SOUTHSHORE CORP /CO
10-Q, 1996-10-24
MISCELLANEOUS AMUSEMENT & RECREATION
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PAGE>
                                FORM 10-Q
                     SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C.  20549
 
(Mark One)

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

For the quarterly period ended September 30, 1996

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
       EXCHANGE ACT OF 1934

For the transition period from ___________________ to _________________

                Commission File Number 0-19949

                 THE SOUTHSHORE CORPORATION
      (Exact name of registrant as specified in its charter)


          Colorado                                      84-1153522  
- ---------------------------                       ------------------------
(State or other jurisdiction                         (I.R.S. Employer
of incorporation or organization                    Identification No.)


         10750 East Briarwood Avenue, Englewood, Colorado 80112
         ------------------------------------------------------
              (Address of principal executive offices)

                           (303) 649-9875
                           --------------
          (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.

                              Yes X    No___

                 APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares outstanding of each of the issuer's classes 
of common stock, as of the last practicable date.

     The registrant had 2,610,470 shares of its $.001 par value common stock 
outstanding as of September 30, 1996.

                                  1
<PAGE>


                PART I - FINANCIAL INFORMATION          

ITEM 1.  FINANCIAL STATEMENTS               
               
THE SOUTHSHORE CORPORATION               

BALANCE SHEET (Unaudited)               
<TABLE>
<CAPTION>
                           March 31,                   September 30,
                              1996                          1996
CURRENT ASSETS               
<S>                     <C>                         <C>               
Cash                         1,625                           399
Accounts Receivable              0                        27,659
Notes Receivable                 0                        28,230
Inventory                        0                           250
                           -------                     ---------
 Total Current Assets        1,625                        56,537
               
OTHER ASSETS
               
Land                       435,173                       435,173
Property and 
Equipment,
net of accumulated 
depreciation of
$1,961,122 and 
$2,240,878,
respectively             2,508,664                     2,255,247
Deposits                    48,485                        17,185
Prepaids                     4,846                        24,939
Debt Offering Costs,               
net of accumulated 
amortization                29,397                        18,872
                        ----------                    ----------
 Total Assets            3,028,190                     2,807,952
               
CURRENT LIABILITIES               
               
Notes Payable -
Current                    326,762                       269,088
Notes Payable -
Related Parties            153,400                        97,400
Payroll Taxes 
Payable                       (775)                        8,239
Property Taxes  
Payable                    384,275                       432,322
Accrued Interest            49,164                        63,659
Accounts Payable -
Trade                      142,743                        53,564
Deferred Credits            30,991                        27,139
Accrued Payroll                  0                             0
Sales Tax Payable                0                             0
                         ---------                     ---------
 Total Current 
Liabilities              1,086,560                       951,412
               
Notes Payable                
net of current 
portion                    835,598                       815,158
Notes Payable - 
Related Parties               
net of current 
portion                    400,000                       261,000
                        ----------                    ----------
 Total Liabilities       2,322,158                     2,027,570
               
STOCKHOLDERS' EQUITY               
               
Preferred Stock, 
$.01 Par Value               
  25,000,000 Shares 
Authorized  
None Issued and 
Outstanding               
               
Common Stock, 
$.001 Par Value               
100,000,000 Shares 
Authorized;
2,610,470 issued 
and outstanding
and Outstanding 
Respectively                 2,611                         2,611
               
Additional Paid-
In Capital               4,377,574                     4,377,574
Retained Earnings       (3,674,153)                   (3,599,803)
                        -----------                   -----------
 Total Stockholders' 
Equity                     706,032                       780,382

 Total Liabilities and
Stockholders' Equity     3,028,190                     2,807,952
</TABLE>
                                       2
<PAGE>


THE SOUTHSHORE CORPORATION               
               
STATEMENT OF OPERATIONS               
(Unaudited)               
                                         Six Months           Six Months
                                           Ended                Ended
                                        September 30,        September 30,
                                           1996                 1995
Revenue               
<TABLE>
<CAPTION>
<S>                                    <C>                  <C>                
Sales -Admissions                         820,760             681,938
Sales -Food, Merchandise                  221,734             154,542
Sales -Other                                4,766                   0
Corporate Sponsorships                     25,050              14,307
                                         --------             -------
 Total Sales                            1,072,310             850,787
               
               
Cost of Sales                              23,429              10,973
                                         --------             -------
Gross Profit                            1,048,881             839,814
               
               
Operating Expenses
               
Salaries                                  221,153             228,947
Payroll Taxes                              36,730              41,837
Operating Supplies                         14,832              14,539
Chemicals                                  13,106              10,846
Repairs & Maintenance                      21,510              17,720
Advertising                                90,963              99,841
Outside Services                           20,384              48,497
Utilities                                  87,493              97,889
Equipment Rental                                0               1,359
Insurance                                  18,951              18,896
Depreciation & Amortization               279,756             280,325
Property Taxes                             60,307              62,072
Other                                      12,793               7,776
                                          -------             -------
  Total Operating Expenses                877,980             930,544
               
               
Excess of Revenue over Expense                
(Before Other Income/Expense)             170,901             (90,731)
               
