EX-99.3
3
genius_8kaex99-3.txt
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
EXHIBIT 99.3
GENIUS PRODUCTS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined statements of
Operations have been prepared to give effect to the Genius acquisition of
American Vantage Media Corporation ("AVMC"), a wholly owned subsidiary of
American Vantage Corporation ("AVC") on March 21, 2005, as if this acquisition
had occurred on January 1, 2004. AVC purchased Wellspring Media, Inc. in
February, 2004, which became AVMC.
The total purchase price is calculated to be $19.0 million. The
calculation includes the value of the shares issued to AVC using a four day
volume weighted share price of $2.27 (VWAP two days prior to the acquisition and
two after the acquisition) plus the value of the warrants disclosed above plus
and additional $1,559,911 for shares and warrants issued to bankers for fees.
The unaudited pro forma condensed combined financial statements should
be read in conjunction with the Company's historical consolidated financial
statements and related notes thereto, "Management's Discussion and Analysis or
Plan of Operation" included in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 2004, the Quarterly Report on Form 10-Q as of March
31, 2005, the Report on Form 8-K for March 21, 2005 and the financial statements
and related notes thereto of American Vantage Companies and Wellspring, Inc.,
for the calendar years ended December 31, 2004 and 2003, respectively, contained
herein.
This pro forma financial information reflects certain assumptions and
estimates deemed probable by management regarding the acquisition based upon the
assets and liabilities acquired. These estimates and assumptions have been made
solely for purposes of developing this pro forma information. The purchase price
allocation of this acquisition is not finalized at this time. A final
determination of the allocation of purchase price to assets acquired and
liabilities assumed has not been made, and the purchase price allocation used in
connection with preparation of these pro-forma financial statements should be
considered preliminary and is subject to the completion of a more comprehensive
evaluation. Amounts preliminarily allocated to fixed assets, intangible assets,
film library or accounts receivable and accounts payable may change
significantly, and amortization methods and useful lives may differ from the
assumptions that we used in this unaudited pro-forma condensed combined
financial information, any of which could result in a material change in
depreciation and amortization expense.
The pro forma adjustments do not reflect any future operating
efficiencies and cost savings that may be achieved with respect to the combined
entity. Unaudited pro forma condensed combined financial information is
presented for information purposes only and is not necessarily indicative of the
results that actually would have been realized had the acquisition been
completed on the date indicated or which may be expected to occur in the future.
Genius Products, Inc.
Pro Forma Condensed Combined Statement of Operations
For the fiscal year ended December 31, 2004
Unaudited
AVC
Consolidated
as reported on Ref (1) Pro-forma
Form 10-KSB Wellspring, Inc. Ref (2) AVMC
Year ended 12/31/04 January 2004 Adjustments Year ended 12/31/04
Sales $ 17,766,000 $ 1,592,000 ($ 638,000) $ 18,720,000
Cost of sales 11,143,000 898,000 (248,000) 11,793,000
------------ ------------ ------------ ------------
Gross profit 6,623,000 694,000 (390,000) 6,927,000
Selling, general and administrative expenses 14,608,000 1,356,000 (3,773,000) 12,191,000
------------ ------------ ------------ ------------
Income (loss) from operations (7,985,000) (662,000) 3,383,000 (5,264,000)
Non-operating income (expense), net 3,316,000 0 (3,573,000) (257,000)
------------ ------------ ------------ ------------
Net income (loss) before provision for taxes (4,669,000) (662,000) (190,000) (5,521,000)
Provision for income taxes 2,006,000 0 (2,826,000) (820,000)
Equity in income of unconsolidated investees, net 624,000 0 (624,000) 0
------------ ------------ ------------ ------------
Net loss from continuing operations ($ 2,039,000) ($ 662,000) ($ 3,640,000) ($ 6,341,000)
============ ============ ============ ============
