UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB/A
                                (Amendment No. 1)

(Mark One)

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

                     For the fiscal year ended July 31, 2003

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

          For the transition period from ____________ to _____________

                         Commission File Number 0-10061

                           AMERICAN VANTAGE COMPANIES
                 (Name of small business issuer in its charter)

           Nevada                                      04-2709807
           ------                                     -----------
(State or other jurisdiction                       (I.R.S. Employer
Of incorporation or organization)                 Identification No.)

         4735 S. Durango Dr., Suite 105, Las Vegas, Nevada     89147
         -------------------------------------------------     -----
           (Address of principal executive offices)          (zip code)

Issuer's telephone number: (702) 227-9800

Securities registered under Section 12(b) of the Exchange Act:  None

Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, par value $.01 per share
                     --------------------------------------
                                (Title of Class)

      Check  whether  the issuer (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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

      Check if there is no disclosure  of delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

      State issuer's revenues for its most recent fiscal year.  $576,000
                                                                --------


                                       1
<PAGE>

      The  aggregate  market  value  of the  shares  of  Common  Stock  held  by
non-affiliates  of the  registrant,  computed by  reference  to the closing sale
price of $1.883 for the Company's  Common Stock, as reported by The NASDAQ Stock
Market,  Inc. on October 24, 2003 was  approximately  $9,842,000  (assuming  for
purposes of such  calculation  that all executive  officers and directors of the
issuer are affiliates and no other persons are affiliates of the issuer).

      The number of shares  outstanding of the issuer's  Common Stock at October
24, 2003 was 5,690,667.

Transitional Small Business Disclosure Format (check one): YES      No   X
                                                              -----    -----

                       DOCUMENTS INCORPORATED BY REFERENCE

None.

                                EXPLANATORY NOTE

This  Annual  Report  on  Form  10-KSB/A  of  American  Vantage  Companies  (the
"Company") for the fiscal year ended July 31, 2003,  contains  amendments to the
original  Annual Report on Form 10-KSB filed on October 29, 2003 (the  "Original
Form 10-KSB") to reflect a restatement  of the financial  statements and related
notes for the  applicable  fiscal  year  ended  July 31,  2003  included  in the
Original  Form 10-KSB in order to correct the  accounting  for the Company's 49%
minority  interest  in its  unconsolidated  investee,  that owns and  operates a
restaurant  in a casino  hotel  located  on the Las  Vegas  Strip  (the  "Border
Grill").  The restatement affects the Company's reported  non-operating  income,
but has no effect on  reported  cash  distributions  from the Border  Grill.  In
connection  with  the  restatement,  changes  have  been  made to (i)  Item 6. -
Management's Discussion and Analysis or Plan of Operations,,  and (ii) Item 7. -
Financial  Statements.  This  Form  10-KSB/A  sets  forth  all  information  and
disclosures  required to be included in the Original Form 10-KSB,  as so amended
to reflect such restatement. This Form 10-KSB/A is effective for all purposes as
of the date of the filing of the original Form 10-KSB.


                                       2
<PAGE>

PART I

Item 1.  Description of Business

Recent Developments

      On April 16, 2003,  American Vantage Companies (the "Company" or "Parent")
acquired  substantially  all of the  assets  and  business  and  certain  of the
liabilities of YaYa, LLC ("YaYa"). YaYa is an "end-to-end" interactive solutions
provider,  specializing  in the  creation  and  provision  of  advertiser-driven
interactive   games  and  marketing   solutions.   In  addition  to  advertising
applications,  YaYa  creates  internet  games for its  clients to be utilized in
employee-training  programs  and for  internal  communications  solutions.  YaYa
Media,  Inc. ("YaYa Media") is a wholly-owned  subsidiary of the Parent,  formed
specifically to acquire the YaYa assets,  business and liabilities purchased and
to continue YaYa's business and operations.

      The  Company  is  continuing  to  review  opportunities  with  the goal of
maximizing its resources in order to increase  stockholder  values.  The Company
believes that any increase in  stockholder  values will be obtained  through the
acquisition of other ongoing operations or through the Company entering into one
or more  businesses.  The  Company  may sell  certain  of its assets in order to
provide  additional  cash  resources  sufficient  to  effectuate  its merger and
acquisition strategy.

      The Company is continuing to pursue legal  remedies  related to its casino
consulting  contract  that  was  prematurely  terminated.  See  "Item  1 - Table
Mountain Casino".

Development of Business

      The  Company  was  incorporated  in Nevada in 1979 under the name  Western
Casinos, Inc. The Company changed its name to American Casino Enterprises,  Inc.
in 1979 and then changed its name to American  Vantage  Companies in March 1997.
The Company was originally  formed to engage in the business of recreational and
leisure time activities,  including casino gaming.  In January 1991, the Company
completed  the purchase of all of the capital  stock of Millerton  Games,  Inc.,
which held a management  consulting  contract with Table Mountain Casino.  Table
Mountain  Casino is a tribal  gaming  enterprise  located  on a  Federal  Indian
Rancheria in Friant, California (the "Table Mountain Casino")

      The Company had been engaged in providing  gaming  consulting  services to
Table  Mountain  Casino until May 1999 when its  contract to provide  consulting
services to the Table Mountain  Casino was  prematurely  terminated by the Table
Mountain Band of Indians (the "Table Mountain Tribe")  following a change in the
tribal  government.  See  "Item 1.  Description  of  Business  - Table  Mountain
Casino."

      In February 1999,  Vantage Bay Group, Inc. ("Vantage Bay"), a wholly-owned
subsidiary  of the  Company,  purchased a 49%  interest in the Border Grill (the
"Border Grill"),  to develop a restaurant  located in the Mandalay Bay Hotel and
Casino in Las Vegas,  Nevada.  The restaurant  opened in June 1999. See "Item 1.
Description of Business - Border Grill Restaurant."

      In May 1999,  Sitka Restaurant  Group,  Inc.  ("Sitka"),  a majority-owned
subsidiary of the Company, opened the WCW Nitro Grill (the "WCW Nitro Grill"), a
themed  restaurant,  in the Excalibur Hotel and Casino (the  "Excalibur") in Las
Vegas,  Nevada.  The Company  closed the WCW Nitro Grill in September  2000. See
"Item 1. Description of Business - WCW Nitro Grill Restaurant."

      All  references  herein  to the  Company  refer  to the  Company  and  its
subsidiaries on a consolidated  basis,  unless the context otherwise  indicates.
The Company's  principal  executive  offices are located at 4735 S. Durango Dr.,
Suite  #105,  Las  Vegas,  Nevada,  89147,  and its  telephone  number  is (702)
227-9800.


                                       3
<PAGE>

Table Mountain Casino

      On February 1, 1996, the Company entered into a termination agreement (the
"Termination Agreement") with the Table Mountain Tribe terminating the Company's
1993 consulting  agreement (the "1993  Agreement") and  simultaneously  entering
into a new consulting agreement (the "1996 Agreement").  Under the conditions of
the Termination Agreement, commencing February 1, 1996, the Table Mountain Tribe
was  required  to pay  the  Company  48  monthly  installments  of  $350,000  in
consideration  for  termination of the 1993 Agreement.  However,  no payment was
required for any month in which the net income of the Table Mountain  Casino did
not equal or exceed $1 million. The term of the Termination  Agreement was to be
automatically  extended by one month for each month that no payment was required
thereunder, up to a maximum of 12 months.

      The 1996 Agreement required that the Company consult and provide technical
assistance,  training  and advice to the Table  Mountain  Tribe  concerning  all
matters relating to the operation and business  activities of the Table Mountain
Casino, including, but not limited to, organization and administration, planning
and development, gaming activities, internal controls and accounting procedures,
cage  operations,  engineering and maintenance,  housekeeping,  human resources,
management   information  services,   marketing  and  advertising,   purchasing,
surveillance,  security and food and beverage operations. The 1996 Agreement was
amended in both June 1997 and October 1997. The term of the 1996  Agreement,  as
amended,  was to  expire  on June 30,  2000.  For its  services  under  the 1996
Agreement,  as amended,  the Company was to receive minimum monthly  payments of
$50,000.  The  Table  Mountain  Tribe  was  also  required  to pay  the  Company
additional  monies for certain  increments of monthly Table Mountain  Casino net
income in excess of the first $1.5 million of net revenue from the operations of
Table Mountain Casino.

      On May 20, 1999, the Company received formal written notice from the newly
elected  tribal  government,  that the Table  Mountain  Tribe  had  unilaterally
terminated the Company's  contract to provide  consulting  services to the Table
Mountain  Casino,  and ceased  payments on the 1996  Agreement  and  Termination
Agreement.

      In June 1999,  the  Company  brought a civil  action in the United  States
District Court,  Eastern District of California,  Fresno Division (the "District
Court")  against the Table Mountain Tribe for breach of the Company's  contracts
with the Table Mountain Tribe.  The lawsuit seeks to recover  payments  totaling
$3,150,000 due under the Termination  Agreement and an award of $790,000,  which
represents  only the base fees due under the 1996  Agreement.  The Company  also
seeks  interest,  court costs and additional  unspecified and "to be determined"
consulting  fees that would have been due during the remainder of the consulting
term.

      The Table Mountain Tribe filed a counterclaim against the Company claiming
the  consulting  contracts  are  invalid  for  several  reasons  and  requesting
restitution for all consulting fees paid to the Company during the period of the
contracts.

      In September  2000, an order was filed by District  Court Judge Anthony W.
Ishii who dismissed the Company's claims against the Table Mountain Tribe due to
the  District  Court's  lack of  subject  matter  jurisdiction.  The order  also
dismissed  the Table  Mountain  Tribe's  counterclaim  against the Company.  The
District Court made no ruling on the merits of the action.  The Company appealed
the order of the District  Court to the Ninth  Circuit  Court of Appeals,  which
upheld the District Court's dismissal.

      In December 2000, the Company filed a virtually identical suit against the
Table  Mountain  Tribe in the  Fresno  County  Superior  Court  of the  State of
California. In April 2001, an order was filed by Superior Court Judge Stephen J.
Kane who  dismissed  the  Company's  civil  action  for lack of  subject  matter
jurisdiction  based on the  Superior  Court's  determination  that  federal  law
completely  preempts the field of Indian gaming.  The Superior  Court,  however,
made no ruling on the merits of the action.

      In July 2001, the Company filed an appeal with the California  State Court
of Appeals,  Fifth  District.  In October 2002, the California  Court of Appeals
reversed the April 2001 order of dismissal.  Both the  California  Supreme Court
and the United  States  Supreme  Court  subsequently  denied the Table  Mountain
Tribe's petition to review that appellate decision.


                                       4
<PAGE>

      In April 2003,  with the case remanded back to the Fresno County  Superior
Court,  the Table Mountain Tribe filed a motion to dismiss the case based on the
Table  Mountain  Tribe's  assertion that its contracts with the Company were not
properly  authorized  by tribal  authorities,  and thereby did not  constitute a
valid waiver of the Table Mountain Tribe's sovereign immunity.  In May 2003, the
Fresno  County  Superior  Court  determined  that the  Company  was  entitled to
discovery on the sovereign  immunity issue,  and only after such discovery would
the Fresno County  Superior Court conduct  further  proceedings on the sovereign
immunity issue.

      As of October 24, 2003,  the Company and the Table Mountain Tribe continue
to conduct discovery  proceedings.  The Fresno County Superior Court will likely
conduct  further  proceedings  on the  sovereign  immunity  issue  by the end of
December 2003.

      Since the Company is unable to  determine  its  losses,  if any should the
Tribe's counterclaim be successful,  no accounting recognition has been given to
the matter in the accompanying financial statements.

Border Grill Restaurant

      On November 12, 1998, Vantage Bay entered into an operating agreement (the
"Operating Agreement") with TT&T, LLC ("TT&T") to develop a restaurant named the
Border  Grill in the  Mandalay  Bay Hotel and Casino in Las Vegas,  Nevada.  The
Operating Agreement provides that Vantage Bay, in exchange for a 49% interest in
the Nevada limited liability company that owns Border Grill, contribute $251,000
upon the  execution  of the  Operating  Agreement  and,  thereafter,  contribute
further  capital  up to an  aggregate  of  $2,750,000,  all of  which  had  been
contributed  by the Company prior to July 31, 2000, to fund the  development  of
the restaurant  subject to the terms and conditions of the Operating  Agreement.
Vantage  Bay also  agreed to loan to TT&T up to  $175,000  for  development  and
operation  of the  restaurant.  The  Company  further  agreed to  guarantee  all
payments due from Vantage Bay to TT&T. The Border Grill opened on June 17, 1999.
The Company has no day-to-day  management  responsibility in connection with the
restaurant  or the  limited  liability  company.  Since  commencement  of Border
Grill's  operations,  with this  investment,  the Company has received  periodic
distributions.  Such  distributions  totaled  $800,000 and  $650,000  during the
fiscal years ended July 31, 2003 and 2002, respectively.

WCW Nitro Grill Restaurant

      On November 12, 1998, Sitka entered into a license agreement (the "License
Agreement")  with World  Championship  Wresting,  Inc. ("WCW") to develop one or
more themed  restaurants to be named the WCW Nitro Grill.  The Company agreed to
guarantee all payments due from Sitka to WCW.