               
Other Income                               11,351                 500
Interest Expense (Net)                    (97,377)            (33,751)
Amortization of Debt Offering             (10,525)            (10,525)
                                          --------            --------
     Net Profit(Loss)                      74,350            (134,507)
               
Gain (Loss) Per Share                        0.03               (0.05)
</TABLE>
                                  3

<PAGE>


THE SOUTHSHORE CORPORATION               
               
STATEMENT OF OPERATIONS               
(Unaudited)               
                                        Three Months           Three Months
                                       Ended Sept 30,          Ended Sept 30,
                                           1996                    1995
<TABLE>
<CAPTION>
Revenue               
<S>                                     <C>                     <C>            
Sales -Admissions                        625,196                 574,371
Sales -Food, Merchandise                 166,641                 131,344
Sales -Other                               2,440                   1,500
Corporate Sponsorships                     1,800                     600
                                         -------                 -------
     Total Sales                         796,077                 707,815
               
               
Cost of Sales                             15,224                   9,067
                                         -------                 -------
Gross Profit                             780,853                 698,748
               
Operating Expenses               
               
Salaries                                 135,807                 146,472
Payroll Taxes                             25,033                  30,098
Operating Supplies                         6,429                   6,494
Chemicals                                  6,224                   4,916
Repairs & Maintenance                      8,542                   6,620
Advertising                               29,796                  23,453
Outside Services                           6,645                  28,062
Utilities                                 57,411                  66,002
Equipment Rental                               0                     650
Insurance                                  9,335                   8,688
Depreciation & Amortization              140,001                 140,159
Property Taxes                            30,154                  30,793
Other                                     10,985                   8,780
                                         -------                 -------
     Total Operating Expenses            466,361                 501,188
               
               
Excess of Expense Over               
     Revenue (Before Other                
     Income/Expense)                     314,492                 197,560
               
               
Other Income                               7,786                     500
Interest Expense (Net)                   (49,857)                (46,710)
Amortization of Debt Offering             (5,263)                 (5,263)
                                         --------                 -------
     Net Profit(Loss)                    267,158                 146,088
               
Net Profit Per Share                        0.10                    0.06
</TABLE>
                                  4

<PAGE>


THE SOUTHSHORE CORPORATION                         
                         
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY                         
From March 31, through September 30, 1996                         
(Unaudited)



<TABLE>
<CAPTION>                         
                                        Additional     Retained     
                  Number of   Common     Paid-In       Earnings     
Date               Shares     Stock      Capital       (Deficit)     Total
<S>             <C>          <C>       <C>           <C>            <C>      
Balance at
 March 31,
 1996            2,610,470    2,611     4,377,574     (3,674,153)    706,032
                         
Net Profit 
Six Months 
Ended                         
September 30, 
1996                                                      74,350      74,350
                         
Balance at
 September 
30, 1996         2,610,470    2,611     4,377,574     (3,599,803)    780,382
</TABLE>













                                    5


<PAGE>


THE SOUTHSHORE CORPORATION               
               
STATEMENT OF CASH FLOWS               
(Unaudited)                             Six Months            Six Months
                                          Ending                Ending
                                       September 30,         September 30,
                                           1996                  1995
<TABLE>
<CAPTION>
Cash flows from Operating 
Activities               
<S>                                   <C>                    <C>               
Net Profit(Loss)                         74,350               (134,507)
               
               
Adjustments to Reconcile 
Net (Loss) to Net Cash 
(Used In) Operating Activities               
               
Amortization and Depreciation           290,281                290,850
(Increase)  in Accounts Receivable      (55,888)                (2,072)
(Increase) in Inventory                    (250)                     0
(Decrease) in Accounts Payable               
and Accrued Expenses                    (17,847)              (586,617)
               
Other, Net                              (23,719)                16,875
                                        -------                -------
Net Cash (Used In) Operating
     Activities                         266,927               (415,470)
               
               
Cash flows from Investing 
Activities               
               
Deposits                                 31,300                   (460)
Land, Property, Equipment               (26,340)                21,733
                                        -------                -------
Net Cash (Used In) Investing
     Activities                           4,961                 21,273
               
Cash flows from Financing 
Activities               
               
Increase(Decrease) Debt                (273,114)               (62,109)
Issuance of Stock, Net
 of Offering Costs                            0                459,548
               
Net Cash Provided by Financing
     Activities                        (273,114)               397,439
                                       --------                -------
Increase (Decrease) in Cash              (1,226)                 3,241
               
Cash, Beginning of Period                 1,625                    539
               
Cash, End of Period                         399                  3,780
                                        -------                 ------         
Income Taxes Paid                             0                      0
               
Interest Paid                            68,802                 78,838
</TABLE>
                                 6

<PAGE>


                     THE SOUTHSHORE CORPORATION

                   NOTES TO FINANCIAL STATEMENTS

                       September 30, 1996
                          (Unaudited)

(1)  Summary of Accounting Policies
     ------------------------------
A summary of significant accounting policies consistently applied in the 
preparation of the accompanying financial statements follows:

(a)     General
        -------
     The Southshore Corporation ("Company") was incorporated under the laws of 
Colorado on March 26, 1990 for the purpose of engaging in any lawful 
business.  The company operates a waterpark in southeast Denver metro area.

