UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended June 30, 1997
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or
[ ] Transition Report Pursuance to Section 13 or 15(d) of the Securities
Exchange act of 1934.
For the transition period from to
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Commission File Number 0-23782
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RENAISSANCE ENTERTAINMENT CORPORATION
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(Exact name of registrant as specified in its charter)
Colorado 84-1094630
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
4410 Arapahoe Avenue, Suite 200, Boulder, Colorado 80303
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(Address of principal executive offices) (Zip Code)
(303) 444-8273
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(Registrant's telephone number, including area code)
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 CORPORATE ISSUERS:
As of August 14, 1997, Registrant had 9,636,262 shares of common stock, $.03
Par Value, outstanding.
INDEX
Page
Number
------
Part I. Financial Information
Item I. Financial Statements
Balance Sheets as of June 30, 1997 (Unaudited)
and December 31, 1996 3
Statements of Operations for the Three Months
Ended June 30, 1997 and 1996
(Unaudited) 4
Statements of Operations for the Six Months
Ended June 30, 1997 and 1996
(Unaudited) 5
Statements of Cash Flows for the Six Months
Ended June 30, 1997 and 1996
(Unaudited) 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. Other Information 14
2
RENAISSANCE ENTERTAINMENT CORPORATION AND CONSOLIDATED SUBSIDIARY
BALANCE SHEETS
(Unaudited)
ASSETS
June 30, December 31,
1997 1996
----------- -----------
Current Assets:
Cash and equivalents $ 784,582 $ 374,289
Stock subscription receivable 133,749
Accounts receivable (net) 126,607 99,551
Note receivable, current portion
Inventory 231,792 184,695
Prepaid expenses and other 715,966 139,167
----------- -----------
Total Current Assets 1,858,947 931,451
Property and equipment, net of
accumulated depreciation 7,097,158 7,176,755
Note receivable, net of current portion
Covenant not to compete 35,000 45,000
Goodwill 595,488 620,826
Restricted cash 915,177 890,116
Other assets 239,675 208,201
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TOTAL ASSETS $10,741,445 $ 9,872,349
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 1,094,735 $ 1,068,028
Notes payable, current portion 1,365,338 1,209,119
Unearned income 284,430 160,588
----------- -----------
Total Current Liabilities 2,744,503 2,437,735
Notes payable, net of current portion,
unrelated parties 2,931,174 2,341,987
Notes Payable, related parties 250,000
Other 35,376 37,175
----------- -----------
Total Liabilities 5,961,053 4,816,897
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Stockholders' Equity:
Common stock, $.03 par value, 50,000,000
shares authorized, 9,636,262 shares
issued and outstanding at June 30, 1997 289,088 277,013
Additional paid-in capital 9,038,098 8,071,634
Accumulated earnings (deficit) (4,546,794) (3,293,195)
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Total Stockholders' Equity 4,780,392 5,055,452
----------- -----------
Total Liabilities and Stockholders' Equity $10,741,445 $ 9,872,349
----------- -----------
----------- -----------
The accompanying notes are an integral part of the financial statements.
3
RENAISSANCE ENTERTAINMENT CORPORATION AND CONSOLIDATED SUBSIDIARY
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
June 30
-----------------------
1997 1996
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REVENUE:
Sales $4,870,723 $ 5,316,083
Faire operating costs 1,807,224 2,147,219
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Gross Profit 3,063,499 3,168,864
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OPERATING EXPENSES:
Salaries 1,258,342 1,472,431
Depreciation and amortization 73,929 160,677
Goodwill writedown 380,000
Advertising 681,496 875,601
Other operating expenses 696,966 1,570,959
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Total Operating Expenses 2,710,733 4,459,668
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Net Operating (Loss) Income 352,766 (1,290,804)
---------- -----------
Other Income (Expenses):
Interest income 16,004 16,725
Interest (expense) (104,735) (81,933)
Other income (expense) 310,726 51,248
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Total Other Income (Expenses) 221,995 (13,960)
---------- -----------
Net Income (Loss) before (Provision)
Credit for Income Taxes 574,761 (1,304,764)
(Provision) Credit for Income Taxes - -
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Net Income (Loss) to Common Stockholders $ 574,761 $(1,304,764)
---------- -----------
---------- -----------
Net Income (Loss) per Common Share $ .06 $ (.16)
---------- -----------
---------- -----------
Weighted Average Number of Common
Shares Outstanding
9,962,418 7,992,378
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---------- -----------
The accompanying notes are an integral part of the financial statements.