      On May 17,  1999,  the first WCW Nitro Grill opened in the  Excalibur.  On
September  28, 2000,  the Company  announced  its closing of the WCW Nitro Grill
effective  September 30, 2000 due to adverse historical  operating  results.  In
connection with the WCW Nitro Grill, the Company  recorded,  for the fiscal year
ended July 31, 2002 income from discontinued  restaurant  operations of $34,000,
net of income tax benefit totaling $18,000.

YaYa Media, Inc.

      General. On April 16, 2003, the Company acquired  substantially all of the
assets and business and certain of the liabilities of YaYa.  Consideration  paid
in acquiring  the YaYa assets,  business  and  liabilities  consisted of 824,811
shares of  Company  common  stock and the  assumption  of  liabilities  totaling
approximately  $2,500,000,  including loans aggregating  $1,110,000 in principal
amount made by the Company to YaYa, in December 2002 and March 2003. The 824,811
shares of  Company  common  stock  were  valued at $1.41 per share  based on the
closing  price of  Company  common  stock on  April  16,  2003.  YaYa  Media,  a
wholly-owned  subsidiary of the Company,  was formed specifically to acquire the
YaYa assets,  business and liabilities purchased and to continue YaYa's business
and operations.

      Services.  YaYa Media is an "end-to-end"  interactive  solutions provider.
Individual  projects are initiated  through advisory services that can lead to a
production  engagement,  followed  by  ongoing  technology  support.  All  three
services are part of an overall  strategic  plan focused on the  development  of
innovative training, marketing, and/or communications solutions for YaYa Media's
clients.  Intrinsic to certain of its  marketing  strategies is the creation and
provision of  specialized  Web- or CD-based  interactive  games.  In addition to
advertising applications,  YaYa Media also creates internet games to be utilized
in its  client's  employee-training  programs  and for  internal  communications
solutions.


                                       5
<PAGE>

      Subsequent to April 16, 2003, YaYa generated  revenues totaling  $576,000,
consisting of $422,000 for advisory services,  $64,000 for development of custom
software products and $90,000 for hosting and reporting services provided to its
clients.  YaYa Media revenues are generated  from  relatively few contracts with
primarily  Fortune  1000  companies.  A  decline  in the size or number of these
arrangements could adversely affect future operations.

      Internal labor and independent  contractors.  YaYa Media employees provide
the strategic advisory services,  solution ideation,  creative development,  and
project management of YaYa  Media-developed  interactive games production.  YaYa
Media employees also provide the planning and management of follow-on technology
support.   Certain  game  production  services  and  advisory  services  require
specialized  technical  expertise  that is generally  outsourced to  independent
contractors  on a  project-specific  basis.  Until  June  2003,  YaYa Media also
provided its clients with web hosting,  data  extraction  and reporting  through
YaYa  Media-developed  data capture  technology and  internally-owned  hardware.
These services were  subsequently  outsourced to various outside  parties.  YaYa
Media is not dependent  upon any single  outsource  party and believes there are
numerous companies readily available to provide services to YaYa Media.

      Competition.   YaYa  Media's  primary   competition   derives  from  other
games-based interactive solution developers. Most are of similar size or smaller
than YaYa Media and no company has established a dominant position in the field.
Two of YaYa Media's primary sources of differentiation are its ability to engage
its clients at a very early stage  through its strategic  advisory  services and
deliver deeply branded,  highly  customized  interactive  solutions  rather than
`light' rebranding of an off-the-shelf product.

      Trademarks  and patents.  YaYa Media holds  various  trademarks or patents
that relate primarily to development of its Consumer Dialog Technology  ("CDT").
CDT provides an integrated application to track and measure consumer involvement
during game play.  YaYa Media  clients use the  extracted  data to supplement or
direct their product marketing strategies. As discussed above, during June 2003,
YaYa Media discontinued its internal support of this product.

Employees

      As of October 24, 2003,  the Company has 15 employees.  The Parent has two
employees,  its  President  and Chief  Executive  Officer  and Chief  Accounting
Officer.  YaYa employees  include a chief  executive  officer,  chief  operating
officer  and  chief  financial  officer,  chief  technology  officer  and  other
production and administrative staff.

Item 2. Description of Property

      During the fiscal year ending  July 31,  2003 and  through  September  30,
2003, the Company's executive offices were located in approximately 1,000 square
feet of shared office space at 7674 West Lake Mead Blvd.,  Suite 108, Las Vegas,
Nevada 89128. The Company did not pay a monthly rent for use of the premises nor
was there an agreement for any future payments.  The fair value of the Company's
office space arrangement is believed not to be material.

      Effective  October 1, 2003, the Company relocated its executive offices to
approximately  1,500 square feet of office  space at 4735 S. Durango Dr.,  Suite
#105, Las Vegas, Nevada, 89147. The lease agreement provides for a monthly lease
amount of approximately $2,300 and expires on August 31, 2007.

      YaYa's executive offices are located in approximately 4,600 square feet of
office space at 12300  Wilshire  Blvd.,  Suite #400,  Los  Angeles,  California,
90025. The month-to-month lease agreement provides for a monthly lease amount of
approximately $10,500. YaYa also has a satellite sales office with approximately
1,000 square feet of office  space at 333 Hudson  Street,  Suite #104,  New York
City, New York, 10013. The New York City office  month-to-month  lease agreement
provides for a monthly lease amount of approximately $3,000.


                                       6
<PAGE>

      In May 1997, the Company  acquired  approximately  40 acres of undeveloped
land in North Las Vegas,  Nevada for  approximately  $3,500,000 in cash.  During
September  2003, the Company entered into an "Agreement for Purchase and Sale of
Real  Property  and  Escrow  Instructions"  (the  "Property  Agreement")  with a
national home building company  ("Buyer")  contemplating the sale by the Company
of the  approximately  40 acres of  undeveloped  land.  The  Property  Agreement
provides for a $7,000,000 purchase price with the Buyer responsible for the real
estate broker  commission  fees. The Buyer may terminate the  transaction at any
time prior to December  4, 2003 for any reason and on or prior to  December  31,
2003 if the Buyer is unable to obtain approval of the Buyer's "tentative map" by
the applicable zoning authorities.

Item 3. Legal Proceedings

      For a discussion of the Company's litigation with the Table Mountain Tribe
see "Item 1. Description of Business - Table Mountain Casino".

      Neither the Company  nor any of its  subsidiaries  is a party to any other
material  legal  proceeding,  nor to the Company's  knowledge is any  litigation
threatened against the Company or its subsidiaries.

Item 4. Submission of Matters to a Vote of Security Holders

      An Annual Meeting of Stockholders of the Company was held on July 18, 2003
to consider and act upon the following  matters:  (i) to elect Stephen K. Bannon
and  Randolph  C.  Read as Class B  directors  of the  Company  to serve for the
ensuing three years or until their  successors  are duly elected and  qualified;
(ii) to  consider  and act upon a proposal  to amend the  Company's  Articles of
Incorporation  to  increase  the number of  authorized  shares of the  Company's
common stock to 100,000,000  from  10,000,000;  (iii) to consider and act upon a
proposal to amend the Company's  Articles of Incorporation to include provisions
concerning  a  classified  Board of  Directors;  (iv) to consider and act upon a
proposal  to approve  the  Company's  2003  Equity  Incentive  Plan;  and (v) to
consider and act upon a proposal submitted by a stockholder of the Company.

      The  holders  of  5,690,667  shares of Common  Stock of the  Company  were
entitled to vote at the meeting,  of which 5,400,613 shares of common stock were
represented  in person or by  proxy.  The  stockholders  voted as  follows  with
respect to the:

      o     Election of Class B Directors to terms expiring in 2006 --

                   Name                     For          Withheld Authority
                   ----                     ---          ------------------

             Stephen K. Bannon           5,207,758            192,855
             Randolph C. Read            5,339,273             61,340

      o     4,910,214 shares in favor,  487,761 shares against, and 2,638 shares
            abstaining  for  the  resolution  ratifying  the  amendment  to  the
            Company's  Articles  of  Incorporation  to  increase  the  number of
            authorized shares of common stock to 100,000,000;

      o     2,530,873  shares  in favor,  1,365,230  shares  against,  and 1,005
            shares abstaining for the resolution to amend the Company's Articles
            of Incorporation to create a classified Board of Directors;

      o     2,292,161 shares in favor,  1,604,608 shares against, and 339 shares
            abstaining for the resolution  ratifying the Company's proposed 2003
            Equity Incentive Plan.

      The  stockholder  proposal was withdrawn by the  stockholder  prior to the
Annual Meeting. No agreement was entered into with the stockholder in connection
with the withdrawal of his proposal.

                                       7
<PAGE>

                                    PART II

Item 5.  Market for the Company's Common Stock and Related Stockholder Matters
------   ----------------------------------------------------------------------

Common Stock Prices

      The Company's  common stock is traded on the NASDAQ  SmallCap Stock Market
under the symbol "AVCS".

      The  following  table  sets  forth the range of high and low  closing  bid
prices of the Company's  common stock for each quarterly  period  indicated,  as
quoted  on  the  NASDAQ  SmallCap  Market.  The  prices  represent  inter-dealer
quotations,  without  retail  mark-up,  mark-down  or  commission,  and  may not
necessarily represent actual transactions:

<TABLE>
<CAPTION>
Period                                                                High Bid        Low Bid
---------------------------------------------------------------------------------------------
<S>                                                                   <C>              <C>
Fiscal 2002

         First Quarter (August 1, 2001 - October 31, 2001)            $1.78            $1.11
         Second Quarter (November 1, 2001 - January 31, 2002)         $1.89            $1.02
         Third Quarter (February 1, 2002 - April 30, 2002)            $2.50            $1.46
         Fourth Quarter (May 1, 2002- July 31, 2002)                  $1.78            $1.30

Fiscal 2003

         First Quarter (August 1, 2002 - October 31, 2002)            $1.98            $1.24
         Second Quarter (November 1, 2002 - January 31, 2003)         $2.00            $1.37
         Third Quarter (February 1, 2003 - April 30, 2003)            $1.90            $1.32
         Fourth Quarter (May 1, 2003- July 31, 2003)                  $2.11            $1.55
</TABLE>

      On October 24, 2003,  the closing  sale price per share for the  Company's
common stock was $1.883.

Holders

      On October  24,  2003 there  were 860  holders of record of the  5,690,667
shares of the Company's common stock outstanding.

Dividends

      The Company has not paid any cash  dividends on its common stock since its
incorporation.  Management anticipates that in the foreseeable future, earnings,
if any,  will  be  retained  for  use in its  business  or for  other  corporate
purposes.

Stockholder Proposals for Inclusion in Next Year's Proxy Statement

      To be considered for inclusion in next year's proxy statement, stockholder
proposals must be received at the Company's principal executive offices no later
than the close of business on November 25, 2003.  Proposals  should be addressed
to Ronald J. Tassinari,  President,  American Vantage Companies, P.O. Box 89180,
Las Vegas, Nevada 89128.


                                       8
<PAGE>

Other Stockholder Proposals for Presentation at Next Year's Annual Meeting

      For any proposal  that is not submitted for inclusion in next year's proxy
statement,  but is instead sought to be presented directly at next year's annual
meeting,  SEC rules will permit  management to vote proxies in its discretion if
the Company:

o     receives  notice of the proposal  before the close of business on November
      25, 2003 and  advises its  stockholders  in the proxy  statement  for next
      year's annual  meeting  about the nature of the matter and how  management
      intends to vote on such matter, or

o     does not receive  notice of the proposal prior to the close of business on
      November 25, 2003.

      Notices of intention to present  proposals at next year's  annual  meeting
should  be  addressed  to  Ronald  J.  Tassinari,  President,  American  Vantage
Companies, P.O. Box 89180, Las Vegas, Nevada, 89128.

Item 6. Management's Discussion and Analysis or Plan of Operation

      The following  discussion and analysis should be read in conjunction  with
the explanatory note and consolidated financial statements and notes included in
"Item 7. Financial Statements" of this report.

Statement on Forward-Looking Statements

      In addition  to  historical  information,  this  report  contains  certain
forward-looking  statements.  Such statements include those concerning  American
Vantage Companies and its controlled subsidiaries (collectively,  the "Company")
expected  financial  performance  and the Company's  strategic  and  operational
plans,  as well as all  assumptions,  expectations,  predictions,  intentions or
beliefs about future events. Although the Company believes that its expectations
are  based  on  reasonable  assumptions,  there  can be no  assurance  that  the
Company's financial goals or expectations will be realized. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results,  performance,  or achievements of the Company,  or
industry results, to be materially  different from future results,  performance,
or  achievements  expressed  or  implied  by  such  forward-looking  statements.
Numerous  factors may affect the Company's  actual results and may cause results
to differ materially from those expressed in forward-looking  statements made by
or on behalf of the Company.  These risks and uncertainties include, but are not
limited to, those relating to dependence on existing  management and federal and
state  regulation  of the  restaurant  industry,  any  unforeseen  change in the
markets for advertising applications or computer and internet "gaming", domestic
and global economic  conditions and changes in federal and state tax laws or the
administration  of such laws.  The Company  assumes no  obligation  to update or
revise  any such  forward-looking  statements  or the  factors  listed  below to
reflect events or  circumstances  that may arise after this report is filed, and
that may have an effect on the Company's overall performance.

Critical Accounting Policies and Estimates

      The  discussion  and analysis of the  financial  condition  and results of
operations  following  are  based  upon  the  Company's  consolidated  financial
statements,  which have been prepared in accordance  with  principles  generally
accepted in the United States of America.  The  preparation  of these  financial
statements  requires the Company to make estimates and judgments that affect the
reported  amounts of assets,  liabilities,  revenues and  expenses,  and related
disclosure of contingent assets and liabilities.