(b)     Unaudited Financial Statements
        ------------------------------
     The accompanying financial statements have been prepared by the 
registrant without audit and are the responsibility of the Company's 
management.  Management is of the opinion that all adjustments that should be 
made to the accompanying financial statements in order for them to present 
fairly the financial position, results of operations and cash flows for the 
periods presented have been made.

     Management has elected to omit substantially all the footnote disclosures 
required by generally accepted accounting principles.

     The accompanying financial statements should be read in conjunction with 
the Company's audited financial statements as of March 31, 1996.  The results 
of operation for the period ended September 30, 1996 are not indicative of the 
operating results for the full year.

(c)     Property and Equipment
        ----------------------
     Property and equipment are stated at cost.  The original park water 
features are depreciated using a straight line method based on a 7 year 
estimated useful life.  A 20 year estimated useful life on a straight line 
basis is utilized on the buildings.  Park improvements since 1994 have been 
depreciated using a modified accelerated cost recovery method over 31.5 years 
for buildings and 7 years for equipment.

                                 7

<PAGE>
(2)  Liquidity and Capital Resources
     -------------------------------
See Management's Discussion for disclosure related to liquidity and capital 
and the related contingencies and commitments.

(3)  Net Profit and Loss Per Common Share
     ------------------------------------
Net profit and loss per common share for the three and six month period ended 
September 30, 1996 and 1995 has been computed based on the weighted number of 
shares outstanding during the respective periods.

(4)  Bank Line of Credit -Note to President
     --------------------------------------
On April 25, 1994, the Company issued a five year promissory note in the 
amount of $400,000 to its President.  The note was issued pursuant to an 
arrangement whereby the President became personally obligated and personally 
secured a $400,000 bank line of credit, the proceeds of which were made 
available to the Company.  The Company is required to pay interest on the line 
at the bank's prime rate.  The Company's President has the right to purchase 
common stock at $2.25 per share in an amount equal to what he is at risk on 
the bank line of credit.  On default of the note he may convert the 
outstanding balance to common stock at $1.00 per share.  At September 30, 
1996, the balance was $261,000.

(5)  10% Secured Notes -$970,000
     ---------------------------
The Company was required to pay down the principal balance of its outstanding 
10% Secured Notes by 25% on September 30, 1994, June 30, 1995 and June 30, 
1996 respectively.  The Company failed to make these payments, however it has 
obtained deferrals from holders of $735,000 in these notes as to payments of 
principal through September 30, 1997.  Additionally, the trustee under the 
Indenture relating to these notes resigned as trustee effective November 4, 
1994.

(6)  Commercial Lease -Phantoms, LLC
     -------------------------------
A $28,230 note receivable has been recorded to reflect an amount due from 
Phantoms, LLC pursuant to a commercial lease and promissory note pursuant to 
which the Company advanced $28,230 as of September 30, 1996 to Phantoms, LLC 
for materials to implement a haunted house at the waterpark facilities.  See 
Item 5, "Other Events", for further details.

                                  8


<PAGE>


   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                     RESULTS OF OPERATIONS

Financial Condition

     At September 30, 1996, working capital was a negative $894,875 as 
compared to a negative $1,084,935 at March 31, 1996.  The principal reasons 
for the working capital shortfall are unpaid and accrued property taxes of 
$411,548, trade payables, and undeferred noteholders of $235,000.  The 
decrease in negative working capital is primarily due 1996 summer operations 
which enabled the company to pay off short term debt and trade payables.  See 
"Liquidity and Capital Resources" below.

     At September 30, 1996, the Company's shareholders' equity was $780,382, 
up from $706,032 at March 31, 1996, due entirely to operating profits.

Results of Operations -Six Months Ended September 30, 1996 Compared to Six 
Months Ended September 30, 1995

     Revenues for the current six months were up over 26% compared to the same 
period in 1995.  This increased is accounted for by increased attendance, 
increased ticket price, the park's increased lease percentage of concession 
and catering gross sales by the changing of our food service provider and more 
favorable weather conditions during June 1996 as compared to June 1995.

     Total operating expenses were down 5.6% as compared to the comparable 
period in 1995.  Salaries were down over 3%.  Payroll taxes decreased over 
12%.  Advertising expenditures were down almost 9% and the cost of outside 
services was down 58%.  Depreciation and amortization remained basically the 
same for the two periods.  The interest expense for period in 1996 is 
consistent with the debt.  The relative low interest expense for the period 
1995 was an anomaly due to aggressive negotiation by management in the lien 
construction settlements.

     Management expects the Company to experience an additional approximate 
$557,000 in operating expenses (including depreciation and amortization) and 
interest expenses during the remainder of the fiscal year ended March 31, 
1996.  A non-cash item, $290,000 in depreciation and amortization constitutes 
approximately 52% of these anticipated operating expenses and interest 
expenses.  Property taxes of $60,000 and interest expense of $95,000 
constitute approximately 11% and 17% of such anticipated expenses.