4
RENAISSANCE ENTERTAINMENT CORPORATION AND CONSOLIDATED SUBSIDIARY
STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended
June 30
--------------------------
1997 1996
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REVENUE:
Sales $ 4,885,596 $ 5,306,079
Faire operating costs 1,830,543 2,119,918
----------- -----------
Gross Profit 3,055,053 3,186,161
----------- -----------
OPERATING EXPENSES:
Salaries 2,019,519 2,189,322
Depreciation and amortization 343,570 266,233
Goodwill Writedown 380,000
Advertising 693,991 892,634
Other operating expenses 1,398,753 2,216,164
----------- -----------
Total Operating Expenses 4,455,833 5,944,353
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Net Operating (Loss) Income (1,400,780) (2,758,192)
----------- -----------
Other Income (Expenses):
Interest income 30,715 30,455
Interest (expense) (196,167) (118,795)
Other income (expense) 312,634 (197,384)
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Total Other Income (Expenses) 147,182 (285,724)
----------- -----------
Net Income (Loss) before (Provision)
Credit for Income Taxes (1,253,598) (3,043,916)
(Provision) Credit for Income Taxes - 239,273
----------- -----------
Net Income (Loss) to Common Stockholders $(1,253,598) $(2,804,643)
----------- -----------
----------- -----------
Net Income (Loss) per Common Share $ (.13) $ (.34)
----------- -----------
----------- -----------
Weighted Average Number of Common
Shares Outstanding 9,531,581 8,186,540
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----------- -----------
The accompanying notes are an integral part of the financial statements.
5
RENAISSANCE ENTERTAINMENT CORPORATION AND CONSOLIDATED SUBSIDIARY
STATEMENTS OF CASH FLOWS
Six Months ended
June 30,
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1997 1996
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Cash Flows from Operating Activities:
Net income (Loss) $(1,253,598) $ (2,804,643)
----------- ------------
Adjustments to reconcile net income (Loss)
to net cash provided by operating
activities:
Depreciation and amortization 343,570 589,294
Gain (loss) on disposal of assets 1,363 23,488
(Increase) decrease in:
Stock subscription receivable 133,749
Inventory (47,097) (131,255)
Receivables (27,056) (270,128)
Prepaid expenses and other (608,273) (308,319)
Increase (decrease) in:
Accounts payable and accrued expenses 26,707 1,660,419
Unearned revenue and other 122,043 119,615
----------- ------------
Total adjustments (54,994) 1,683,114
----------- ------------
Net Cash Provided by Operating
Activities (1,308,592) (1,121,529)
----------- ------------
Cash Flows from Investing Activities:
Investment in restricted cash (25,061) (13,923)
Acquisition of property and equipment (229,999) (2,430,241)
----------- ------------
Net Cash (Used in) Investing Activities (255,060) (2,444,164)
----------- ------------
Cash Flows from Financing Activities:
Common stock issued and additional
paid-in capital 978,539 533,430
Proceeds from notes payable 1,350,000 2,717,628
Principal payments on notes payable (354,594) (72,320)
----------- ------------
Net Cash Provided by Financing Activities 1,973,945 3,178,738
----------- ------------
Net Increase (Decrease) in Cash 410,293 (386,955)
Cash, beginning of period 374,289 732,553
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Cash, end of period $ 784,582 $ 345,598
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Interest paid $ 196,167 $ 117,886
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----------- ------------
Income tax paid $ - $ -
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The accompanying notes are an integral part of the financial statements.