      The  Company  believes  that  the  estimates,  assumptions  and  judgments
involved in the accounting  policies described below have the greatest potential
impact on the consolidated  financial statements,  so these are considered to be
the critical accounting  policies.  Because of the uncertainty inherent in these
matters,  actual  results could differ from the  estimates  used in applying the
critical  accounting  policies.  Certain of these critical  accounting  policies
affect  working  capital  account  balances,  including the policies for revenue
recognition and accounts receivable.


                                       9
<PAGE>

      Within the context of these  critical  accounting  policies and estimates,
the  Company  is  not  currently  aware  of  any  reasonably  likely  events  or
circumstances that would result in materially different amounts being reported.

      Revenue   recognition.   Revenues,   entirely   derived  from  YaYa  Media
operations,  consist of  licensing,  advisory  services  and games  hosting  and
reporting.  Licensing  revenues from long-term  contracts that include producing
licensed  custom  software  applications  are  generally  recognized  using  the
percentage-of-completion  method,  except when  collectibility is not reasonably
assured in which case  profit is  realized  using the  installment  method.  The
percentage of completion is determined based upon labor hours expended  compared
to total expected  development  hours.  Development  hours  associated  with the
production of the core software is included in the measurement of the contract's
progress   toward   completion   as   the   software   is   customized.    Hours
contemporaneously  expended  for  routine  enhancements  of the  core  software,
however,  are excluded from the  calculation.  Revenue from less  significant or
short-term   arrangements  to  develop  software  modifications   typically  for
recurring customers are generally recognized when the services are complete.

      Advisory service fees are recognized based on contract  milestones as time
is incurred.  Licensing fee revenue is  recognized  ratably over the term of the
license  except  that they are  recognized  immediately  when the Company has no
further  services  to  provide  to the  licensee.  Technical  service  fees  are
recognized ratably over the term of the contract.

      Net revenues represent sales to external customers. Intercompany revenues,
if any, are eliminated and are immaterial for separate disclosure.

      Reserve for  uncollectible  accounts  receivable.  YaYa  Media's  accounts
receivable balances are based on contractual  agreements that are primarily with
Fortune 1000 companies.  As such,  YaYa Media does not make an ongoing  estimate
relating to the collectibility of its accounts  receivable or maintain a reserve
for any  estimated  losses  resulting  from the inability of its clients to make
required  payments.  However,  YaYa Media does periodically  analyze each client
account, and, when it becomes aware of a specific client's inability to meet its
financial   obligations,   such  as  in  the  case  of  bankruptcy   filings  or
deterioration in the client's overall financial condition,  YaYa Media records a
specific  provision for uncollectible  accounts to reduce the related receivable
to the amount that is estimated to be collectible.

      Goodwill and other intangible  assets. In accordance with the Statement of
Financial  Accounting  Standards (SFAS) No. 142,  "Goodwill and Other Intangible
Assets,"  periodic  impairment  tests for  goodwill  and other  indefinite-lived
intangible  assets  are based on a  comparison  of the  estimated  fair value of
goodwill  and other  intangible  assets to the carrying  value.  If the carrying
value exceeds the estimate of fair value, impairment is calculated as the excess
of the  carrying  value over the estimate of fair value.  The  estimates of fair
value utilized in goodwill and other indefinite-lived intangible asset tests may
be based upon a number of  factors,  including  assumptions  about the  expected
future operating performance of the reporting units.

      The Company's periodic impairment  assessments of indefinite-lived  assets
are an integral part of the Company's  ongoing  strategic review of its business
operations.  Therefore, the Company's estimates may change in future periods due
to, among other things,  technological  change,  economic conditions,  change in
business plans or an inability to successfully  implement  business plans.  Such
changes may result in impairment charges recorded in future periods.

      During the fiscal year ended July 31, 2003, no impairment  charge  related
to goodwill or other indefinite-lived intangible assets was recorded.

      Intangible assets,  such as patents or trademarks,  that are determined to
have  definite  lives  continue to be amortized  over their useful lives and are
measured for  impairment  only when events or  circumstances  indicate  that the
carrying value may be impaired. In these cases,  Management estimates the future
undiscounted cash flows to be derived from the asset to determine whether or not
a potential  impairment  exists.  If the carrying  value exceeds the estimate of
future  undiscounted  cash flows,  the impairment is calculated as the excess of
the  carrying  value of the  asset  over the  estimate  of its fair  value.  Any
impairment  charges would be classified as other expense within the consolidated
statement of operations.


                                       10
<PAGE>

      Other contingencies.  In the ordinary course of business,  the Company may
be  involved  in  legal   proceedings   regarding   contractual  and  employment
relationships,  trademark  or patent  rights,  and a variety  of other  matters.
Contingent liabilities are recorded if resulting from claims against the Company
when it is probable  that a liability  has been  incurred  and the amount of the
loss is reasonably estimable.  The Company discloses contingent liabilities when
there is a reasonable  possibility that the ultimate loss will materially exceed
the recorded liability. Estimating probable losses requires analysis of multiple
factors,  in some cases including judgments about the potential actions of third
party  claimants and courts.  Therefore,  actual losses in any future period are
inherently  uncertain.  Currently,  the Company  believes  that no pending legal
proceedings or claims, in the ordinary course of business,  will have a material
impact on the Company's financial position or results of operations. However, if
actual or estimated  probable  future losses  exceed the recorded  liability for
such  claims,  additional  charges may be  recorded as an other  expenses in the
Company's  consolidated  statement of operations  during the period in which the
actual loss or change in estimate occurred.

Results of Operations

Year Ended July 31, 2003 ("Fiscal  2003")  Compared With the Year Ended July 31,
2002 ("Fiscal 2002")

      Sales and services. On April 16, 2003, the Company acquired  substantially
all of the assets and  business  and  certain of the  liabilities  of YaYa,  LLC
("YaYa"). YaYa is an "end-to-end"  interactive solutions provider,  specializing
in the  creation  and  provision  of  advertiser-driven  interactive  games  and
marketing  solutions.  In addition to  advertising  applications,  YaYa  creates
internet games for its clients to be utilized in employee-training  programs and
for internal  communications  solutions.  YaYa Media,  Inc.  ("YaYa Media") is a
wholly-owned  subsidiary of the Company that was formed  specifically  to assume
the YaYa assets,  business and  liabilities  and to continue YaYa's business and
operations.

      The YaYa business  generates  revenue from  relatively  few contracts with
certain  Fortune 1000  companies.  The results of operations for YaYa Media from
April 16, through July 31, 2003, are included in the following discussions.

      Subsequent to April 16, 2003, YaYa generated  revenues totaling  $576,000,
consisting of $422,000 for advisory services,  $64,000 for development of custom
software products and $90,000 for hosting and reporting services provided to its
clients.

      Costs and expenses.  General and  administrative  expenses  decreased from
$4,149,000 for Fiscal 2002 to $2,120,000 for Fiscal 2003 for an overall decrease
of $2,029,000 or 48.9%.  Included in the Fiscal 2002 general and  administrative
expenses  is  a  one-time   charge  of  $1,539,000   related  to  the  Company's
restructuring  program to downsize and minimize corporate overhead.  As a result
of the restructuring  program, the Company retained only the Company's President
and Chief  Executive  Officer and  significantly  reduced  other  administrative
expenses.

      During the fiscal years ended July 31, 2003 and 2002, the Company incurred
payroll  and   payroll-related   costs   totaling   $816,000   and   $2,482,000,
respectively.  Fiscal 2002  payroll and  payroll-related  costs  included  costs
related to the Company's  restructuring  program  totaled  $1,324,000.  Although
Fiscal Year 2003  payroll  costs  decreased  overall due to the Fiscal Year 2002
restructuring  program, this decrease was offset by the April 2003 hiring of the
Company's Chief Accounting Officer and $464,000 relating to YaYa Media's general
and administrative payroll costs from April 16, through July 31, 2003.

      The  decrease  in payroll  and  payroll-related  costs for the fiscal year
ended July 31, 2003 were also  partially  offset by increased  accounting  fees.
Under the direction of the Chief Executive Officer,  during August 2002 to April
2003,  the Company  outsourced its internal  accounting and financial  reporting
functions  resulting in $63,000 of accounting  fees expense,  excluding  amounts
paid to its independent auditor.

      Consulting  fees  totaled  $97,000 for Fiscal 2003 and $383,000 for Fiscal
2002, for an overall  decrease of $286,000 or 74.7%.  The Fiscal 2002 consulting
fees were principally paid to investment  advisors for due diligence relating to
three potential acquisition  candidates.  For various reasons, none of the three
proposed transactions was successfully completed.


                                       11
<PAGE>

      Legal fees  decreased from $613,000 for Fiscal 2002 to $328,000 for Fiscal
2003 for an overall  decrease  of  $285,000  or 46.5%.  As  discussed  above for
consulting fees, the Fiscal 2002 legal expenses were primarily  related to legal
fees, due diligence and other related  services  rendered in connection with the
Company's  ongoing merger and  acquisition  efforts.  Legal fees for Fiscal 2003
primarily  relate to monthly  retainers for general SEC and  corporate  matters,
preparation of documents relating to the Company's formation of YaYa Media, YaYa
Media trademark and patent matters, and the Table Mountain Casino litigation.

      Rental  expense  for Fiscal  2003  totaled  $41,000 and $93,000 for Fiscal
2002, for an overall decrease of $52,000 or 55.9%.  During May 2002, the Company
terminated its  month-to-month  lease for its former executive  offices.  During
Fiscal 2003,  the Company did not pay a monthly  rent for its current  executive
offices nor was there an  agreement  between the parties for any future  monthly
rental.  However,  YaYa  Media's  executive  office,  located  in  Los  Angeles,
California and its satellite  sales office in New York City incur monthly rental
charges of $11,000 and $3,000,  respectively.  The  Company  has  relocated  its
executive  offices  as of October 1, 2003,  and will incur  rental  expenses  of
$2,300 per month through the remainder of the fiscal year ending July 31, 2004.

      Directors  fees  increased  from  $93,000 for Fiscal 2002 to $202,000  for
Fiscal 2003,  for a total  increase of $109,000 or 117.2%.  On October 25, 2002,
the Company  granted to Jeanne Hood,  Steven G. Barringer and Stephen K. Bannon,
non-qualified stock options to purchase 20,000, 20,000 and 25,000, respectively,
of the Company's common stock shares at an exercise price of $1.26 per share. In
addition,   on  May  20,  2003,  the  Company   granted  to  Randolph  C.  Read,
non-qualified  stock options to purchase  25,000 of the  Company's  common stock
shares at an exercise price of $1.58.  The options were granted as  compensation
for  serving  on the  Company's  board of  directors  or as a  chairperson  of a
committee of the Company's  board.  Based on the  Black-Scholes  option  pricing
model,  the  Company  recorded  compensation  expense,  included  in general and
administrative  as directors  fees  expense,  totaling  $119,000 for these stock
options.

Non-operating Income

      Net interest  income  decreased from $255,000 at July 31, 2002 to $106,000
at July 31, 2003.  This  decrease is primarily  attributable  to lower  interest
rates on the Company's money market and U.S. Treasury bill accounts (included as
"cash and cash equivalents" and "U.S.  treasury  securities" on the consolidated
balance sheets).  Also, to facilitate immediate cash liquidity for the Company's
acquisition  and merger  activities,  funds were  transferred  from  longer-term
higher  interest  bearing  investments to  shorter-term  lower interest  bearing
investment  accounts.  The Company's cash and cash equivalents and U.S. treasury
securities  balances  also  decreased  from  $9,345,000  at  July  31,  2002  to
$8,454,000  at July 31,  2003.  The  decrease  in the Fiscal  2003 cash and cash
equivalents  balance is primarily a result of the consideration  paid and direct
costs relating to the acquisition of the YaYa business that totaled  $1,317,000.
Interest income was also offset by $14,000 in interest expense accrued on a note
payable from YaYa Media to YaYa.

Income from unconsolidated investees, net

      The  Company,  through a wholly  owned  subsidiary,  holds a 49%  minority
interest in an unconsolidated investee (the "Restaurant Investee") that owns and
operates a  restaurant  in a casino hotel  located on the Las Vegas  Strip.  The
Company has no day-to-day  management  responsibilities  in connection  with the
Restaurant Investee and the Restaurant Investee's operations. In accordance with
U.S.  GAAP,  the Company  excludes  the accounts of the  Restaurant  Investee in
reporting its operating  results and instead  records its  investment  using the
equity  method  of  accounting  as  adjusted  to  reflect  certain   contractual
provisions contained in the operating agreement for the Restaurant Investee with
respect to  recognition  of profits and losses by the members of the  Restaurant
Investee.  These  provisions  required the Company to  recognize  profits to the
initial  extent of an amount  equal to 100% of the  initial  losses the  Company
recognized in prior periods and then recognize an accumulated 5% priority return
on the unpaid portion of the Company's  initial  investment of $2,750,000  until
paid, which the Company believes to have occurred in the quarter ended April 30,
2003.


                                       12
<PAGE>

      Income from the Company's  Restaurant  Investee increased from $404,000 in
Fiscal  2002 to  $445,000  in  Fiscal  2003.  Future  reported  income  from the
Company's  Restaurant  Investee may differ from cash distributions  discussed in
the Liquidity and Capital Resources section.