                                  9

<PAGE>


Results of Operations -Three Months Ended June 30, 1996 Compared to Three 
Months Ended June 30, 1995

     Revenues for the current three months were up over 12% compared to the 
comparable period in 1995.  This increase in revenue is due to increased 
attendance, increase per-capita spending per customer and more favorable lease 
terms with our food concessionaires.

     Overall operating expenses, even with the increase in revenues, declined 
almost 7%.  Salaries decreased by over 7%, and payroll taxes decreased by 
almost 17%.  Advertising increased for the period by 27%, but expenditures for 
outside services declined 76% as the Company's need for legal services and 
other outside consultants has declined substantially.  Depreciation and 
amortization remained basically the same for the two periods.  Interest 
expense of $49,857 is consistent with the Company's debt.

     The net profit for the operating quarter is $267,158 as compared to the 
profit of $146,088 for the same quarter in 1995 and is due primarily to 
increased revenues and decreasing costs of doing business for the quarter.  In 
both quarters, depreciation and amortization, a non-cash item, accounted for 
approximately $145,000 of these losses.

Liquidity and Capital Resources

     At September 30, 1996, the Company had $951,412 in current obligations, 
primarily composed of notes payables, and accrued and past due property 
taxes.  Most of the notes payables are due to affiliates and other parties 
friendly to the Company, while the trade payables are composed largely of 
professional fees with firms and other trade creditors which are not pressing 
for payment and/or are willing to accept terms over an extended period of 
time.

     The accrued and past due property taxes are currently on appeal and are 
not subject to foreclosure until November 1997.  The Company has appealed 
these evaluations with Arapahoe County, Colorado without much success and will 
continue appeals in the future in hopes of reducing its annual property tax 
assessment, however there is no assurance that it will be successful.

     Management is seeking long-term financing of its debt and the inclusion 
of additional debt in a new debt package to finance additional park facilities. 


     In the past, the Company has relied on its principal shareholders for 
capital infusion and short-term loans to fund some of the Company's operating 
expenses and pay creditors.  Failure to have these or similar funding 
available in the future could result in short-term cash flow and creditor 
problems.  Long-term financing is expected to relieve the Company's short-term 
debt problems.

                              10

<PAGE>
     In order to provide revenues in the off season (mid-September through 
lat May), the Company is leasing park facilities for other uses such as a 
haunted house facility during October and automobile storage in the parking 
lot.
















                                 11

<PAGE>

ITEM 5.   OTHER EVENTS
- -------   ------------
     In order to provide other revenue sources for the Company in the off 
season, in August 1996 the Company entered into a lease with Phantoms, LLC, a 
Colorado limited liability company, whereby Phantoms is to operate a haunted 
house at the Company's waterpark facility during October 1996.  The haunted 
house is to use pavilions and other non-water feature portions of the park 
with temporarily implemented modifications.  Under the terms of the lease, the 
Company and Phantoms are to pay certain designated expenses and share in the 
net profits, if any, of the project.  As part of the lease, the Company 
advanced $28,230 to Phantoms as of September 30, 1996 for materials to 
implement the haunted house attraction.  Under the terms of the lease, the 
Company is to recoup this advance from the initial ticket sales from this 
attraction and Phantoms has executed a promissory note to the Company for this 
advance.  Phantoms has the option of extending the lease each year for a 
minimum of four additional years.











                                12

<PAGE>


                   PART II -OTHER INFORMATION

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K.
- -------     ---------------------------------
(a)  Exhibits

     3.1     Articles of Incorporation(1)

     3.2     Bylaws(1)

     10.1    Underwriter's Warrants to Purchase Common Stock(1)

     10.3    Incentive Stock Option Plan(1)

     10.12   Indenture of Trust and 10% Secured Promissory Note(2)

     10.25   Promissory Note -Vancol Industries, Inc.(3)

     10.26   Convertible Promissory Note -Kenneth M. Dalton(4)

     10.27   Stock Option -Kenneth M. Dalton(4)

     10.28   Convertible Promissory Note $104,500 -Kenneth M. Dalton(5)

     10.29   Stock Option 61,250 shares -Kenneth M. Dalton(5)

     10.30   Commercial Lease - Phantoms, LLC

     27.1    Financial Data Schedule
____________________

(1)   Incorporated by reference to Form S-18 Registration Statement, File No. 
      33-42730-D, filed September 11, 1991

(2)   Incorporated by reference to Form 10-K for year ended March 31, 1993 
      filed July 16, 1993, File No. 0-19949

(3)   Incorporated by reference to Amendment No. 1 to the Form S-1, File No. 
      33-73774, filed February 9, 1994

(4)   Incorporated by reference to Form 8-K filed May 5, 1994, File No. 0-19949

(5)   Incorporated by reference to Form 8-K filed December 30, 1994, File No. 
      0-19949

                                  13

<PAGE>


(b)     Reports on Form 8-K:

   No reports on Form 8-K were filed during the quarter ended June 30, 1996.


                             SIGNATURES

     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.