6
RENAISSANCE ENTERTAINMENT CORPORATION AND
CONSOLIDATED SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 (Unaudited)
1. UNAUDITED STATEMENTS
The balance sheet as of June 30, 1997, the statements of operations and
the statements of cash flows for the three month and six month periods
ended June 30, 1997 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, 1997 and for all periods presented, have been made.
These statements should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 filed with the
Securities and Exchange Commission.
2. 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.
3. SUBSEQUENT EVENTS
Subsequent to June 30, 1997, the Company negotiated a sale and leaseback
of its real properties in Wisconsin and Virginia. This transaction is
expected to close prior to September 30, 1997. See the following
discussion in Management's Discussion and Analysis of Financial Condition
and Results of Operations.
7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements, including the footnotes for the fiscal
period ended December 31, 1996. On June 21, 1996, the Company changed its
fiscal year end from March 31 to December 31.
The Company operates five Renaissance Faires in the United States and is engaged
in a strategy to develop and acquire additional Renaissance Faires nationwide.
The Company's newest Faire opened on May 4, 1996 in Fredericksburg, Virginia, a
project which was designed and constructed by the Company. On February 5, 1996,
the Company acquired Creative Faires, Ltd., the owner and operator of the New
York Renaissance Faire. With its five faires currently drawing close to 750,000
visitors annually, the Company believes that it is the largest operator of
Renaissance Faires and Renaissance entertainment events in the United States.
The Renaissance Faire is a re-creation of a Renaissance village, a fantasy
experience transporting the visitor back into sixteenth century England.
Although the Company was profitable in its fiscal year ended March 31, 1995, it
incurred a net loss of ($1,273,671) in the fiscal year ended March 31, 1996,
and a net loss of ($1,851,725) for the nine months ended December 31, 1996. In
addition, the Company expects to incur a net loss for the fiscal year ending
December 31, 1997. The New York and Virginia Faires operated at a loss during
1996. In addition, the Virginia Faire, which ran from April 26, 1997 through
June 8, 1997, operated at a loss in 1997. The Company believes both of these
Faire's results were adversely affected in 1996 and the Virginia Faire in 1997
by unusually inclement weather in their respective areas. It is typical for a
new faire such as the Virginia Faire to operate at a loss for two or more years
until it is able to build a sufficient customer base and awareness of the
faire. Due to the fact that the New York Faire was acquired in 1996, the
Company had limited ability to affect the operations of this Faire during the
1996 faire season. The Company has hired a new manager for this Faire and has
introduced several new entertainment acts and implemented additional
promotional efforts for this faire's 1997 season, which began on July 26, 1997
and will end on September 14, 1997.
The owner of the site for the Company's Northern California Faire is seeking to
develop this site for commercial construction purposes, although the owner's
efforts to do so are currently being blocked by pending litigation in which the
use of the site for such purposes is being challenged. An extension of the
lease for this site for the 1997 faire season has been obtained. While the
Company is investigating new sites for the Northern California Faire, there can
be no assurance that the Company will be able to secure a new site for this
Faire for the 1998 or following faire seasons.
The Company is also considering relocation of its Southern California Faire.
On November 4, 1996, the Company entered into a non-binding letter of intent
with the owner of a site in Pomona, California, which contemplated that the
Company would commence operation of the Southern California Faire at that
site starting in 1998. Subsequent to the signing of the letter of intent, the
owner of the current site for the Southern California Faire indicated that it
was willing to enter into a long-term lease for the current site. The
ability to enter into a long-term lease for this site increases its value to
the Company, as the Company could construct temporary structures on the site
and significantly reduce setup costs for the faire. As of the date of this
report, the Company has not decided if it should enter into a long-term lease
for the current site or relocate the Faire to the proposed site in Pomona.
The Company estimates that the cost of the construction and relocation to the
new site would be approximately $2,000,000.