Discontinued Operations

      On September 28, 2000, the Company  announced its closing of the WCW Nitro
Grill  restaurant.  As a result,  during  Fiscal  2001 the  Company  recorded  a
provision to capture costs related to the discontinued operations. During Fiscal
2002,  the Company  wrote-off the remaining  provision in the amount of $34,000,
net of the income tax benefit totaling $18,000.

Liquidity and Capital Resources

      As of July 31, 2003,  the Company had cash and cash  equivalents  totaling
$8,454,000. Of this amount, the Company holds $7,546,000 in various money market
accounts.  The Company also had  consolidated  working  capital of $8,714,000 at
July 31, 2003, as compared with its working  capital of  $10,667,000 at July 31,
2002.  As  discussed  previously,  the decrease in the Fiscal 2003 cash and cash
equivalents balance is primarily a result of the YaYa acquisition.  In addition,
until  April 16,  2003,  the Company had no current  operating  revenue  source.
Hence,  recurring  operating  costs  decreased  the Company's  working  capital.
Interest  income and capital  distributions  from its investment in Border Grill
partially offset this effect.  However, it should be noted that the Border Grill
Operating  Agreement  does not provide  for  guaranteed  capital  distributions.
Therefore, such distributions are subject to fluctuation.

      On September 5, 2003, American Care Group, Inc., a wholly-owned subsidiary
of the  Company,  entered  into an  "Agreement  for  Purchase  and  Sale of Real
Property  and  Escrow  Instructions"  (the  "Agreement")  with a  national  home
building  company   ("Buyer"),   contemplating   the  sale  by  the  Company  of
approximately  40 acres of undeveloped  land owned by the Company and located in
North Las Vegas,  Nevada. The Agreement provides for a $7,000,000 purchase price
with the Buyer responsible for the real estate broker commission fees. The Buyer
may  terminate  the  transaction  at any time prior to  December 4, 2003 for any
reason  and on or prior to  December  31,  2003 if the Buyer is unable to obtain
approval of the Buyer's "tentative map" by the applicable zoning authorities.

      Upon signing the  Agreement,  the Buyer funded an escrow  account with its
initial deposit of $100,000.  An additional  $100,000 deposit is due on December
5, 2003.  The  deposits are  refundable  until  December  31, 2003.  The Company
expects  to  recognize  a  pre-tax  gain  of   approximately   $3,500,000   upon
consummation of this land sale transaction.

      The Company intends to fund its operating costs and merger and acquisition
activities from its existing working capital resources, as well as the potential
land  sale  proceeds.   It  is  possible  that  future  merger  and  acquisition
opportunities may require additional resources. The Company may provide for such
requirements with financing from financial  institutions  and/or the issuance of
equity securities.

Long-term Financial Obligations

      In connection  with the April 16, 2003  acquisition  of the YaYa business,
YaYa Media assumed a $523,000  promissory note payable to certain YaYa partners.
Provided that YaYa Media has  available  cash  resources,  the  promissory  note
provides  for annual  interest-only  payments  commencing  on December  31, 2003
through  maturity date. The interest rate on the promissory note is 9% per annum
with a  maturity  date of the later of (i) May 1,  2006,  or (ii) the first date
that YaYa Media has sufficient cash resources  available to repay the balance of
the promissory note and all accrued but unpaid interest.


                                       13
<PAGE>

Impact of Inflation

      The Company believes that inflation has not had a material impact on costs
and expenses.

Factors That May Affect Future Results

      From the April 16, 2003 YaYa acquisition through the Company's fiscal year
end at July 31, 2003, YaYa Media incurred a net loss of $525,000.  Prior to July
31, 2003,  YaYa Media  reviewed its current  revenue  streams and  determined to
focus  primarily on its advisory  services and  development  of custom  software
applications.  As a result, during July 2003, YaYa Media decreased its full-time
employee staffing levels to 12 with the intent to outsource a specific project's
required technical expertise to independent  contractors as needed. Despite YaYa
Media's  efforts to  significantly  decrease labor costs,  there is no assurance
that YaYa Media will be  successful  in its efforts to attain  profitability  in
Fiscal 2004.

      YaYa Media also  generates  revenue from  relatively  few  contracts  with
certain  companies.  A decline in the size or number of these arrangements could
adversely affect its future operations.

      As discussed previously, on September 5, 2003, the Company entered into an
agreement  contemplating  the sale of approximately 40 acres of undeveloped land
owned by one of the Company's  wholly-owned  subsidiary and located in North Las
Vegas,  Nevada.  The failure to consummate the sale could  adversely  affect the
Company's cash and cash equivalents.

Qualitative and Quantitative Disclosures About Market and Interest Rate Risk

      Except for exceeding insured deposit limits  (approximately  $8,300,000 at
July 31, 2003), the Company is exposed to minimal market risks as its investment
policy allows only short-term,  high-rated securities. The Company does not hold
or issue  derivatives,  derivative  commodity  instruments  or  other  financial
instruments, for trading purposes. At July 31, 2003, the Company's cash and cash
equivalents  approximate their fair values due to the short-term nature of these
instruments.

      During the next 12 months,  the Company does not anticipate  entering into
financing arrangements which would expose it to interest rate risk.

Item 7. Financial Statements

      Management  of  American   Vantage   Companies  is  responsible   for  the
information  and  representations  contained  in this report.  The  consolidated
financial  statements of the Company have been  prepared in conformity  with the
generally  accepted  accounting   principles   considered   appropriate  in  the
circumstances  and include some amounts based on best  estimates and  judgments.
Other  financial  information in this report is consistent  with these financial
statements.

      The Audit  Committee of the Board of  Directors,  presently  consisting of
three  independent  directors,   is  responsible  for  the  appointment  of  the
independent  accountants  and  reviews  with  the  independent  accountants  and
management,   the  scope  and  the  results  of  the  annual  examination,   the
effectiveness of the accounting control system and other matters relating to the
financial  affairs of the  Company  as they deem  appropriate.  The  independent
accountants  have full  access  to the  Audit  Committee,  with or  without  the
presence of management, to discuss any appropriate matters.


                                       14
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Audit Committee
American Vantage Companies
Las Vegas, Nevada

We have audited the accompanying consolidated balance sheets of American Vantage
Companies and  Subsidiaries  (the Company) as of July 31, 2003 and 2002, and the
related consolidated  statements of operations,  changes in stockholders' equity
and cash flows for the years then  ended.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform,  audits of its internal
control over financial reporting.  Our audits included consideration of internal
control over financial  reporting as a basis for designing audit procedures that
are appropriate in the  circumstances,  but not for the purpose of expressing an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the consolidated  financial  statements  present fairly, in all
material respects,  the financial position of American Vantage Companies and its
subsidiaries  as of July 31, 2003 and 2002, and the results of their  operations
and their  cash flows for the years then  ended in  conformity  with  accounting
principles generally accepted in the United States of America.

Las Vegas, Nevada
March 25, 2004, except for Note 12, as to which the date is April 21, 2005


                                       15
<PAGE>

AMERICAN VANTAGE COMPANIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                      JULY 31,
                                                                     ----------------------------------------
                                                                         2003                         2002
                                                                     -----------                  -----------
<S>                                                                  <C>                          <C>
ASSETS                                                               Restated - see note  12
Current assets:
        Cash and cash equivalents                                    $ 8,454,000                  $ 1,560,000
        U.S. treasury securities                                              --                    7,785,000
        Accounts receivable, net                                         767,000                           --
        Refundable income taxes                                               --                    1,448,000
        Other                                                            395,000                       63,000
                                                                     -----------                  -----------
                                                                       9,616,000                   10,856,000

Land held for development or sale                                      3,544,000                    3,544,000
Investment in unconsolidated investees                                 1,323,000                    1,615,000
Goodwill                                                               2,926,000                           --
Deferred income tax                                                      287,000                           --
Furniture, equipment and other assets, net                               296,000                        9,000
                                                                     -----------                  -----------
                                                                     $17,992,000                  $16,024,000
                                                                     ===========                  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
        Accounts payable                                             $   295,000                  $    50,000
        Accrued liabilities                                              172,000                           --
        Deferred income tax                                               33,000                      139,000
        Deferred revenue                                                 106,000                           --
        Customer deposits                                                296,000                           --
                                                                     -----------                  -----------
              Total current liabilities                                  902,000                      189,000
                                                                     -----------                  -----------

Long-term debt                                                           523,000                           --
Commitments and contingencies

Stockholders' equity:
        Preferred stock, $.01 par; 10,000,000 shares authorized;
          0 shares issued and outstanding                                     --                           --
        Common stock, $.01 par; 100,000,000 shares authorized;
          5,690,667 and 4,865,856 shares issued and outstanding           57,000                       49,000
        Additional paid-in capital                                     4,963,000                    3,324,000
        Retained earnings                                             11,547,000                   12,462,000
                                                                     -----------                  -----------
                                                                      16,567,000                   15,835,000
                                                                     -----------                  -----------
                                                                     $17,992,000                  $16,024,000
                                                                     ===========                  ===========
</TABLE>

                 See notes to consolidated financial statements


                                       16
<PAGE>

AMERICAN VANTAGE COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                  YEAR ENDED JULY 31,
                                                                        --------------------------------------
                                                                            2003                       2002
                                                                        -----------                -----------
                                                                        Restated -- see Note 12
<S>                                                                     <C>                        <C>
Sales and services                                                      $   576,000                $        --
Cost of sales and services                                                  337,000                         --
                                                                        -----------                -----------

Gross margin                                                                239,000                         --
                                                                        -----------                -----------

Costs and expenses
      General and administrative                                          2,120,000                  2,610,000
      Corporate restructuring                                                    --                  1,539,000
                                                                        -----------                -----------

                                                                          2,120,000                  4,149,000

Non-operating income
      Interest                                                              106,000                    255,000
      Miscellaneous                                                              --                     10,000
                                                                        -----------                -----------

Loss from continuing operations before income tax benefit                (1,775,000)                (3,884,000)

Income tax benefit                                                          392,000                  1,308,000

Income from unconsolidated investees, net                                   468,000                    404,000

Discontinued operations
      Income from discontinued restaurant operations, net of income
        tax benefit totaling $18,000                                             --                     34,000
                                                                        -----------                -----------

Net loss                                                                $  (915,000)               $(2,138,000)
                                                                        ===========                ===========

Income (loss) per common share - basic and diluted
       Continuing operations                                            $     (0.18)               $     (0.45)
       Discontinued operations                                                   --                       0.01
                                                                        -----------                -----------

       Net loss                                                         $     (0.18)               $     (0.44)
                                                                        ===========                ===========

Weighted average number of common shares and
   common share equivalents                                               5,106,000                  4,866,000
                                                                        ===========                ===========
</TABLE>

                 See notes to consolidated financial statements


                                       17
<PAGE>

AMERICAN VANTAGE COMPANIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                               Common stock                Additional
                                                        -----------------------------       Paid-in          Retained
                                                            Shares        Par Value         Capital          Earnings
                                                        ------------     ------------     ------------     ------------
<S>                                                     <C>              <C>              <C>              <C>
Balance, July 31, 2001                                     4,865,856     $     49,000     $  3,218,000     $ 14,600,000

Issuance of options under plans                                   --               --           75,000               --

Issuance of warrants under plan                                   --               --           31,000               --

Net loss                                                          --               --               --       (2,138,000)
                                                        ------------     ------------     ------------     ------------

Balance, July 31, 2002                                     4,865,856           49,000        3,324,000       12,462,000

Shares issued related to YaYa acquisition                    824,811            8,000        1,155,000               --

Issuance of options under plans                                   --               --          484,000               --

Net loss                                                          --               --               --         (915,000)
                                                        ------------     ------------     ------------     ------------

Balance, July 31, 2003  (as restated - see Note 12)        5,690,667     $     57,000     $  4,963,000     $ 11,547,000
                                                        ============     ============     ============     ============
</TABLE>

                 See notes to consolidated financial statements


                                       18
<PAGE>

AMERICAN VANTAGE COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                             YEAR ENDED JULY 31,
                                                                        ----------------------------
                                                                            2003             2002
                                                                        -----------      -----------
<S>                                                                     <C>              <C>
Operating activities
   Net cash used in operating activities                                $  (355,000)     $(2,875,000)
                                                                        -----------      -----------

Investing activities
   Purchase of furniture and equipment                                      (27,000)          (1,000)
   Proceeds from sale of furniture and equipment                                 --            6,000
   Advances to YaYa, LLC                                                 (1,110,000)              --
   Direct YaYa acquisition costs                                           (207,000)              --
   Capitalization of YaYa Media, Inc.                                        (1,000)              --
   Cash proceeds acquired from YaYa LLC                                       9,000               --
   Net proceeds from redemption of U.S. treasury bills, at maturity       7,785,000               --
   Purchased U.S. treasury bills and certificates of deposit                     --       (1,940,000)
   Cash distribution from unconsolidated restaurant subsidiary              800,000          650,000
                                                                        -----------      -----------

   Net cash provided by (used in) investing activities                    7,249,000       (1,285,000)
                                                                        -----------      -----------

Net increase (decrease) in cash and cash equivalents                      6,894,000       (4,160,000)

Cash and cash equivalents, at beginning of year                           1,560,000        5,720,000
                                                                        -----------      -----------

Cash and cash equivalents, at end of year                               $ 8,454,000      $ 1,560,000
                                                                        ===========      ===========
</TABLE>

                 See notes to consolidated financial statements


                                       19
<PAGE>

AMERICAN VANTAGE COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2003 AND 2002

Note 1 - Nature of business and summary of significant accounting policies

      Nature of business.  Prior to April 16, 2003,  American Vantage  Companies
and  its   wholly-owned   subsidiaries   (collectively,   the  "Company")   were
substantially  inactive.  As discussed  in Note 2, on April 16,  2003,  American
Vantage  Companies (the "Parent")  acquired  substantially all of the assets and
business  and  certain of the  liabilities  of YaYa,  LLC  ("YaYa").  YaYa is an
"end-to-end"  interactive  solutions provider,  specializing in the creation and
provision of  advertiser-driven  interactive games and marketing  solutions.  In
addition  to  advertising  applications,  YaYa  creates  internet  games for its
clients  to  be  utilized  in   employee-training   programs  and  for  internal
communications  solutions.  YaYa Media,  Inc.  ("YaYa  Media") is a wholly-owned
subsidiary  of the  Parent,  formed  specifically  to acquire  the YaYa  assets,
business  and  liabilities   purchased  and  to  continue  YaYa's  business  and
operations.

