the Southern California and Virginia Renaissance Faires and
the start-up of the Bristol and New York Renaissance Faires. The current
portion of the notes payable increased by $694,503 to $1,132,459 from
$437,956 at March 31, 1996. The Company drew cash from its operating lines of
credit to finance both capital improvements at the Virginia Renaissance Faire
and its operating losses. Unearned income decreased by $182,503 to $303,295.
The Company recognized deposits from vendors as income once the Southern
California Faire and Virginia Faire completed their seasonal run. Based on
these events, the Company's CURRENT LIABILITIES increased by 64.9% to
$3,471,577 at June 30, 1996 from $2,104,844 at March 31, 1996.
8
<PAGE>
LIQUIDITY
The changes in current assets and liabilities resulted in a decrease in
working capital of $1,993,935 from $15,023 at March 31, 1996 to $(1,978,912) at
June 30, 1996. The decrease in working capital is primarily due to use of cash
to fund the Virginia construction project, which transfers assets out of working
capital and into long-term assets, as well as cash outflow required from its
operations during the 1996 Renaissance Faire. The Company's future liquidity is
highly dependent on results of the remaining three Faires to be held in the
summer and fall of 1996. It is management's opinion that cash flow from
operations will not be adequate to fund the Company's existing short-term and
long-term obligations owed to lending institutions.
Except for approximately $100,000 of capital improvements to complete the
construction of the Virginia Renaissance Faire, the Company has no current
commitments for any material capital expenditures for the balance of the year.
The Company currently owes $250,000 to Bank One Kenosha and $750,000 to Bank One
Boulder for its operating lines of credit that are due on September 1, 1996.
Based on recent discussions with these lenders, management believes that a sixty
day extension will be granted by both lenders. There can be no assurance that
the extensions will be granted. Management has begun discussions with its
current lenders and other outside sources to increase its lines of credit and/or
refinance its existing lines of credit to accommodate the cyclical nature of the
Company's operations. Management believes that it will be necessary to raise
approximately $1,500,000 of additional working capital either through debt or
equity to fund its short-term cash flow problems. Efforts are currently
underway to accomplish that goal. However, there can be no assurance that
additional capital will be available to the Company, or if available, available
on terms acceptable to the Company. There is a possibility that the Company
may need to raise equity capital at a price significantly lower than the current
market price for the Company's common stock.
SHAREHOLDERS' EQUITY
Shareholders' equity decreased $1,196,628 or 20.6% from $5,797,438 at March
31, 1996 to $4,600,810 at June 30, 1996. Equity was reduced $924,764, due to
the net operating loss for the quarter. Equity decreased $380,000 due to the
write off of goodwill for the Southern California Faire and equity increased by
$108,136 due to the exercise of warrants and employee stock options.
9
<PAGE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE
MONTHS ENDED JUNE 30, 1995
The results of operations of the Company for the quarter ended June 30,
1996, reflect operations of the full nine week run of the Southern California
Faire, the full seven week run of the Virginia Renaissance Faire, and one
weekend of the Bristol Renaissance Faire.
Revenue increased from $4,486,726 for the three months ended June 30, 1995
to $5,316,083 for the three months ended June 30, 1996. This is an increase of
18.5%. The increase in revenues related to the opening of the Virginia Faire
during the quarter. The increased revenues from the run of the Virginia Faire
were offset by a decrease in revenues of $489,087 for the Southern California
Faire as compared to last year. Unusually inclement weather in both Virginia
and Southern California reduced the expected revenues from Faire operations.
Operating expenses increased by $1,642,332 in 1996 compared to 1995. This
is partially due to the increased costs of starting a new Faire in Virginia and
six months of operating expenses for the New York Renaissance Faire, which was
purchased by the Company in February 1996. Due to the pooling of interests
between Creative Faires, Ltd. (The New York Renaissance Faire) and the Company
and the different fiscal year ends of Creative Faires, Ltd. and the Company, the
Company is accounting for six months of operations for the New York Faire in
this three month quarter. The Company wrote down $380,000 in Goodwill for the
Southern California Faire, based on its poor performance for the past two years.
The Company incurred a NET LOSS of $1,304,764 for the three months ended
June 30, 1996 compared to a NET INCOME of $56,424 for the three months ended
June 30, 1995. The decrease in net income is due to: a) losses incurred with
the opening of the Virginia Faire, reflecting the industry experience that it
can take two or more years for a new Faire to become profitable; and b) to the
decrease in revenues from the Southern California Faire. The Company believes
that it will be necessary to find a new permanent location for the Southern
California Faire in order to improve its operating results. While the Company
is currently investigating new sites for this Faire, there can be no assurance
that a new site will be available or, if available, available on terms
acceptable to the Company.
Net loss per share was ($.30) for the first quarter of the current fiscal
period compared to net income per share of $.02 in a similar period last year.
This reflects the operating losses for the Virginia Faire, start-up costs for
the Virginia Faire, the reduction of revenue from the Southern California Faire,
six months of operating expenses for the New York Faire, and the write-down of
$380,000 of goodwill for the Southern California Faire.
10
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
The company was not required to file report on Form 8-K during the
quarter ended June 30, 1996.
EXHIBIT 27.
11
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RENAISSANCE ENTERTAINMENT CORPORATION
Dated: 8/23/96 /s/ Miles Silverman
------------------- -------------------------------------
Miles Silverman, President
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 345,598
<SECURITIES> 0
<RECEIVABLES> 321,837
<ALLOWANCES> 0
<INVENTORY> 227,289
<CURRENT-ASSETS> 1,492,665
<PP&E> 8,712,469
<DEPRECIATION> 1,499,906
<TOTAL-ASSETS> 10,571,180
<CURRENT-LIABILITIES> 3,471,577
<BONDS> 3,631,252
0
0
<COMMON> 131,558
<OTHER-SE> 4,469,252
<TOTAL-LIABILITY-AND-EQUITY> 10,571,180
<SALES> 1,699,998
<TOTAL-REVENUES> 5,316,083
<CGS> 620,211
<TOTAL-COSTS> 1,527,008
<OTHER-EXPENSES> 4,459,668
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81,933
<INCOME-PRETAX> (1,304,764)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,304,764)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,304,764)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.24)
</TABLE>