                      THE SOUTHSHORE CORPORATION



October 23, 1996                By  /s/ Kenneth M. Dalton               
- ----------------                   -----------------------------
Date                             Kenneth M. Dalton, President
                                 and Principal Executive Officer



October 23, 1996               By  /s/ Eric L. Nelson                  
- ----------------                  ---------------------------
Date                             Eric L. Nelson
                                 Principal Accounting Officer













                              14

<PAGE>

<PAGE>
                                                                EXHIBIT 10.30

8/7/96                  COMMERCIAL LEASE

     THIS COMMERCIAL LEASE is made and entered into this        day of August 
                                                         ------
1996, by and between The Southshore Corporation, a Colorado Corporation, 
hereinafter called Southshore and Phantoms, LLC, a Colorado Limited Liability 
Company, hereinafter called Phantoms.

     WHEREAS, Phantoms is experienced in the construction and operation of 
commercial haunted houses and desires to construct and operate a first class 
commercial haunted house and other entertainment activities, hereinafter 
called the Project, during October of 1996, on the property owned by 
Southshore at 10750 E. Briarwood Ave., Englewood, Colorado, and

     WHEREAS, Southshore is willing to lease to Phantoms the portions of its 
property reasonably needed by Phantoms to construct and operate its Project, 
and

     WHEREAS, Phantoms and Southshore desire to establish a long term working 
relationship which includes operating the Project in future years and possible 
equity participation by Southshore in similar projects located at other water 
parks.

     NOW THEREFORE, the parties agree as follows:

     1.     Leased Premises.  Southshore agrees to lease to Phantoms certain 
areas located on its property located at 10750 E. Briarwood Avenue, Englewood 
Colorado, hereinafter referred to as the Leased Premises, which Phantoms 
reasonably required to construct and operate the Project.  This space will 
include, but not be limited to, the parking lot, the park entrance and access 
to the Project facilities, the two pavilions, the area between the pavilions, 
the area where the miniature golf course is located, and the volleyball 
courts.  Such use shall not damage or cause undue wear on Southshore Waterpark 
facilities and Southshore shall have the right of access to all of the Leased 
Facilities for the purpose of inspection and maintenance of its facilities.  
Phantoms shall provide Southshore with the right to review and approve the 
location of all Project facilities.  Such approval shall not be denied unless 
Southshore believes the proposed location could damage the waterpark 
facilities, cause undue wear on them or cause undue concerns regarding the 
safety of people or park facilities.                                           

     2.     Lease Term.  The Lease Term will be one year commencing on August 
7, 1996, and terminating on August 5, 1997, unless it is extended pursuant to 
Paragraph 5, but the Southshore property shall be occupies and used by 
Phantoms to construct and operate the Project only for the period described in 
Paragraph 3 below.

     3.     Permitted Uses.  The Leased Premises shall be used for the 
construction and operation of the Project.  The Project will be operated and 
open to the public from September 26, 1996 to November 3, 1996.  Phantoms 
shall have the use of the Leased Premises for the construction of the Project 
from September 6, 1996 to September 26, 1996 and shall have the use of the 
Leased Premises for the disassembly of the Project from November 3 to December 
1, 1996.  Phantoms will be responsible for the storage of 

                                    1

<PAGE>

equipment and materials which can be reused to construct the Project in 1997.
Phantoms understands that Southshore will need reasonable access to its 
waterpark facilities during this period to perform maintenance and to 
winterize them.

     4.     Rent and Expenses.  On or before December 1, 1996, Phantoms shall 
pay to Southshore rent for the Leased Premises in the amount of 50% of the 
Adjusted Net Profits from the operation of the Project.  Net Profits, for the 
purpose of this Lease, shall mean the Gross Revenues from admission ticket 
sales to the Project, minus all necessary and appropriate Project construction 
and operating expenses, hereinafter referred to as Project Expenses.  Adjusted 
Net Profits means Net Profits minus 10 percent of the of the Net Profits.  
This 10 percent of Net Profits shall be paid to Phantoms as its management fee 
for constructing and operating the Project.

     Project Expenses for the Project include the cost of material and 
equipment needed to install the Project, the cost of installing the Project, 
and the cost of operating and maintaining the Project.  The preliminary budget 
for the Project is attached hereto as Exhibit A and shall include, but not be 
limited to, materials, equipment, advertising, insurance, Project repairs and 
maintenance, utilities required to operate the Project, employees' salaries, 
taxes, security and other mutually agreed upon expenses which are not 
described above or listed in Exhibit A.  A revised budget shall be prepared 
and submitted to Southshore by August 15, 1996.  The cost of purchasing, 
installing and operating the Project shall not exceed $150,000 unless the 
parties mutually agree that this amount may be exceeded.  Phantoms will use 
its best efforts to install and operate the Project for significantly less 
than that amount.  Phantoms, to the extent possible, agrees to purchase 
equipment, material and services in a manner which allows up to 30 days to 
make payment.

     5.     Option to Extend Lease.  Phantoms shall have the option to extend 
this Lease each year for one additional year under the same terms and 
conditions set forth herein for a maximum of four additional years (i.e. a 
total of five years - the base year of 1996/1997 and four renewal years).  
Phantoms must notify Southshore of its desire to exercise its option to extend 
the Lease no later than February 1, during any lease year.