8
The Company had a working capital deficit ($1,506,284) and ($885,556) as of
December 31, and June 30, 1997, respectively. During the first five months
of fiscal 1997, the Company obtained $1,350,000 of additional working
capital. While the Company believes that it has adequate working capital to
fund anticipated operations for fiscal 1997, it believes it must obtain
additional working capital for future fiscal periods. See "Liquidity and
Capital Resources."
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE
MONTHS ENDED JUNE 30, 1996
Revenues decreased $445,360 or 8% from $5,316,083 in 1996 to $4,870,723 in
1997. This decrease was primarily the result of a decrease in revenues for the
Virginia Faire of approximately $175,000 and a decrease in revenues for the
Southern California Faire of approximately $260,000. The decreased revenues
for the Virginia Faire were due to unusually inclement weather - six of the
seven faire weekends had substantial rain which severely impacted attendance.
The decreased revenues for the Southern California Faire were due to being open
one less weekend in 1997 than in 1996. Although revenues were down in
Virginia, the operating loss was reduced by approximately $190,000, from a loss
of approximately $460,000 for the 1996 period to a loss of approximately
$270,000 for the 1997 period, through expense control.
Operating expenses (year-round operating costs and corporate overhead)
decreased $1,748,935 or 39%, from $4,459,668 in 1996 to $2,710,733 in 1997.
The primary cause of this decrease was the inclusion in the second quarter of
1996 of six months of operating expense for the then newly acquired New York
Faire. This unusual occurrence was the consequence of the exclusion from the
quarter ended March 31, 1996 of the first calendar quarter results of that
faire due to the use of the pooling of interest method of acquisition and the
previous year end of March 31. Also, 1996 results included $380,000 of
goodwill writedown and unusual expenses of a one time nature of approximately
$400,000 applicable to the initial start-up of the Virginia Faire.
Additionally, in 1996 the $349,000 rent for the Northern California Faire site
was paid and expensed in the second quarter, whereas the rent for this site
will be paid and expensed in the third quarter of 1997.
Of the operating expenses, salaries decreased 15%, from $1,472,431 in 1996 to
$1,258,431 in 1997 for the reasons stated above. Advertising expense decreased
$194,105, or 22%, from $875,601 in 1996 to $681,496 in 1997. This decrease was
due to spending more in 1996 for advertising the first year of the Virginia
Faire as well as the utilization of more cost efficient methods of advertising
in 1997.
Depreciation and amortization decreased 54%, from $160,677 in 1996 to $73,929
in 1997. This decrease is primarily the result of the Company standardizing
the depreciable lives used for buildings from a range of between 7 to 30 years
in 1996 to 15 years for temporary buildings and 30 years for permanent
buildings in 1997.
Other operating expenses (all other general and administrative expenses of the
Company) decreased $873,993 or 56%, from $1,570,959 in 1996 to $696,966 in
1997. Included in this decrease is the $400,000 of one-time expenses discussed
above, incurred in 1996 in connection with the initial start-up of the Virginia
Faire. The balance of the decrease is due to management's implementation of a
variety of cost saving measures.
As a result of the foregoing, net operating income (before interest charges and
other income) increased to $1,643,570 from a loss of ($1,290,804) for the 1996
period to an income of $352,766 for the 1997 period.
A 28% increase in interest expense from $81,933 in 1996 to $104,735 in 1997
resulted from an increase in the Company's borrowing levels throughout the 1997
period as compared to the 1996 period.
9
Other income increased $259,478, from $51,248 in 1996 to $310,726 in 1997. The
primary cause of this increase was the reversal in the second quarter of
$309,694 of expense which had been accrued in 1996 for expenses expected to
have been incurred in 1997 to evaluate a new site for the Northern California
Faire. During the second quarter it became apparent that this site would not
be available and that these costs would not be incurred. In addition, it is
not possible at this time to determine what expenses may be incurred if the
Company is required to find a new site for this Faire.
