BlackWaltzX has the right idea but you don't need to upgrade the nail, just flail away at the large balloons with the rusty nail. Be sure that you get the nail outside the Balloons image each time before the down stroke or it won't register. Only upgrades you need are artillery and water, other than that be sure to use the birds well as they are probably your best weapon. Racer232 the ship is full of gun powder and flying lamps.
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 "Shore Siege!"){kind=icon}