      The Company continues to review  opportunities with the goal of maximizing
its resources in order to increase stockholder values.  Effective July 29, 2002,
the Company initiated a complete  corporate  restructuring  that resulted in the
severance of all executive and  administrative  staff, with the exception of its
Chief Executive Officer. In addition,  the Company terminated its month-to-month
lease for its executive offices and significantly  reduced other  administrative
expenses.  The cost of this  restructuring  was a one-time charge of $1,539,000,
including  primarily  severance  pay  and a  $95,000  loss  on the  disposal  or
abandonment of certain property and equipment.

      The  Company,  through  a  wholly-owned  subsidiary,  also has a  minority
interest in an unconsolidated investee (the "Restaurant Investee") that owns and
operates a restaurant  in a casino hotel located on the Las Vegas  "Strip".  The
Company has no day-to-day  management  responsibilities  in connection  with the
Restaurant Investee and its operations.

      Through   YaYa  Media,   the  Company  has  a  minority   interest  in  an
unconsolidated  investee (the "YaYa Investee") that promotes "video game touring
festivals".  The Company has no day-to-day  responsibilities  in connection with
the YaYa Investee and its operations.

      Until  May  1999,  the  Company  had  been  engaged  in  providing  gaming
consulting  services  to a  tribal  gaming  enterprise  when  its  contract  was
prematurely terminated (see Note 7- Commitments and contingencies).

      Principles of consolidation. The consolidated financial statements include
the accounts of American Vantage  Companies and its  wholly-owned  subsidiaries.
All significant intercompany accounts and transactions have been eliminated.

      Subsequent  to  the  issuance  of  the  Company's  consolidated  financial
statements  for the three and six  months  ended  April 30,  2003,  the  Company
determined that the non-operating income from its unconsolidated subsidiary, the
Investee had been  recorded  incorrectly.  Prior to June 30,  2004,  the Company
excluded the accounts of the Investee and instead  recorded its investment using
the  equity  method  of  accounting  (based  on its  equity  in  the  Restaurant
Investee's net assets, which is 49%) subject to certain contractual  adjustments
until  the  Investee  attained  sustained  profitability.   The  effect  of  the
adjustments is that,  through June 30, 2004, the Company  recognized 100% of the
Investee's  income and losses and had received 100% of its capital  contribution
and priority  return.  The  restatement  recognizes  that the Investee  attained
sustained  profitability at February 2003. This restatement has no effect on the
Company's  reported cash flows.  See Note 12 - Restatement of previously  issued
financial statements.

      The Company also  excludes  the accounts of its YaYa  Investee and instead
records its investment using the equity method of accounting based on its equity
in the YaYa Investee's net assets, which is 36% at July 31, 2003.


                                       20
<PAGE>

AMERICAN VANTAGE COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2003 AND 2002

      Use of estimates.  The  preparation of financial  statements in conformity
with  accounting  principles  generally  accepted in the United States  requires
management to make estimates and  assumptions  that affect the reported  amounts
and disclosures,  some of which may require revision in future periods.  For the
Company,  the most  significant  estimate  is  goodwill  as it may be subject to
impairment within the next year if there are changes in circumstances.

      Cash  equivalents.  The Company  considers all highly  liquid  instruments
purchased  with  an  original  maturity  of  three  months  or  less  to be cash
equivalents. These include primarily money market funds.

      U.S. treasury  securities.  U.S. treasury securities at July 31, 2002 have
an original maturity of six months and are classified as held-to-maturity.

      Concentration of credit risk. The Company is subject to  concentrations of
credit risk associated with cash and  equivalents and accounts  receivable.  The
Company places cash and equivalents with financial  institutions with investment
grade credit ratings. The financial  institutions are FDIC insured on amounts up
to $100,000.  In  aggregate,  such insured  limits are exceeded by $8,300,000 at
July 31, 2003.

      The  Company  considers  its   concentration   risk  related  to  accounts
receivable to be mitigated as project  contracts are primarily with Fortune 1000
companies.

      Revenue   recognition.   Revenues,   entirely   derived  from  YaYa  Media
operations,  consist of  licensing,  advisory  services  and games  hosting  and
reporting.  Licensing  revenues from long-term  contracts that include producing
licensed  custom  software  applications  are  generally  recognized  using  the
percentage-of-completion  method,  except when  collectibility is not reasonably
assured in which case profit is recognized  using the  installment  method.  The
percentage of completion is determined based upon labor hours expended  compared
to total expected  development  hours.  Development  hours  associated  with the
production of the core software is included in the measurement of the contract's
progress   toward   completion   as   the   software   is   customized.    Hours
contemporaneously  expended  for  routine  enhancements  of the  core  software,
however,  are excluded from the  calculation.  Revenue from less  significant or
short-term   arrangements  to  develop  software  modifications   typically  for
recurring customers are generally recognized when the services are complete.

      Advisory service fees are recognized based on contract  milestones as time
is incurred.  Licensing fee revenue is  recognized  ratably over the term of the
license  except  that they are  recognized  immediately  when the Company has no
further  services  to  provide  to the  licensee.  Technical  service  fees  are
recognized ratably over the term of the contract.

      Net revenues represent sales to external customers. Intercompany revenues,
if any, have been eliminated and are immaterial for separate disclosure.

      Concentrations.  As the  Company's  wholly  owned  subsidiary,  YaYa Media
generates  revenue from  relatively  few  contracts  with certain  companies,  a
decline  in the size or  number of these  arrangements  could  adversely  affect
future operations.

      Land  held for  development  or sale.  Land held for  development  or sale
consists  of  approximately  40 acres of  undeveloped  land in North Las  Vegas,
Nevada,  that is valued at the lower of cost or estimated  fair value less costs
to sell. See Note 11 - Subsequent events.


                                       21
<PAGE>

AMERICAN VANTAGE COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2003 AND 2002

      Goodwill.  In accordance with SFAS No. 142 "Goodwill and Other  Intangible
Assets" (SFAS 142),  goodwill and intangible assets with indefinite lives are no
longer  being   amortized  but  instead  are  being   measured  for   impairment
periodically,  or when events indicate that an impairment exists. As required by
SFAS 142, in the Company's  impairment  test of goodwill,  the fair value of the
applicable  reporting  unit is compared to its carrying  value.  If the carrying
value of the  reporting  unit  exceeds the  estimate of fair value,  the Company
calculates  the  impairment as the excess of the carrying value of goodwill over
its estimated fair value.

      At July 31, 2003, the Company has recorded  $2,926,000 in goodwill related
to the April 16, 2003 acquisition of the YaYa operations.  No impairment test of
goodwill  was  performed  at July 31, 2003 given the three and a half month YaYa
Media operating period.

      Furniture,  equipment  and  depreciation.   Furniture  and  equipment  are
recorded  at cost  (excluding  furniture  and  equipment  acquired  in the  YaYa
acquisition which was recorded at its fair market value on date of acquisition).
Depreciation for financial  reporting  purposes is determined on a straight-line
basis over three to seven years.

      Stock-based  compensation.  The Company accounts for stock-based  employee
compensation  (see Note 5 -  Stockholders'  equity)  using the  intrinsic  value
method in  Accounting  Principles  Board  Opinion No. 25,  Accounting  for Stock
Issued to Employees. Historically, the Company has granted stock options with an
exercise price equal to the market value at the date of grant,  and accordingly,
no compensation expense is recognized.

      Income (loss) per common share. The computation of basic income (loss) per
common  share  are  based  on the  weighted  average  number  of  common  shares
outstanding.  Options  and  warrants to  purchase  737,000 and 25,000  shares of
common  stock in Fiscal  2003 and  452,000  and  25,000 in Fiscal  2002 were not
included  in the  computation  of diluted  income  (loss) per share  because the
effect would be anti-dilutive.

      Discontinued operations.  All discontinued operations were initiated prior
to the effective  date of Statement of Financial  Accounting  Standards No. 144,
Accounting  For  The  Impairment  or  Disposal  of  Long-Lived  Assets,  and are
accounted for in accordance with Accounting  Principles Bulletin Opinion No. 30,
Reporting  the Results of  Operations  - Reporting  the Effects of Disposal of a
Segment of a  Business,  and  Extraordinary,  Unusual and  Infrequent  Occurring
Events and Transactions.

Note 2 - YaYa asset purchase

      Consideration paid in acquiring the YaYa assets,  business and liabilities
consisted of 824,811 shares of the Company's  common stock and the assumption of
liabilities  totaling  approximately  $2,500,000,  including  loans  aggregating
$1,110,000 in principal  amount made by the Company to YaYa in December 2002 and
March 2003.  The 824,811 shares of Company common stock were valued at $1.41 per
share based on the closing price of Company common stock on April 16, 2003.

      The  following  table  summarizes  the allocated  estimated  fair value of
YaYa's  assets and  liabilities  at July 31, 2003 and  calculates  the resulting
goodwill balance.  Certain estimated working capital adjustments are still being
assessed by management.


                                       22
<PAGE>

AMERICAN VANTAGE COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2003 AND 2002

<TABLE>
<CAPTION>
<S>                                                                            <C>
Purchase price:
    Issuance of 824,811 shares of Company common stock (note 4)                $ 1,163,000
    Pre-acquisition advances to YaYa, LLC, including $26,000 in accrued
      interest receivable                                                        1,136,000
    Cash capitalization of YaYa Media, Inc. (100% interest)                          1,000
                                                                               -----------
Total purchase price                                                             2,300,000

Acquisition direct costs:
    Issuance of common stock options as investment banking fee (note 4)            100,000
    Legal, accounting and other miscellaneous direct acquisition costs             207,000
                                                                               -----------
Total costs                                                                      2,607,000
                                                                               -----------


Fair value of YaYa's assets and liabilities:
    Assets
           Furniture and equipment                                                 207,000
           Investments and other assets (including $64,000 in identifiable
             intangibles)                                                          131,000
           Current assets (including $751,000 in net accounts receivable)          776,000
                                                                               -----------
                                                                                 1,114,000
                                                                               -----------
    Liabilities
           Note payable to YaYa, LLC members                                       523,000
           Current liabilities                                                     910,000
                                                                               -----------
                                                                                 1,433,000
                                                                               -----------
Fair value of identifiable net liabilities assumed                                (319,000)
                                                                               -----------

Goodwill (costs plus fair value of net liabilities assumed)                    $ 2,926,000
                                                                               ===========
</TABLE>

      The  results  of  operations  for YaYa  Media  have been  included  in the
consolidated financial statements of the Company since the date of acquisition.

      The following  unaudited pro forma  information  represents the results of
operations  of the Company as if YaYa had  occurred at the  beginning  of fiscal
year 2002:

                                                           Year Ended July 31,
                                                       -------------------------
                                                           2003           2002
                                                       ----------     ----------

Net revenues                                           $1,859,000     $5,422,000
                                                       ==========     ==========

Net loss                                               $3,208,000     $3,080,000
                                                       ==========     ==========

Loss per common share - basic and diluted              $     0.56     $     0.54
                                                       ==========     ==========

      The unaudited pro forma  information  does not purport to be indicative of
the results that would actually have been achieved had the acquisitions occurred
as of the date of the periods indicated or that may be obtained in the future.


                                       23
<PAGE>

AMERICAN VANTAGE COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2003 AND 2002

Note 3 - Investments in unconsolidated investees

      The  Company,  through a wholly  owned  subsidiary,  holds a 49%  minority
interest in an unconsolidated  investee that owns and operates a restaurant in a
casino hotel  located on the Las Vegas  "Strip".  The Company has no  day-to-day
management  responsibilities  in connection with the Restaurant Investee and the
Restaurant  Investee's  operations.  In accordance  with U.S.  GAAP, the Company
excludes the accounts of the  Restaurant  Investee in  reporting  its  operating
results and instead records its investment using the equity method of accounting
as adjusted to reflect  certain  contractual  adjustments  until the  Restaurant
Investee attains  sustained  profitability.  The Company has restated the income
from the  Restaurant  Investee (See Note 12 - Restatement  of previously  issued
financial statements). Income from the Restaurant Investee, as restated, for the
fiscal year ended July 31, 2003 was $445,000.