Combining net operating income with other income/expense resulted in a
$1,879,525 increase in net income before taxes, from a loss of ($1,304,764) for
the 1996 period to an income of $574,761 for the 1997 period.
Net income to common stockholders also increased $1,879,525, from a loss of
($1,304,764) for the 1996 period to income of $574,761 for the 1997 period.
Finally, net income per common share increased from a loss of ($.16) for the
1996 period to an income of $.06 for the 1997 period, based on 7,992,378
weighted average shares outstanding during the 1996 period and 9,962,418
weighted average shares outstanding during the 1997 period.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS
ENDED JUNE 30, 1996
Revenues decreased $420,483 or 8% from $5,306,079 in 1996 to $4,885,596 in
1997. This decrease was for the reasons described above in the three months
comparison, as the Company has minimal revenues in the first three months of
the year.
Operating expenses (year-round operating costs and corporate overhead)
decreased $1,488,520 or 25%, from $5,944,353 in 1996 to $4,455,833 in 1997.
The primary causes of this decrease were the $380,000 of goodwill writedown and
unusual expenses of a one time nature of approximately $400,000 applicable to
the initial start-up of the Virginia Faire included in 1996 results.
Additionally, in 1996 the $349,000 rent for the Northern California Faire site
was paid and expensed in the second quarter, whereas the rent for this site
will be paid and expensed in the third quarter of 1997.
Of the operating expenses, salaries decreased 8%, from $2,189,322 in 1996 to
$2,019,519 in 1997, reflecting a reduction of personnel for the 1997 period as
compared to the 1996 period.
Advertising expense decreased $198,643, or 22%, from $892,634 in 1996 to
$693,991 in 1997. This decrease was due to spending more in 1996 for
advertising the first year of the Virginia Faire as well as the utilization of
more cost efficient methods of advertising in 1997.
Depreciation and amortization increased 29%, from $266,233 in 1996 to $343,570
in 1997. This increase is primarily the result of depreciation on the
approximately $4,000,000 invested in buildings and improvements to the Virginia
property. This increase would have been greater had the Company not
standardized the depreciable lives used for buildings from a range of between 7
to 30 years in 1996 to 15 years for temporary buildings and 30 years for
permanent buildings in 1997.
Other operating expenses (all other general and administrative expenses of the
Company) decreased $817,411 or 37%, from $2,216,164 in 1996 to $1,398,753 in
1997. Included in this decrease is the $400,000 of one-time expenses discussed
above, incurred in 1996 in connection with the initial start-up of the Virginia
Faire. The balance of the decrease is due to management's implementation of a
variety of cost saving measures.
10
As a result of the foregoing, net operating income (before interest charges
and other income) increased $1,357,412 from a loss of ($2,758,192) for the
1996 period to a loss of ($1,400,780) for the 1997 period.
A 65% increase in interest expense from $118,795 in 1996 to $196,167 in 1997
resulted from an increase in the Company's borrowing levels throughout the
1997 period as compared to the 1996 period.
Other income/expense increased $513,018, from other expense of ($197,384) in
1996 to other income of $312,634 in 1997. The primary source of the other
income in 1997 was the reversal of $309,694 of expense which had been accrued
in 1996 for expenses expected to have been incurred in 1997 to evaluate a new
site for the Northern California Faire. During the second quarter it became
apparent that this site would not be available and that these costs would not
be incurred. In addition, it is not possible at this time to determine what
expenses may be incurred if the Company is required to find a new site for
this Faire. The primary source of the other expense in 1996 was the reversal
of $200,000 of other income which had been erroneously recorded in 1995.
Combining net operating income with other income/expense resulted in a
$1,790,318 increase in net income before taxes, from a loss of ($3,043,916)
for the 1996 period to a loss of ($1,253,598) for the 1997 period.
As a result of operating losses for the entire fiscal year ended March 31,
1996 (the Company's fiscal year previously ended March 31), a refund of taxes
paid in prior years was available in the 1996 period. This resulted in a
credit to Income Taxes of $239,273 for the six months period ended June 30,
1996.