     If Phantoms plans to operate a haunted house facility in the Southeast 
portion of the metro Denver area after it has operated the facility at 
Southshore for five years, Phantoms and Southshore shall negotiate in good 
faith a new agreement for the operation of a haunted house type facility for 
an additional five years at Southshore.  The terms of that agreement shall be 
similar to the terms of this agreement.  If such an agreement can not be 
reached, then Phantoms and Southshore shall enter into a new lease containing 
the same terms and conditions contained in this lease.

     If Southshore should decide to sell or lease the Leased Premises, then 
Southshore has the option of terminating this Lease or assigning it to the new 
owner or lessee.  If Southshore sells or leases the Leased Premises, but does 
not assign the Lease to the new owner or lessee, such sale or lease shall 
contain the condition that the new owner or lessee would not 

                                2
<PAGE>

allow a haunted house entertainment facility to be operated on the Leased 
Premises for five years after the date of the sale or lease.

     6.     Signage.  Phantoms shall be permitted use of any and all signage 
available at the Leased Premises so long as it complies with local signage 
regulations and does not damage existing signage.

     7.     Services Provided by Southshore.  The following services shall be 
provided and paid for by Southshore, but the expense of such services shall be 
considered Project Expenses and shall be reimbursed to Southshore out of 
Project Revenues prior to the Final Settlement Date which shall occur on or 
before December 1, 1996.

     a.     Utilities.  Utilities required for the installation, operation and 
dismantling of the Project.  A comparison between Southshore utility costs 
during this period in 1995 and the costs during 1996 will be used to determine 
the cost attributable to the Project.

     b.     Insurance.  Southshore shall maintain its existing liability 
insurance for the Leased Premises and shall obtain whatever endorsement may be 
required to cover its liability for injury or damage to third persons during 
the construction and operation of the Project.  The policy and enforcement 
shall specifically identify Phantoms as an additional names insured during 
September through November of 1996.  Phantoms will cooperate with Southshore 
in obtaining such insurance, and if Southshore should for any reason be unable 
to obtain reasonably priced insurance, then Phantoms has the option of 
obtaining the necessary insurance.

     Phantoms shall purchase workman's compensation which satisfied the 
minimum amount and other requirements of Colorado's Workman's Compensation Act 
which cover all of its employees and shall provide Southshore with an 
insurance certificate evidencing the existence of such insurance.  Phantoms 
will likewise require all contractors performing work on the leased premises 
to obtain such insurance covering their employees.

     c.     Box Officer Personnel.  Southshore shall provide and pay the box 
office personnel needed to operate the Project.  These people will handle the 
ticket sales and box office equipment and arrange for the deposit of daily 
revenues in Southshore's bank.

     d.     Project Installation Assistance.  Southshore may provide the 
assistance of its staff from time to time during the installation or operation 
of the Project.  The extent of such services and the compensation for them 
will be considered a Project Expense.  These expenses shall be agreed upon and 
documented by the parties in advance.

                                  3

<PAGE>
     

     e.     Other Services.  Any other services to be provided by Southshore 
and their cost shall be agreed upon in writing by the parties in advance.

     Southshore shall be responsible for operating all food and other 
concessions currently located at the Southshore Waterpark.  Phantoms may 
propose other concessions, the parties will agree on who operates them if 
concessions are added.  Southshore and Phantoms will share the net profits 
from the concessions.  Revenues from concessions will be accounted for 
separately from the Project Revenues and will not be subject to the management 
fee.  Additionally, Phantoms shall pay Southshore a fee of five thousand 
dollars to participate in the concession profits.  This fee shall be 
independent from the calculation or distribution of concession profits and 
shall be paid to Southshore by November 15, 1996.

     The parties agree that local telephone service provided by Southshore 
shall be a nonreimbursable expense.  Long distance calls directly attributable 
to the Project shall be a Project expense.

     8.     Improvements and Equipment.  Phantoms shall construct the Project 
on the Leased Premises and purchase all materials and equipment necessary to 
operate the Project.  All materials and equipment purchased shall be owned 
jointly by the parties on an equal basis.  To the extent practicable, Phantoms 
shall notify the designated Southshore person in advance of the major items of 
material and equipment that will be purchased and of their cost.  The 
designated Southshore person will notify Phantoms if he is aware of any 
locations where better pricing may be obtained.

     Upon the termination of this Lease, Phantoms shall purchase Southshore's 
one-half interest in the Project materials and equipment and any other 
improvements at a mutually agreeable price.  If Southshore and Phantoms cannot 
agree the value of such materials, equipment or other improvements, such 
material, equipment and other improvements shall be sold and the proceeds of 
the sale shall be divided equally between the parties.