      The following  summarizes the condensed balance sheet at July 31, 2003 and
the  statement  of  operations  for  the  twelve  months  ended  July  31,  2003
(unaudited) of the Restaurant Investee:

      Assets                                                    $1,890,000
      Liabilities                                                  417,000
                                                                ----------

      Members' capital                                          $1,473,000
                                                                ==========

      Revenues                                                  $5,510,000
      Expenses                                                   4,851,000
                                                                ----------

      Income from operations                                    $  659,000
                                                                ==========

      In  addition,  as a result of the YaYa  asset  acquisition,  the  Company,
through YaYa Media, Inc.,  obtained a non-controlling  interest (36% at July 31,
2003) in an unconsolidated  investee that has entered into an in-substance joint
venture  arrangement  to create a promotional  event called a video game touring
festival.  The Company has no capital  requirement in connection with this joint
venture and is not obligated to provide future financing of the activities.  If,
after  good faith  efforts  by the  members,  there are  insufficient  corporate
sponsors to cover all costs and expenses of staging the initial event, the joint
venture shall dissolve and liquidate, unless the members agree to the contrary.

      The following  summarizes the condensed balance sheet at July 31, 2003 and
the statement of  operations  from the April 16, 2003  acquisition  date through
July 31, 2003 (unaudited) of the YaYa Investee:

      Assets                                                    $  38,000
      Liabilities                                                  97,000
                                                                ---------

      Members' deficit                                          $ (59,000)
                                                                =========

      Revenues                                                  $ 145,000
      Expenses                                                    101,000
                                                                ---------

      Income from operations                                    $  44,000
                                                                =========


                                       24
<PAGE>

AMERICAN VANTAGE COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2003 AND 2002

Note 4 - Long-term debt

      From the April 16,  2003  acquisition  of the YaYa  business  the  Company
assumed a $523,000  promissory  note payable to certain YaYa partners.  Provided
that YaYa Media has available cash  resources,  the promissory note provides for
annual  interest-only  payments commencing on December 31, 2003 through maturity
date. The interest rate on the promissory note is 9% with a maturity date of the
later of (i) May 1, 2006, or (ii) the first date that YaYa Media has  sufficient
cash available to repay the balance of the  promissory  note and all accrued but
unpaid interest.

Note 5 - Stockholders' equity

      Preferred stock. The Board of Directors has authority,  without additional
shareholder approval, to issue up to 10,000,000 shares of preferred stock and to
set the various terms including, without limitation,  dividend rates, conversion
rights,  voting  rights,  terms  of  redemption  and  liquidation   preferences.
Conversion  rights  associated  with a future  issuance of preferred stock could
dilute  the  interest  of  the  holders  of  common  stock.  Voting  rights  and
liquidation  preferences  could also be senior to the rights and  preferences of
the common stockholders.

      Common stock. Effective July 18, 2003, the Company's stockholders ratified
an  increase  in the  Company's  authorized  common  stock  from  10,000,000  to
100,000,000 shares.

      In connection with the April 16, 2003 asset acquisition  agreement between
YaYa,  YaYa Media and the Company,  the Company issued to YaYa 824,811 shares of
Company  common stock valued at $1.41 per share,  based on the closing  price of
Company common stock on April 16, 2003. The agreement provides for the Company's
right to  repurchase  the 824,811  shares of common  stock issued to YaYa as the
acquisition  consideration.  This right is  exercisable  in the  Company's  sole
discretion if YaYa Media fails to produce net income (determined  without giving
effect to any  interest  charges on the  Company's  prior loans to YaYa) for the
period commencing on April 16, 2003 and terminating on April 30, 2004. The right
is  exercisable  at the purchase  price of $1.40 per share and is exercisable in
whole or in part.

      YaYa and the Company  also entered  into a Voting  Agreement,  dated as of
April 16, 2003. This agreement provides that YaYa will vote all of the shares of
the  Company's  common  stock that it owns,  including  the 824,811  shares YaYa
acquired in the acquisition  transaction,  as directed by the Company's board of
directors,  except in connection with any (a) tender offer by a party other than
YaYa or an affiliate  of YaYa,  (b)  transaction  which is subject to Rule 13e-3
promulgated under the Securities Exchange Act of 1934, as amended, or (c) merger
involving the Company where, as a result of such merger,  the then  stockholders
of the Company would, upon consummation of such merger, own less than 50% of the
total voting power of the entity  surviving such merger.  The agreement  further
provides  that it is  terminable on the later of: (x) the day following the 20th
consecutive  trading day where the closing price of the  Company's  common stock
exceeds $7.50 per share or (y) April 16, 2010.

      Stock repurchase  program.  From time to time, the Company may repurchase,
without additional shareholder approval, up to an aggregate of $2,000,000 of its
common stock in the open market or in privately  negotiated  transactions,  with
the timing and terms of such  purchases to be determined by management  based on
market conditions.  There is no expiration date for the repurchase program.  The
Company repurchased no shares in Fiscal 2003 and Fiscal 2002 and has purchased a
total of 387,027 shares ($415,000) through July 31, 2003.

      Stock options. At July 31, 2003, the Company has two separate active stock
option  plans  with  1,583,334  shares  reserved  for  employees,  officers  and
directors  of the  Company  and  others  who  are  involved  in  the  continuing
development  and success of the Company or its  subsidiaries.  In addition,  the
Company has two expired stock option plans adopted with 500,000 shares  reserved
for officers of the Company and 833,334 shares reserved for key


                                       25
<PAGE>

AMERICAN VANTAGE COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2003 AND 2002

employees, including officers. The options, under all plans, are granted at not
less than 100% of the market value of the Company's common stock on the date of
grant.

         The following is a summary of activity of outstanding stock options
under the four plans:

<TABLE>
<CAPTION>
                                                                                              Employees,
                                                  Officers          Key Employees        Officers / Directors
                                                  --------          -------------        --------------------
<S>                                                <C>                   <C>                  <C>
Common shares reserved for issuance                500,000               833,334              1,583,334
                                                  ========              ========              =========

<CAPTION>
Shares / weighted average exercise price
<S>                                          <C>       <C>         <C>        <C>         <C>        <C>
    Outstanding, July 31, 2001               52,726    $   1.86    586,943    $   2.65    304,172    $   3.51
    Granted                                      --          --         --          --     65,000          --
    Canceled / expired                      (41,030)       2.07   (410,971)       3.06   (105,000)         --
                                           --------    --------   --------    --------   --------    --------

    Outstanding, July 31, 2002               11,696        1.13    175,972        1.48    264,172        3.51
    Granted                                      --          --         --          --    427,500        1.37
    Canceled / expired                           --          --    (58,668)         --    (83,337)       3.48
                                           --------    --------   --------    --------   --------    --------

    Outstanding, July 31, 2003               11,696    $   1.13    117,304    $   1.29    608,335    $   2.08
                                           ========    ========   ========    ========   ========    ========

<CAPTION>
<S>                                          <C>        <C>         <C>   <C>              <C>   <C>
Weighted average remaining
  contractual life (years) / range
  of exercise prices                         6.5        $1.13       6.6   $1.13 - $1.63    8.8   $1.13 - $3.57
                                             ===        =====       ===   =============    ===   =============
</TABLE>

      Under the intrinsic value method, no compensation cost has been recognized
for employee stock-based  compensation under the applicable  circumstances.  Had
the  Company  used the fair  value-based  method of  accounting  and  recognized
compensation  expense as  provided  for in  Statement  of  Financial  Accounting
Standards No. 123, Stock-Based Compensation, net loss and net loss per share for
years ended July 31, 2003 and 2002 would have been as follows:

                                                         2003          2002
                                                         ----          ----

Pro forma net loss                                     $987,000   $   2,138,000
                                                       ========   =============

Pro forma net loss per share - basic and diluted       $   0.19   $        0.44
                                                       ========   =============

      The  weighted-average  grant-date  fair value of the options and  warrants
granted was $1.37 and $1.57 per option for 2003 and 2002, respectively.

      The  closing of the YaYa  acquisition  transaction  also  resulted  in the
contingent option previously  granted to a director on July 12, 2002 to purchase
up to 175,000  shares of the  Company's  common stock at $1.41 per share and the
contingent option previously  granted to the Company's outside corporate counsel
on July 12, 2002 to purchase up to 87,500 shares of the  Company's  common stock
at $1.41 per share to each become fully exercisable.  These options were granted
as compensation for serving on the Company's special advisory group to the board
of directors.  The special  advisory  group was  established on July 12, 2002 to
identify,  review and perform initial due diligence services of potential merger
and acquisition candidates on behalf of the Company. The options have a ten-year
exercise  term and an exercise  price  equal to the closing  price of the common
stock on July 12, 2002.  Based on the  Black-Scholes  option pricing model,  the
Company    initially    capitalized    approximately    $365,000    as   prepaid
acquisition/investment  fee  costs.  As a result  of the YaYa  acquisition,  the
Company reclassified $100,000 or


                                       26
<PAGE>

AMERICAN VANTAGE COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2003 AND 2002

approximately  4% of the overall  purchase  price of these  capitalized  prepaid
acquisition/investment fee costs as direct costs of the acquisition.

      Warrants.  In 2002,  the Company  granted to an investment  banking firm a
warrant to purchase  25,000 shares of Company common stock,  at a purchase price
of $1.65 per share expiring in five years,  in exchange for  investment  banking
services.

      The weighted-average  grant-date fair value of each non-employee award and
the pro forma presentation for employee stock-based  compensation was determined
by  using  the  Black-Scholes   option  pricing  model  and  the  following  key
assumptions:

                                                  2003                 2002
                                                  ----                 ----

Expected stock price volatility                144% to 146%        131% to 132%
Expected option lives (years)                       10                   3
Expected dividend yield                              0                   0
Risk-free interest rates                            1.3%           3.9% to 4.0%

Note 6 - Income taxes

Income tax benefit (expense) is comprised as follows:

                                  2003               2003               2002
                              -----------        -----------        -----------
                            (As originally      (As restated,
                               reported)         see Note 12)

Current                       $        --        $        --        $ 1,447,000
Deferred                          319,000            392,000           (139,000)
                              -----------        -----------        -----------
                              $   319,000        $   392,000        $ 1,308,000
                              ===========        ===========        ===========

      The income tax benefit  (expense)  for the years  ending July 31, 2003 and
2002 differs from the amount of income tax determined by applying the applicable
U.S.  statutory  federal  income  tax rate to  pre-tax  loss as a result  of the
following differences:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                 2003             %             2003            %            2002            %
                             -----------    -----------    -----------    -----------    -----------    -----------
                           (As originally                 (As restated,
                              reported                     see Note 12
<S>                          <C>                     <C>   <C>                     <C>   <C>                     <C>
Statutory federal tax rate   $   372,000             34    $   445,000             34    $ 1,183,000             34
Stock options and warrants       (40,000)            (4)       (40,000)            (3)       (36,000)            (1)
Employment tax credits                --             --             --             --         37,000              1
Valuation allowances                  --             --             --             --        114,000              3
Other                            (13,000)            (1)       (13,000)            (1)        10,000              1
                             -----------    -----------    -----------    -----------    -----------    -----------
Effective tax benefit        $   319,000             29    $   392,000             30    $ 1,308,000             38
                             ===========    ===========    ===========    ===========    ===========    ===========
----------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       27
<PAGE>

AMERICAN VANTAGE COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2003 AND 2002

      The components of deferred net tax assets and liabilities at July 31, 2003
and 2002 are comprised of:

<TABLE>
<CAPTION>
      ----------------------------------------------------------------------------------------
                                                         2003          2003           2002
                                                     -----------    -----------    -----------
                                                    (As originally  (As restated,
                                                       reported      see Note 12
<S>                                                  <C>            <C>            <C>
      Deferred net tax assets (liabilities):
         Operations of unconsolidated investee       $   (62,000)   $    11,000    $  (222,000)
         Tax attributes of unconsolidated investee      (145,000)      (145,000)        71,000
         Net operating loss                              382,000        382,000             --
         Discontinued operations                              --             --         12,000
         Other                                             6,000          6,000             --
                                                     -----------    -----------    -----------

      Total deferred net tax assets (liabilities)    $   181,000    $   254,000    $  (139,000)
                                                     ===========    ===========    ===========
      ----------------------------------------------------------------------------------------
</TABLE>

Note 7 - Commitments and contingencies

      Litigation.  In connection with the premature termination of the Company's
contracts to provide  consulting  services to an Indian gaming  enterprise,  the
Company  brought a civil action  against the Table Mountain Tribe (the "Tribe").
The lawsuit seeks to recover payments  totaling  $3,150,000 due under one of the
agreements and $790,000 under another.  The Company also seeks  interest,  court
costs and additional unspecified and to-be-determined consulting fees that would
have been due during the remainder of the consulting contract term.

      In October  2002,  the  Company  was  successful  in its  appeal,  and the
California  Superior Court of Appeals reversed a California Superior Court order
dismissing  the case for lack of  jurisdiction.  The  California  Supreme  Court
subsequently denied the Tribe's petition to review that appellate decision.

      In April  2003,  the Tribe filed a motion to dismiss the case based on its
assertion  that its contracts  with the Company were not properly  authorized by
Tribal authorities, and thereby did not constitute a valid waiver of the Tribe's
sovereign immunity to suit.

      In May 2003, the California Superior Court determined that the Company was
entitled to discovery on the sovereign immunity issue, and after such discovery,
the California Superior Court would conduct further proceedings on the sovereign
immunity issue.  Also in May 2003, the Tribe filed a Writ of Certiorari with the
United States Supreme  Court,  who will decide in the next few months whether or
not to hear the Tribe's appeal.