Net income to common stockholders increased $1,551,045, from a loss of
($2,804,643) for the 1996 period to a loss of ($1,253,598) for the 1997
period. Finally, net income per common share increased from a loss of ($.34)
for the 1996 period to a loss of ($.13) for the 1997 period, based on
8,186,540 weighted average shares outstanding during the 1996 period and
9,531,581 weighted average shares outstanding during the 1997 period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital deficit was narrowed during the six months ended
June 30, 1997, from $1,506,284 at December 31, 1996 to $885,556 at June 30,
1997. This improvement resulted from a number of cost reductions implemented
by management in order to reduce the Company's working capital
11
requirements and the issuance of $1,000,000 of convertible debentures during
the first five months of the year.
The Company's working capital requirements are greatest during the period from
January 1 through April 30, when it is incurring start-up expenses for its
first faires of the faire season, the Southern California and Virginia Faires.
The Company has historically relied upon various revolving credit facilities to
meet its working capital requirements during this period. At December 31,
1996, the Company had outstanding $1,000,000 in short-term bank lines of credit
borrowings which was the maximum amount available under the lines and did not
therefore have any unused credit available for the 1997 faire season.
Subsequent to year end, the Company entered into an agreement with the banks
which requires the Company to pay these lines from 1997 operations ($300,000 of
which was paid in the six month period ended June 30, 1997, leaving a balance
of $700,000). Since December 31, 1996, the Company has also raised $1,000,000
of working capital through the issuance of convertible debentures, of which
$250,000 was issued to Charles S. Leavell, Chairman of the Board of Directors
of the Company and the balance to Mr. Leavell's father and an unrelated party,
and also raised $350,000 of working capital from the sale of convertible notes
to a number of private investors. The debentures are secured by mortgages on
the Company's Wisconsin and Virginia Faire sites, and the notes are secured by
a mortgage on the Company's Wisconsin Faire site. The debentures are
convertible into common stock at the lesser of $4.50 per share or 70% of the
fair market value of the Company's common stock, and the notes are convertible
into common stock at the lesser of $1.75 per share or 50% of the fair market
value for the Company's common stock. The debenture holders were also granted
warrants to purchase an aggregate of 200,000 shares of the Company's common
stock at the lesser of $3.00 per share or 70% of the fair market value of the
Company's common stock.
Management believes that the Company should raise additional working capital
in order to more adequately fund its operations. During July 1997, the
Company entered into a letter of intent for the sale/leaseback of its
Wisconsin and Virginia Faire sites. The letter contemplates the sale of
these properties at their approximate aggregate book value ($6,000,000) and
the leaseback of the properties for a period of 20 years. Lease payments are
scheduled to be $600,000 per year during each of the first two years, and
increasing to $850,000 per year in years 13 through 20. The Company would
have the right to reacquire the properties during the term of the lease at an
aggregate price of $6,650,000 during the first three years, increasing to
$7,350,000 during years 13 through 20. The sale/leaseback transaction
further contemplates that the proceeds, minus a security deposit of
$1,000,000, $500,000 of which is to be released in four years and the balance
released in eight years, will be used to repay all outstanding indebtedness
of the Company other than its trade payables, and that the purchasers of the
property will be granted a six-year warrant representing the right to acquire
an aggregate of 1,100,000 shares of the Company's common stock at an exercise
price of $1 per share. The Company estimates that if the sale/leaseback
transaction is completed as contemplated, it will increase the Company's
working capital by approximately $2,000,000, which the Company believes would
be adequate to fund working capital requirements through at least the fiscal
year ending December 31, 1998. Such funds would not, however, be adequate to
fund the relocation of the Company's Northern or Southern California Faires.
The sale/leaseback transaction is scheduled to be completed prior to
September 30, 1997. However, the letter of intent is non-binding and there
can be no assurance that the transaction will be completed.