     9.     Financing and payment of Project Expenses.  Southshore agrees to 
initially loan Phantoms up to $30,000 between the date of this Lease and 
September 20, 1996.  This money shall be used to pay for materials and 
equipment needed to construct the Project which are described in Paragraph 8 
above and other services needed to paid in September to construct and prepare 
to operate the Project.  Additionally, Southshore shall advance to Phantoms as 
a loan the amounts needed by Phantoms after September 20, 1996 to successfully 
operate the Project.  Such advances will be made in one of the two following 
ways.  (1) Phantoms shall submit a written request which lists in reasonable 
detail the Project expenses which will be paid for with the advance and the 
date such payments are due.  Copies of invoices and order forms shall be 
included for all major purchases of materials, equipment and material and in 
all other instances when practicable.  (2) Phantoms shall submit invoices for 
materials, equipment or consulting services for work performed and Southshore 
will pay those bills directly to the vendor or consultant.  Phantoms shall pay 
all of its employees directly.  Southshore will not advance any money to 
Phantoms to pay the 

                             4


<PAGE>

actors it hires or write any checks to Phantoms' actors.  Phantoms shall 
receive payment for the cost of actors from Project Revenues promptly after 
the Project closes if Project Revenues exceed the amount of money Southshore 
has advanced to Phantoms under the Note.

     In conjunction with the loans described above, Phantoms shall execute a 
promissory note, hereinafter referred to as the Note, in the form similar to 
the one attached as Exhibit B.  The total amount which may be drawn under the 
Note shall not exceed $125,000 unless Southshore agrees in writing that this 
amount can be exceeded.  The entire amount drawn by Phantoms under this Note 
shall be secured by the Gross Revenues of the Project.  Additionally fifty 
percent of any outstanding balance drawn under the Note shall be secured by 
Phantoms' fifty percent interest in the equipment, materials and other 
improvements described in Paragraph 8 above.  Phantoms shall sign any 
documents that may be required or authorized by Colorado law to perfect these 
security interests.  All Project Revenues as they are received shall be used 
to repay or reduce the current balance of the amount advanced under the Note.  
No payments shall be made to Phantoms from Project Revenues in the form of 
Management Fees or profits until the total amount advanced by Southshore to 
Phantoms under the terms of the Note has been paid in full from Project 
Revenues and Phantoms has been reimbursed from Project Revenues for its costs 
for actors and other employees.

     If the total amount of Project Revenues is not sufficient to pay the 
amount loaned by Southshore in full and reimburse Phantoms for the money it 
paid to the actors, then the parties agree the unpaid amount or amounts shall 
be considered the Project loss and that each party shall bear 50 Percent of 
that loss.

     10.     Final Settlement.  Before December 1, 1996 and as soon as 
practicable after the Project has closed, Phantoms shall submit to Southshore 
a final accounting and statement of all Project Expenses and Project 
Revenues.  Then on or before December 1, 1996, Southshore and Phantoms shall 
meet to reconcile any differences and agree upon the final accounting.  
Southshore shall likewise submit to Phantoms a final accounting and statement 
of the Project Revenues, all advances it made to Phantoms under the Note, and 
all payments of Project expenses which it made directly to Project vendors or 
consultants.

     Then, the parties shall calculate the management fee payable to Phantoms 
and the Project profit which shall be split equally.  The management fee paid 
to Phantoms shall be 10 percent of the difference between Total Project 
Revenues and Total Project Expenses.  In the event there is a Project loss, no 
management fee will be paid and each party shall be liable for one half of the 
Project loss.  The Project loss shall be any amount remaining unpaid on the 
Note plus any amount of the total wages paid to the actors that has not been 
reimbursed to Phantoms from Project Revenues.  If the parties decide to sell 
the Project materials and equipment, the proceeds of this sale shall be used 
to reduce the total amount of the Project loss.

                                  5

<PAGE>


     Southshore shall have the right to inspect and audit Phantoms' books and 
records for the Project at any time upon 48 hours written notice.  Phantoms 
shall likewise have the right to inspect and audit Southshore's records and 
books for Project Revenues and payment of any of the Project expenses at 
anytime upon 48 hours written notice.

     11.     Subletting.  Phantoms, for itself, its successors, and assigns, 
covenants that it shall not assign, sell, pledge or in any manner transfer 
this Lease or any interest therein nor sublet the Leased Premises, or any part 
or parts thereof, without the prior written consent of Southshore in each 
instance.  Southshore's consent will not be unreasonably withheld.

     12.     Default.  Each of the following shall constitute an event of 
Default under this Lease:

     a.     If Phantoms fails to pay, when due, Rent or its share of any 
Project loss.

     b.     If Phantoms breaches or fails to comply with any provision of the 
Lease and such breach continues for a period of ten days after written notice 
from Southshore to Phantoms;

     c.     If Phantoms shall file a Petition in Bankruptcy or Insolvency or 
for reorganization, or arraignment under the Bankruptcy Laws of the United 
States or any similar Act of any state;
     d.     If Phantoms is in default on the Note referenced in paragraph 
number 9 herein.