      Since the Company is unable to determine  its losses,  if any,  should the
Tribe's counterclaim be successful,  no accounting recognition has been given to
these matters in the accompanying financial statements.

      Lease  commitments.  The  Company  leases  space  for  its  offices  under
agreements with terms ranging from month-to-month to 48 months. Rent expense was
$41,000 and $0 for the fiscal years ended July 31, 2003 and 2002,  respectively.
Amounts  of  minimum  future  annual  rental  commitments  under   noncancelable
operating  leases in each of the five fiscal  years ending July 31, 2004 through
2009 are $19,000, $29,000, $29,000, $30,000, $5,000 and $0, respectively.


                                       28
<PAGE>

AMERICAN VANTAGE COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2003 AND 2002

Note 8 - Related party transactions

      Non-employee  directors receive $15,000 per annum for serving on the Board
of  Directors  of the  Company.  During the year ended July 31,  2002,  employee
directors received $11,250 for serving on the Board of Directors.  Effective May
1, 2002, the Company no longer compensates employee directors for serving on the
Board.  However, all directors are reimbursed for expenses incurred in attending
meetings of the Board and other Company related expenses.

      Two  non-employee  directors also received $10,000 each for serving as the
chairpersons for the audit and compensation committees.

      In  consideration  for  consulting  services,  the Company paid a director
$60,000 during Fiscal 2003 and $20,000 during Fiscal 2002.

      In consideration for corporate legal and consulting services,  the Company
paid a minority shareholder approximately $90,000 and $93,000 during Fiscal 2003
and 2002, respectively (see Note 5 - Stockholders' equity (stock options)).


Note 9 - Retirement plan

      Company employees meeting certain eligibility  requirements participate in
a simplified employee pension plan. Employer  contributions to the plan are made
on a discretionary  basis and were $49,000 and $207,000 for the years ended July
31, 2003 and 2002, respectively.

                                       29
<PAGE>

AMERICAN VANTAGE COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2003 AND 2002

Note 10 - Supplemental cash flow information

<TABLE>
<CAPTION>
                                                                                                YEAR ENDED JULY 31,
                                                                                      --------------------------------------
                                                                                          2003                       2002
                                                                                      -----------                -----------
                                                                                      Restated - see Note 12
<S>                                                                                   <C>                        <C>
Reconciliation of net loss to net cash used in operating activities
    Net loss                                                                          $  (915,000)               $(2,138,000)
    Income from unconsolidated investees                                                 (468,000)                  (404,000)
    Depreciation and amortization                                                          39,000                     23,000
    Loss on disposal of furniture and equipment                                                --                     95,000
    Compensation expense from issuance of stock options                                   119,000                         --
    Expenses paid with stock options and warrants **                                           --                    106,000
    Deferred income tax benefit                                                           (45,000)                   139,000
    Change in operating assets and liabilities, net of amounts acquired
       or assumed in the YaYa LLC acquisition:
          Accounts receivable, net                                                        (16,000)                        --
          Refundable income taxes                                                       1,100,000                   (424,000)
          Other assets                                                                    (76,000)                    11,000
          Accounts payable                                                               (103,000)                  (103,000)
          Accrued liabilities                                                             (29,000)                  (180,000)
          Deferred revenue                                                                 93,000                         --
          Customer deposits                                                               (54,000)                        --
                                                                                      -----------                -----------

                                                                                      $  (355,000)               $(2,875,000)
                                                                                      ===========                ===========

    ** Denotes significant non-cash financing activity

Supplemental schedule of noncash investing and financing activities:
   Cost of acquisition in excess of fair market value of net
     assets received                                                                  $ 2,926,000                $        --
   Liabilities assumed                                                                  1,433,000                         --
   Common stock issued in connection with acquisition                                   1,163,000                         --
   Tangible assets acquired in connection with acquisition                              1,044,000                         --
   Stock options issued in connection with acquisition                                    100,000                         --
</TABLE>

Note 11 - Subsequent events

      Land sale. On September 5, 2003, American Care Group, Inc., a wholly-owned
subsidiary of the Company  entered into an  "Agreement  for Purchase and Sale of
Real Property and Escrow  Instructions"  (the  "Agreement") with a national home
building  company   ("Buyer"),   contemplating   the  sale  by  the  Company  of
approximately  40 acres of undeveloped  land owned by the Company and located in
North Las Vegas,  Nevada. The Agreement provides for a $7,000,000 purchase price
with the Buyer responsible for the real estate broker commission fees. The Buyer
may  terminate  the  transaction  at any time prior to  December 4, 2003 for any
reason  and on or prior to  December  31,  2003 if the Buyer is unable to obtain
approval of the Buyer's "tentative map" by the applicable zoning authorities.


                                       30
<PAGE>

AMERICAN VANTAGE COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2003 AND 2002

      Upon signing the  Agreement,  the Buyer funded an escrow  account with its
initial deposit of $100,000.  An additional  $100,000 deposit is due on December
5, 2003.  The  deposits are  refundable  until  December  31, 2003.  The Company
expects  to  recognize  a  pre-tax  gain  of   approximately   $3,500,000   upon
consummation of this land sale transaction.

      Bad debt recovery.  During 1998,  the Company  wrote-off a note payable in
the amount of $413,000 related to casino  predevelopment costs. During September
2003, the Company received $606,000  representing the note payable principal and
accrued interest of $193,000.

Note 12 - Restatement of previously issued financial statements

      Subsequent  to  the  original  issuance  of  the  Company's   consolidated
financial  statements  for the  fiscal  year ended July 31,  2003,  the  Company
determined  that its  income  from the  Restaurant  Investee  had been  recorded
incorrectly.  Prior to the  restatement,  the Company had recognized 100% of the
initial  losses from the  Restaurant  Investee's  operations  and its subsequent
income through June 30, 2004.  The  restatement  recognizes  that the Restaurant
Investee attained sustained profitability in February 2003, from which point the
Company  has  restated  income  from the  Restaurant  Investee  based on its 49%
interest,  subject to adjustments for any unpaid initial  capital  contributions
and priority  return.  As of July 1, 2004, all of the initial losses were offset
and its initial capital  contributions and priority return were paid,  resulting
in recognition of 49% of future income or losses from the Restaurant  Investee's
operations  prospectively.  This  restatement  has no  effect  on the  Company's
reported cash flows.  The principal  effects of the  restatement  on the periods
restated herein are summarized in the following table:

                                                 As Originally
                                                    Reported        As Restated
                                                  ------------     ------------

For the year ended July 31, 2003:
    Income from unconsolidated investees, net     $    682,000     $    468,000
    Income tax benefit                            $    319,000     $    392,000
    Net income (loss)                             $    774,000     $   (915,000)

At July 31, 2003
    Investment in unconsolidated investees        $  1,537,000     $  1,323,000
    Deferred income tax                           $    214,000     $    287,000
    Total assets                                  $ 18,133,000     $ 17,992,000
    Retained earnings                             $ 11,688,000     $ 11,547,000


                                       31
<PAGE>

Item 8.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure

      On September 10, 2002, the Company  appointed  Piercy Bowler Taylor & Kern
("Piercy"),  Certified Public Accountants and Business Advisors,  a professional
corporation,  as its new auditor for its fiscal  year ended July 31,  2002.  The
change resulted from  notification by the Company's former  auditors,  Bradshaw,
Smith & Co.,  LLP  ("Bradshaw")  that it was  discontinuing  its public  company
practice and would  discontinue its audit services to the Company  following the
audit of the  Company  financial  statements  for its fiscal year ended July 31,
2002. The audit committee of the Company  recommended and the Board of Directors
of the Company  authorized  the  termination  of Bradshaw and the  engagement of
Piercy as the Company's  independent auditors for its fiscal year ended July 31,
2002.

      During  the  Company's  two  most  recent  fiscal  years,  there  were  no
disagreements  between the Company and Piercy,  whether or not resolved,  on any
matter of accounting principles or practices, financial statement disclosure, or
auditing  scope or procedure,  which,  if not resolved to Piercy's  satisfaction
would  have  caused  Piercy  to make  reference  to the  subject  matter  of the
disagreement(s) in connection with its reports.

Item 8A. Controls and Procedures

      An evaluation was performed,  as of July 31, 2003,  under the  supervision
and with the participation of our management,  including its President and Chief
Executive  Officer and Chief  Accounting  Officer,  of the  effectiveness of the
design and operation of our disclosure  controls and  procedures,  as defined in
Rules 13a-14(c) and 15d-14(c) under the Securities  Exchange Act of 1934.  Based
on such evaluation,  our management has concluded that the Company's  disclosure
controls and  procedures  were not effective as of July 31, 2003 for the reasons
described below.

      As is described  elsewhere  in this Annual  Report on Form  10-KSB/A,  the
Company  has  determined  that the  non-operating  income  from  the  Restaurant
Investee originally had been recorded  incorrectly.  The correction of the error
resulted in the restatement of the Company's  consolidated  financial statements
contained in the Annual Report on Form 10-KSB for the fiscal year ended July 31,
2003,  and  Quarterly  Reports on Form 10-QSB for the quarters and  transitional
period ended April 30,  2003,  October 31,  2003,  December 31, 2003,  March 31,
2004, June 30, 2004 and September 30, 2004.

      After   evaluating   the  nature  of  the  deficiency  and  the  resulting
restatement, the Company's management concluded that a material weakness existed
in the Company's internal control over financial reporting at July 31, 2003.

      During the fiscal year ended 2003,  there were no  significant  changes in
the Company's internal control over financial reporting that materially affected
or were reasonably  likely to materially  affect internal control over financial
reporting.

      The Company's management,  along with the Audit Committee of the Company's
Board of  Directors,  has  reviewed  the  process  employed in  determining  the
recording and reporting of complex and unusual accounting  matters.  As a result
of this review, the Company has adopted a policy of retaining, if necessary, the
services of a qualified  certified public  accountant or specialist,  other than
the Company's  independent  auditor,  to assist the Company with respect to, the
reporting of transactions that involve complex and unusual accounting matters.

      The Company's management has evaluated this matter relative to its current
and prior internal control  environment and disclosure  controls and procedures.
It has  concluded  that the material  weakness  that led to this error not being
detected  timely has been  mitigated  as of December 31, 2004 as a result of the
additional  controls that were placed into effect as of that date, which enabled
the Company to detect the need for the restatement.


                                       32
<PAGE>

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16(a) of the Exchange Act

      Set forth below are the names of all the directors and executive  officers
of  the  Company  along  with  certain  information  relating  to  the  business
experience of each of the listed directors and officers.

Name                         Age          Position
----                         ---          --------

Ronald J. Tassinari          60           Chief Executive Officer, President,
                                          Director

Stephen K. Bannon            49           Vice-Chairman and Director

Audrey K. Tassinari          63           Director

Jeanne Hood                  76           Director (Chairwoman of the Audit
                                          Committee)

Steven G. Barringer          47           Director

Randolph C. Read             50           Director (Chairman of the Compensation
                                          Committee)

Anna M. Morrison             47           Chief Accounting Officer

      Ronald J.  Tassinari has been  Chairman of the Board of  Directors,  Chief
Executive  Officer and  President of the Company  since its  inception in August
1979.

      Stephen K. Bannon has been a director of the Company since May 2002. Since
early 2002, Mr. Bannon has been Head, Strategic Advisory Services, for The Firm,
a leading talent  management  company in the entertainment and media industries.
From July 2000 to early 2002,  Mr.  Bannon was a Managing  Director  and head of
media and  entertainment  investment  banking at Jefferies & Company,  Inc.,  an
institutional  brokerage and investment bank for middle market growth companies.
From April 1990  through July 1998,  Mr.  Bannon  served as the Chief  Executive
Officer of Bannon & Co., Inc., an investment  banking firm  specializing  in the
entertainment,  media  and  communications  industries.  Mr.  Bannon  has been a
director and a member of the Executive Committee of First Look Media, Inc. since
its  inception  in December  1993.  First Look Media,  Inc.  specializes  in the
acquisition  and direct  distribution  of,  and  worldwide  license  and sale of
distribution rights to,  independently  produced feature films in a wide variety
of genres. From October 1996 to June 2000, Mr. Bannon served as Vice-Chairman of
the Board of  Directors  and Chairman of the  Executive  Committee of First Look
Media,  Inc. In addition,  Mr.  Bannon serves on the Board of Directors of Axiom
Navigation  Inc., a privately held company in the global  positioning  satellite
communications industry.

      Audrey K.  Tassinari  has been a director of the Company since March 1985.
Ms. Tassinari  served as the Company's  Executive Vice President from April 1986
until  July  2002,  when she  resigned  such  position  in  connection  with the
Company's corporate  restructuring.  During her tenure with the Company, she was
responsible for the Company's management and employee training programs at Table
Mountain  Casino  that  grew  from  approximately  45  employees  in 1989 to 850
employees  in  1999.  From  1973 to 1985,  Ms.  Tassinari  held  key  management
positions in the hotel/casino  industry.  Ms. Tassinari is the wife of Ronald J.
Tassinari, the Company's Chief Executive Officer and President.