Reviewing the change in financial position over the six months, current assets,
largely comprised of cash and prepaid expenses, increased from $931,451 at
December 31, 1996 to $1,858,947 at June 30, 1997, an increase of $927,496 or
100%. Of these amounts, cash and cash equivalents increased from $374,289 at
December 31, 1996 to $784,582 at June 30, 1997. Accounts receivable increased
from $99,551 at December
12
31, 1996 to $126,607 at June 30, 1997. Prepaid expenses increased from
$139,167 at December 31, 1996 to $715,966 at June 30, 1997. This is a normal
condition, as these costs represent expenses incurred in advance, on behalf
of the Bristol and New York Faires, which are expensed against operations
once those Faires are operating.
Current liabilities increased from $2,437,735 at December 31, 1996 to
$2,744,503 at June 30, 1997, an increase of $306,768 or 13%. This increase is
due to increased indebtedness incurred to cover the Company's operating
expenses during the first six months. The current portion of notes payable
increased from $1,209,119 at December 31, 1996 to $1,365,338 at June 30, 1997,
primarily as the result of the issuance of $350,000 of secured notes as
described above. This additional debt was partially offset by payment of
$300,000 during the quarter on the Company's bank lines of credit. Of the
$1,365,338, $700,000 was due to short-term borrowings on the bank lines of
credit, which are to be repaid from operations prior to September 30, 1997,
under the terms of an agreement with the banks. Unearned income, which
consists of the sale of admission tickets to upcoming faires and deposits
received from craft vendors for future faires, increased from $160,588 at
December 31, 1996 to $284,430 at June 30, 1997.
Total assets increased from $9,872,349 at December 31, 1996 to $10,741,445 at
June 30, 1997, an increase of $869,096 or 9%. Of this amount, the increase in
current assets of $927,496 was partially offset by moderate decreases in the
other non-current asset categories. Property, plant and equipment (net of
depreciation) decreased by $79,597 or 1% from $7,176,755 at December 31, 1996
to $7,097,158 at June 30, 1997 as a result of depreciation of assets for the
period. Goodwill, which arose from the purchase of the two California Faires
and is being amortized over 15 years, decreased from $620,826 at December 31,
1996 to $595,488 at June 30, 1997 as the result of normal amortization. Other
miscellaneous assets (organizational costs and vendor deposits) increased from
$253,201 at December 31, 1996 to $274,675 at June 30, 1997.
Total liabilities increased from $4,816,897 at December 31, 1996 to $5,961,053
at June 30, 1997, an increase of $1,144,156 or 24%. Total liabilities at June
30, 1997 include $3,044,503 in current liabilities (discussed above), plus
$3,181,174 from the long-term portion of the following bank loans: an $800,000
mortgage on the Bristol Faire property, a $1,500,000 mortgage on the Virginia
Faire property, and a $250,000 loan for construction of vendor booths in
Virginia.
Stockholders' Equity decreased from $5,055,452 at December 31, 1996 to
$4,780,392 at June 30, 1997, a decrease of $275,060 or 5%. This decrease
resulted from the net loss of ($1,253,598), partially offset by additional
contributed capital received as the result of the exercise of 140,292 Class A
Warrants at $2.00 per share, the exercise of 68,000 Class B Warrants at $2.625
per share, and the exercise of 111,716 employee stock options at prices ranging
from $1.125 to $3.50 per share. As of June 30, 1997, the Company had
outstanding 9,636,262 shares of common stock, 1,673,564 Class A Warrants
representing the right to purchase common stock at $2.00 per share, and
1,981,966 Class B warrants representing the right to purchase common stock at
$2.625 per share.
The Company has no significant commitment for capital expenses during the
fiscal year ending December 31, 1997.
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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, 1997.
Exhibit 27. Financial Data Schedule
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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: 8/18/97 /S/ JAMES R. MCDONALD
-------------------------------------------
James R. McDonald, Chief Financial Officer
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