American Vantage Reports Loss

LAS VEGAS -- (PRESS RELEASE) -- American Vantage Cos. (Nasdaq: AVCS) today announced the results of its operations for the three and nine months ended Sept. 30, 2005.

The company reported a net loss of $3,230,000 and $3,919,000 for the three and nine months ended Sept. 30, 2005, respectively, compared to a net loss of $1,083,000 and $1,705,000 for the 2004 three- and nine-month periods. The company's reported net loss for the nine months ended Sept. 30, 2005, includes results from continuing and discontinued operations. Net losses for the three and nine months ended Sept. 30, 2004, also includes results from continuing operations, including a pre-tax gain of $3,423,000 from the sale of land, and the discontinued operations.

As previously disclosed, on March 21, 2005, the company sold American Vantage Media Corp. ("AVMC"), a then wholly owned subsidiary, to Genius Products Inc. ("Genius" or "GNPI"). Consideration received by the company included 7,000,000 shares of GNPI common stock and five-year warrants to purchase an additional 1,400,000 shares of GNPI common stock, half at an exercise price of $2.56 per share and half at an exercise price of $2.78 per share. In conjunction with the sale of AVMC, a gain of $6,536,000 was recorded by the company at Sept. 30, 2005.

During June 2005, the company placed 2,500,000 shares of the Genius common stock and 225,000 warrants to purchase shares of Genius common stock, at an exercise price of $2.56 per share, for gross proceeds of $4,375,000. Related to the placement of such Genius securities, the company surrendered to Genius for cancellation 225,000 warrants to purchase shares of Genius common stock, at an exercise price of $2.56 per share. The company recorded a loss of $2,041,000 in connection with such placements and warrant surrenders.

During August 2005, the company placed an additional 3,125,000 shares of the Genius common stock for gross proceeds of $4,688,000 and recorded a loss of $2,601,000 in connection with such placement. Of the remaining 1,375,000 shares of the Genius common stock received by the company as consideration for the sale of AVMC, 700,000 shares are not subject to escrow or pledge agreements and are available for sale by the company.

For the three months ended Sept. 30, 2005, the company's revenues from continuing operations, its Film and TV Production segment, totaled $37,000, as compared to $75,000 for the comparable 2004 period. The Film and TV Production segment revenues are primarily generated from co-executive producer fees generated from the television series "The O.C." Such fees were decreased for the 2005 television season. For the three months ended Sept. 30, 2005, the company's net loss from continuing operations and net loss per share from continuing operations for basic and diluted shares totaled $(3,436,000) and $(0.60), respectively. Included in the $3,436,000 loss is the $2,601,000 loss from the August 2005 sale of the Genius stock and a $209,000 unrealized loss due to the change in the fair value of the Genius warrants at Sept. 30, 2005.

In addition, included in the company's net loss from operations is the company's equity income from a 49% interest in the Border Grill Las Vegas Restaurant ("Border Grill") that totaled $114,000 and $158,000 for the three months ended Sept. 30, 2005 and 2004, respectively. Cash distributions from the Border Grill during the three months ended Sept. 30, 2005 and 2004 totaled $172,000 and $184,000, respectively.

The comparable net loss for the three months ended Sept. 30, 2004, from continuing operations and net loss per share from continuing operations for basic and diluted shares totaled $(296,000) and $(.05), respectively.

For the three-month period ended Sept. 30, 2004, the net loss of $1,083,000 was primarily generated from discontinued operations of AVMC.

The company is pursuing potential acquisition and merger transactions, which are in various stages of discussion. However, no assurance can be given that the company will successfully acquire other businesses or, if acquired, such businesses will prove to be profitable.