Historical
----------------------------------- Combined
Genius Products Pro-forma AVMC Company
Year ended Year ended Year ended
12/31/2004 12/31/2004 12/31/2004
Sales $ 16,630,000 $ 18,720,000 $ 35,350,000
Cost of sales 13,893,000 11,793,000 25,686,000
------------ ------------ ------------
Gross profit 2,737,000 6,927,000 9,664,000
Selling, general and administrative expenses 8,231,000 12,191,000 20,422,000
------------ ------------ ------------
Income (loss) from operations (5,494,000) (5,264,000) (10,758,000)
Non-operating income (expense), net (551,000) (257,000) (808,000)
------------ ------------ ------------
Net income (loss) before provision for taxes (6,045,000) (5,521,000) (11,566,000)
Provision for income taxes 1,000 (820,000) (819,000)
------------ ------------ ------------
Net loss from continuing operations ($ 6,046,000) ($ 6,341,000) ($12,387,000)
============ ============ ============
Net loss per common share - basic and diluted ($ 0.25) ($ 0.40)
Weighted average number of common shares
outstanding. Ref. (3) 23,826,584 30,826,584
============ ============
REFERENCE NOTES TO THE PRO-FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Reference (1): AVC purchased Wellspring in February of 2004. The audited
Statement of Operations contained in the AVC 10-KSB include eleven months of
AVMC activity. In order to create a total year 2004 pro-forma for AVMC, the
January Wellspring, Inc. activity is added.
Reference (2): Adjustments necessary to back out non-AVMC related activity
included in AVC, which was not part of the acquisition, which includes American
Vantage Companies, Hypnotic (with the exception of Hypnotic Shorts) and YaYa
Media, Vantage Bay and Border Grill.
Reference (3): The weighted average number of common shares outstanding are
modified for the combined company pro-forma to assume that the 7,000,000 shares
issued to AVC occurred on the first day of the period presented.

EX - 99 . 3 3 genius _ 8kaex99 - 3 . txt UNAUDITED PRO FORMA FINANCIAL STATEMENTS EXHIBIT 99 . 3 GENIUS PRODUCTS , INC . UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS The following unaudited pro forma condensed combined statements of Operations have been prepared to give effect to the Genius acquisition of American Vantage Media Corporation ( " AVMC " ) , a wholly owned subsidiary of American Vantage Corporation ( " AVC " ) on March 21 , 2005 , as if this acquisition had occurred on January 1 , 2004 . AVC purchased Wellspring Media , Inc . in February , 2004 , which became AVMC . The total purchase price is calculated to be $ 19.0 million . The calculation includes the value of the shares issued to AVC using a four day volume weighted share price of $ 2.27 ( VWAP two days prior to the acquisition and two after the acquisition ) plus the value of the warrants disclosed above plus and additional $ 1,559,911 for shares and warrants issued to bankers for fees . The unaudited pro forma condensed combined financial statements should be read in conjunction with the Company ' s historical consolidated financial statements and related notes thereto , " Management 's Discussion and Analysis or Plan of Operation " included in the Company 's Annual Report on Form 10 - KSB for the year ended December 31 , 2004 , the Quarterly Report on Form 10 - Q as of March 31 , 2005 , the Report on Form 8 - K for March 21 , 2005 and the financial statements and related notes thereto of American Vantage Companies and Wellspring , Inc . , for the calendar years ended December 31 , 2004 and 2003 , respectively , contained herein . This pro forma financial information reflects certain assumptions and estimates deemed probable by management regarding the acquisition based upon the assets and liabilities acquired . These estimates and assumptions have been made solely for purposes of developing this pro forma information . The purchase price allocation of this acquisition is not finalized at this time . A final determination of the allocation of purchase price to assets acquired and liabilities assumed has not been made , and the purchase price allocation used in connection with preparation of these pro - forma financial statements should be considered preliminary and is subject to the completion of a more comprehensive evaluation . Amounts preliminarily allocated to fixed assets , intangible assets , film library or accounts receivable and accounts payable may change significantly , and amortization methods and useful lives may differ from the assumptions that we used in this unaudited pro - forma condensed combined financial information , any of which could result in a material change in depreciation and amortization expense . The pro forma adjustments do not reflect any future operating efficiencies and cost savings that may be achieved with respect to the combined entity . Unaudited pro forma condensed combined financial information is presented for information purposes only and is not necessarily indicative of the results that actually would have been realized had the acquisition been completed on the date indicated or which may be expected to occur in the future . Genius Products , Inc . Pro Forma Condensed Combined Statement of Operations For the fiscal year ended December 31 , 2004 Unaudited AVC Consolidated as reported on Ref ( 1 ) Pro - forma Form 10 - KSB Wellspring , Inc . Ref ( 2 ) AVMC Year ended 12 / 31 / 04 January 2004 Adjustments Year ended 12 / 31 / 04 Sales $ 17,766,000 $ 1,592,000 ( $ 638,000 ) $ 18,720,000 Cost of sales 11,143,000 898,000 ( 248,000 ) 11,793,000 ------------ ------------ ------------ ------------ Gross profit 6,623,000 694,000 ( 390,000 ) 6,927,000 Selling , general and administrative expenses 14,608,000 1,356,000 ( 3,773,000 ) 12,191,000 ------------ ------------ ------------ ------------ Income ( loss ) from operations ( 7,985,000 ) ( 662,000 ) 3,383,000 ( 5,264,000 ) Non - operating income ( expense ) , net 3,316,000 0 ( 3,573,000 ) ( 257,000 ) ------------ ------------ ------------ ------------ Net income ( loss ) before provision for taxes ( 4,669,000 ) ( 662,000 ) ( 190,000 ) ( 5,521,000 ) Provision for income taxes 2,006,000 0 ( 2,826,000 ) ( 820,000 ) Equity in income of unconsolidated investees , net 624,000 0 ( 624,000 ) 0 ------------ ------------ ------------ ------------ Net loss from continuing operations ( $ 2,039,000 ) ( $ 662,000 ) ( $ 3,640,000 ) ( $ 6,341,000 ) = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = Historical ----------------------------------- Combined Genius Products Pro - forma AVMC Company Year ended Year ended Year ended 12 / 31 / 2004 12 / 31 / 2004 12 / 31 / 2004 Sales $ 16,630,000 $ 18,720,000 $ 35,350,000 Cost of sales 13,893,000 11,793,000 25,686,000 ------------ ------------ ------------ Gross profit 2,737,000 6,927,000 9,664,000 Selling , general and administrative expenses 8,231,000 12,191,000 20,422,000 ------------ ------------ ------------ Income ( loss ) from operations ( 5,494,000 ) ( 5,264,000 ) ( 10,758,000 ) Non - operating income ( expense ) , net ( 551,000 ) ( 257,000 ) ( 808,000 ) ------------ ------------ ------------ Net income ( loss ) before provision for taxes ( 6,045,000 ) ( 5,521,000 ) ( 11,566,000 ) Provision for income taxes 1,000 ( 820,000 ) ( 819,000 ) ------------ ------------ ------------ Net loss from continuing operations ( $ 6,046,000 ) ( $ 6,341,000 ) ( $ 12,387,000 ) = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = Net loss per common share - basic and diluted ( $ 0.25 ) ( $ 0.40 ) Weighted average number of common shares outstanding . Ref . ( 3 ) 23,826,584 30,826,584 = = = = = = = = = = = = = = = = = = = = = = = = REFERENCE NOTES TO THE PRO - FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS Reference ( 1 ) : AVC purchased Wellspring in February of 2004 . The audited Statement of Operations contained in the AVC 10 - KSB include eleven months of AVMC activity . In order to create a total year 2004 pro - forma for AVMC , the January Wellspring , Inc . activity is added . Reference ( 2 ) : Adjustments necessary to back out non - AVMC related activity included in AVC , which was not part of the acquisition , which includes American Vantage Companies , Hypnotic ( with the exception of Hypnotic Shorts ) and YaYa Media , Vantage Bay and Border Grill . Reference ( 3 ) : The weighted average number of common shares outstanding are modified for the combined company pro - forma to assume that the 7,000,000 shares issued to AVC occurred on the first day of the period presented .
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