     13.     Landlord's Remedies.  Upon the occurrence of any event of 
default, as defined in the immediately preceding paragraph numbered 12., 
Southshore shall have the right to exercise any one or more of the following 
remedies.

     a.     Southshore may demand possession of the Leased Premises from 
Phantoms.  Phantoms shall remain liable to Landlord for any amount due as rend 
and any other sum due and owing to Southshore by Phantoms under the terms of 
this Lease.  If this occurs, Southshore, at its sole option, may take over the 
operation of the Project.

     b.     Southshore may re-enter and take possession of the Leased Premises 
or any part thereof and remove all or portions of the Project using such force 
for such purposes as may be necessary.  Phantoms shall reimburse Southshore 
for the reasonable cost of removing and storing the Project equipment and 
materials.

     c.     Terminate this Lease.

                            6

<PAGE>


     d.     All other remedies available to Southshore under law or equity.

     14.     Relationship of the Parties.  Nothing contained herein shall be 
deemed or construed by the parties hereto, nor by any third party, as creating 
the relationship of Principal and Agent or of a Partnership or a joint venture 
between the parties hereto, it being agreed that neither the method of 
computation of rent or any other provision of this Lease shall be deemed to 
create any relationship between the parties other than that of Landlord and 
Tenant.

     15.     Amendments and Modifications.  No Amendments or Modifications of 
this Lease or any part thereof shall be valid or binding unless reduced to 
writing and signed by the parties hereto.

     16.     Attorneys' Fees and Costs.  In the event either party takes legal 
action against the other in order to enforce the terms of this Lease, the 
party in whose favor the final judgment is entered shall be entitled to 
recover from the other party its reasonable attorneys' fees and costs.  In the 
event the matter is settled before any judgment is entered, each party shall 
bear its own costs.

     17.     Unenforceability.  If any clause or provision of this Lease is 
illegal, invalid or unenforceable under present or future laws effective 
during the term of this Lease, then the remainder of the Lease shall not be 
affected thereby.

     18.     Attorney Disclaimer.  Each and every provision of this Lease has 
been independently, separately and freely negotiated by the parties as if this 
Lease were drafted by both Phantoms and Southshore and any statutory or common 
law presumptions based on drafting are hereby waived by the parties.

     19.     Notices.  All Notices to be given under this Lease by either of 
the parties shall be in writing.  Any notice may be served by certified U. S. 
mail, return receipt requested and such service shall be deemed effective and 
complete as of the next business day following the mailing of such Notice.  
Such Notices shall be addressed as follows:

a.If to Phantoms:                      3051 S. Rooney Road
                                       Morrison, CO  80465

b.If to Southshore:                    10750 E. Briarwood Ave.
                                       Englewood, CO  80112

     20.     Arapahoe County PDP Amendment Approval.  Both parties understand 
that a small risk exists that the operation of the Project at Southshore could 
be questioned by Arapahoe County on the basis that it is not allowed by 
existing County approvals.  If Arapahoe County should attempt to stop the 
construction or operation of the Project for any reason, both parties shall 
equally share the cost of resisting and defending against all efforts.  

                                    7

<PAGE>


Phantoms agrees that the expenses incurred by Landaide to date to discuss the 
Project with County officials and to obtain the letter dated August 7, 1996 
from the County Zoning Department are Project expenses.

     In the event Phantoms is unable to operate the Project in 1996 as a 
result of any actions taken by Arapahoe County, the parties hereto will 
equally share the Project Expenses incurred up to the date when the parties 
decide that the Project can not be operated in 1996.  If this occurs, Phantoms 
will store all of the jointly owned reusable equipment and materials so that 
they can be utilized for a haunted house project in 1997.  Phantoms will 
retain its option to operate a Project in 1997 pursuant to Paragraph 5.  If it 
elects to exercise its option to extend the Lease under these circumstances, 
then 1997 will be considered the first Lease Year and Phantoms shall have four 
additional one year options which may be exercised in the manner described in 
Paragraph 5.  This means that Phantoms could continue to operate a Project on 
the Leased Premises in 1998 through 2001 if it exercised all four of its 
option years.

     IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the 
day and year first written above.

Phantoms, LLC                         The Southshore Corporation


By:     /s/Frank Starr                         By:     /s/ Kenneth M. Dalton
       ---------------                                ----------------------
          Its:  Manager                              Its:  President










                                    8



<PAGE>

<TABLE> <S> <C>

<PAGE>

<ARTICLE> 5
       
<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          MAR-31-1997
<PERIOD-END>                               SEP-30-1996
<CASH>                                             399
<SECURITIES>                                         0
<RECEIVABLES>                                   27,659
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                                56,537
<PP&E>                                       4,496,125
<DEPRECIATION>                               2,240,878
<TOTAL-ASSETS>                               2,807,952
<CURRENT-LIABILITIES>                          951,412
<BONDS>                                              0
                                0
                                          0
<COMMON>                                     2,610,470
<OTHER-SE>                                           0
<TOTAL-LIABILITY-AND-EQUITY>                 2,807,952
<SALES>                                        796,077
<TOTAL-REVENUES>                               796,077
<CGS>                                           15,224
<TOTAL-COSTS>                                  466,361
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              49,857
<INCOME-PRETAX>                                267,158
<INCOME-TAX>                                         0
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<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                   267,158
<EPS-PRIMARY>                                     $.10
<EPS-DILUTED>                                     $.10
        

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