      Jeanne Hood has been a director of the Company since February 1994 and was
a gaming  consultant to the Company from  February 1994 to April 2000.  Ms. Hood
served as a director of Pioneer  Citizens Bank (a Nevada  statewide  bank) until
its merger during 2000 with Zions,  a large  regional bank with offices in seven
states.  Since January 2000,  she has served on the board of Southwest USA Bank.
From 1985 to 1993, Ms. Hood served as President and Chief  Executive  Officer of
Elsinore  Corporation,  a publicly traded gaming company. From 1977 to 1993, Ms.
Hood served as President  and Chief  Executive  Officer of Four Queens,  Inc., a
wholly-owned  subsidiary  of Elsinore  Corporation,  which  subsidiary  owns and
operates the Four Queens Hotel Casino in Las Vegas, Nevada.


                                       33
<PAGE>

      Steven G.  Barringer  has been a director  of the Company  since  February
1998. Mr.  Barringer has been a member of the government  relations firm of MGN,
Inc. in Washington,  D.C. since November 2000. Mr. Barringer also has maintained
his own law practice, Steven G. Barringer,  P.L.L.C., in Washington,  D.C. since
November 2000.  From April 1999 to October 2000,  Mr.  Barringer was a member of
the law firm of Dickstein  Shapiro Morin & Oshinsky,  LLP, in Washington,  D.C.,
practicing  natural resources and environmental  law. From January 1996 to April
1999, he was a member of the law firm of Singer, Brown and Barringer, Las Vegas,
Nevada, practicing natural resources and environmental law.

      Randolph C. Read was elected to the  Company's  board of  directors on May
20, 2003.  He has been the  President  and Chief  Executive  Officer of American
Strategic  Investments,  L.P.,  an investment  fund that focuses on  established
commercial business operations and investing in both debt and/or equity of those
entities,  since 2002.  Mr.  Read  served as  President  of  Knowledge  Universe
Business  Group and  President  of Knowledge  Universe  Capital Co. from 1999 to
2002. Mr. Read currently is a consultant to certain Knowledge  Universe entities
and  their  affiliated  companies.  In 1999,  he was  Chairman  of the  Board of
Shopping.com,  Inc., an internet retailer,  prior to its sale to Compac Computer
Corp.  From 1996 to 1998,  he was Senior Vice  President,  Chief  Financial  and
Planning Officer of Stone Container Corp., an integrated  producer of paperboard
and paper-based  packaging  products.  Since 2002, Mr. Read has also served as a
director of Brands Shopping Network,  Inc., and serves as a director of The Read
Foundation.

      Anna M. Morrison was appointed Chief Accounting  Officer of the Company in
April  2003.  From  August  2002 to  April  2003,  she  provided  financial  and
accounting  services  for the  Company  as an  outside  consultant.  She was the
President of Morrison Business  Resources,  Inc. and an associate with Resources
Connection,  Inc. and Robert Half International,  Inc. from 1997 to August 2002.
Ms.  Morrison  served as Vice  President - Accounting of Gentle  Dental  Service
Corporation  during 1996 and as a manager and an associate for Price  Waterhouse
LLP, a predecessor of PricewaterhouseCoopers LLP from 1987 to 1992 and from 1993
to 1996. Ms. Morrison is a Certified Public Accountant and received B.S. degrees
in business  administration - accounting and speech communications from Southern
Oregon University in 1987.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section  16(a)  of the  Securities  Exchange  Act  of  1934  requires  the
Company's officers and directors, and persons who own more than ten percent of a
registered  class  of the  Company's  equity  securities,  to  file  reports  of
ownership and changes in ownership with the Securities and Exchange  Commission.
Officers,  directors  and persons who own more than ten percent of the Company's
equity  securities are required by regulation to furnish the Company with copies
of all Section 16(a) forms they file.

      Based  solely  on the  Company's  review of the  copies  of those  reports
received by it, or written  representations  from certain reporting persons that
no other  reports were required for those  persons,  the Company is not aware of
any failures to file reports or report  transactions  in a timely  manner during
the Company's fiscal year ended July 31, 2003.

Code of Ethics

      At July 31,  2003,  the Company  adopted a written  code of ethics for its
President and Chief Executive  Officer and Chief Accounting  Officer.  A copy of
the Company's code of ethics is attached hereto as Exhibit 14.1 to this report.


                                       34
<PAGE>

Item 10.  Executive Compensation

Summary Compensation Table

      The  following  table sets forth,  with  respect to our fiscal years ended
July 31, 2003,  2002 and 2001, all  compensation  earned by our Chief  Executive
Officer and our other officers who were serving as executive officers at the end
of our 2003 fiscal year and whose total annual  salary and bonus  earned  during
our 2003 fiscal year exceeded $100,000.

<TABLE>
<CAPTION>
                                          Annual Compensation                           Long-Term Compensation Awards
                                   -------------------------------              --------------------------------------------
Name and                   Fiscal                   Other Annual                   Restricted               Securities
Principal Position          Year   Salary ($)     Compensation ($)              Stock Awards ($)      Underlying Options (#)
--------------------------  ----   ----------     ----------------              ----------------      ----------------------
<S>                         <C>    <C>            <C>                <C>        <C>                              <C>         <C>
Ronald J. Tassinari,        2003   $ 272,473      $         40,000   (1)        $           --                   25,000      (2)
Chief Executive             2002   $ 408,140      $         40,000   (1)        $           --                   28,470      (3)
Officer and President       2001   $ 451,500      $         84,177   (4)(5)     $           --                       --
</TABLE>

------------------------

(1)   Includes  SAR/SEP  retirement  plan  contributions  totaling  $40,000  the
      Company made on the named executive officer's behalf.

(2)   Represents an option granted to the named executive officer in April 2003,
      with an exercise price of $1.41 per share.

(3)   This  option was  voluntarily  canceled  by the named  executive  officer,
      effective as of July 31, 2002.

(4)   Includes  SARP/SEP  retirement  plan  contributions  totaling  $24,000 the
      Company made on the named executive officer's behalf.

(5)   Includes   $20,496   relating  to  the  carrying  cost  of  an  automobile
      transferred to the named executive officer.

Option Grants In Last Fiscal Year

      The following table sets forth:

o     The number of shares  underlying  options the Company  granted  during its
      fiscal  year ended July 31, 2003 to each of the named  executive  officers
      listed in the  Summary  Compensation  Table  contained  in the  "Executive
      Compensation" subsection of this Form 10-KSB/A.

o     The  percentage  that the option  grant  represents  of the total  options
      granted to all of the Company's employees during its 2003 fiscal year,

o     The per share exercise price of each option,

o     and the expiration date of each option.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                             Number of Securities           Percentage of
Name                          Underlying Options       Total Options Granted to All                        Expiration
                                    Granted              Employees in Fiscal Year      Exercise Price         Date
--------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                         <C>                        <C>          <C>
Ronald J.  Tassinari                25,000                      33.3%                      $1.41        April 15, 2013
--------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       35
<PAGE>

Aggregated  Option  Exercises  in Last  Fiscal Year and Fiscal  Year-End  Option
Values Table

      The  table  below  includes  the  number  and  value  of  exercisable  and
unexercisable  stock  options  granted to the  executive  officers  named in the
Summary Compensation Table at the fiscal year ended July 31, 2003.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                    Shares Acquired     Value Realized       Number of            Value of
                                    on Exercise                              Securities           Unexercised
                                                                             Underlying           In-The-Money
Name                                                                         Unexercised          Options at FY-End
                                                                             Options at FY-End    ($)
                                                                             Exercisable /        Exercisable /
                                                                             Unexercisable        Unexercisable
                                                                              (1)                 (1)
----------------------------------------------------------------------------------------------------------------------
<S>                                               <C>               <C>           <C>                 <C>
Ronald J. Tassinari                               0                 $0            80,555 / 0          $98,133 / 0
----------------------------------------------------------------------------------------------------------------------
</TABLE>

------------------------

(1)   The closing  price for the  Company's  common  shares on July 31, 2003 was
      $1.75 per share.

Compensation of Directors

      Non-employee  directors receive $15,000 per annum for serving on the Board
of Directors of the Company.

      Jeanne Hood and Steve Barringer also received  $10,000 each for serving as
the chairpersons for the audit and compensation committees, respectively.

Employment and Severance Agreements

      The Company  entered  into  employment  agreements  with each of Ronald J.
Tassinari, Audrey K. Tassinari and Roy K. Keefer in March 1995. These agreements
were amended as of July 20, 1995 and on December  21, 2001.  Each of these prior
agreements,  as  amended,  had terms  expiring  on March 31,  2002,  subject  to
extension for an unlimited  number of additional  one year terms,  unless either
the executive or the Company provided 30 days' prior written notice to the other
party prior to the date of  termination  of the then current  term.  The Company
entered into substantially  similar new employment agreements with each of these
executive officers,  each effective as of April 1, 2002. The agreements with Ms.
Tassinari  and Mr.  Keefer  were  terminated,  effective  as of July  31,  2002,
pursuant to separate  severance  agreements  entered into in connection with the
Company's corporate restructuring.

      The April  2002  employment  agreements  each  provided  for the grants of
options to the  executives  -- an option to purchase  28,470 shares by Ronald J.
Tassinari;  an option to purchase 10,726 shares by Audrey K.  Tassinari;  and an
option to purchase 9,269 shares by Mr. Keefer. These option grants were intended
to compensate  the executives for not receiving  additional  compensation  under
their  prior  employment   agreements  relating  to  increases  in  a  specified
cost-of-living  index.  Each of these options were  voluntarily  canceled by the
respective optionee as of July 31, 2002.

      Ronald J. Tassinari's April 2002 employment agreement,  which provided for
him to serve  as the  Company's  Chief  Executive  Officer  and  President,  was
intended to serve as an interim  agreement with an expiration  date of September
30, 2002, subject to extension to March 31, 2005 under specified  circumstances.
The initial term was extended to November  30, 2002 and,  thereafter  to January
31, 2003,  pursuant to letter agreements  between Mr. Tassinari and the Company.
The April 2002 agreement with Mr. Tassinari provided,  among other matters,  for
(a) an annual base salary of $240,000,  subject to  adjustments  in the event of
increases  the Company  gives to any of its other  executives  or increases in a
specified  cost-of-living  index, (b)  reimbursement  for his personal legal and
financial  consulting  expenses to a maximum of 3% of his prior calendar  year's
base salary,  (c) his right to designate  the  beneficiary  on a $2 million term
life policy on his life and (d) reimbursement of all normal expenses relating to
the use of his personal  automobile.  The Company also retained the right in the
April 2002  employment  agreement to otherwise  increase  Mr.  Tassinari's  base
salary  and grant Mr.  Tassinari  other  incentive  compensation,  such as stock
options  or  bonuses.  Mr.  Tassinari's  April  2002  agreement  also  contained
indemnification  provisions  relating  to his  performance  of  services  on the
Company's behalf, and  confidentiality,  non-disparagement,  non-competition and
non-solicitation provisions.


                                       36
<PAGE>

      Mr.  Tassinari's  April 2002 employment  agreement  further provided that,
upon his death during the agreement's  term, the Company is obligated to pay his
designee  or  estate  a lump  sum  death  benefit  equal  to the  sum of (a) the
annualized average of the base salary paid to him during the five calendar years
immediately  preceding  his  death,  plus  (b)  the  annualized  average  of the
incentive  awards  granted  to him during the five  calendar  years  immediately
preceding  his death.  The April 2002  agreement  also  provided for  disability
coverage,  including continuing to pay him his base salary and keeping in effect
any incentive  awards during an initial period and then to continuing to pay him
for a one year  period at a rate  equal to the  annualized  average  of the base
salary,  plus the value of any  incentive  compensation,  paid to him during the
prior five calendar years.

      Mr.  Tassinari's April 2002 employment  agreement provided for payments in
the event of his termination  "without cause" or if he terminates his employment
for "good  reason,"  as such terms are used in the April 2002  agreement.  These
payments include (a) payment of a sum equal to 2.99 times the annualized average
of the base salary,  plus the value of any incentive  compensation,  paid to him
during the prior five calendar years, (b) reimbursement of certain legal fees up
to $100,000, (c) continuation of, or the payment of an amount equal in value to,
all  employee  benefits  which he was entitled to receive  immediately  prior to
termination  for  the  remaining  term  of  the  employment  agreement  and  (d)
continuation  of, or the  payment of an amount  equal in value to,  all  medical
insurance  coverage for him and his family for a twelve  month period  following
termination.  The  maximum  amount of all of these  payments  may not exceed the
amount  which would  otherwise  result in an "excess  parachute  payment"  under
section 280G of the Internal Revenue Code, minus $1.00.

      The  Company  entered  into a new  employment  agreement  with  Ronald  J.
Tassinari  effective February 1, 2003. Mr. Tassinari's  February 2003 employment
agreement provides for him to continue to serve as the Company's Chief Executive
Officer  and  President.  The term of the  February  2003  employment  agreement
expires on January 31, 2006.  The February  2003  agreement  with Mr.  Tassinari
provides,  among  other  matters,  for (a) an  initial  annual  base  salary  of
$300,000,  subject to adjustments in the event of increases the Company gives to
any of its other  executives or increases in a specified  cost-of-living  index,
(b) reimbursement for his personal legal and financial  consulting expenses to a
maximum  of 3% of his  prior  calendar  year's  base  salary,  (c) his  right to
designate the  beneficiary  on a $2 million term life policy on his life and (d)
reimbursement  of  all  normal  expenses  relating  to the  use of his  personal
automobile.  The Company also retained the right in the February 2003 employment
agreement  to  otherwise  increase  Mr.  Tassinari's  base  salary and grant Mr.
Tassinari other incentive  compensation,  such as stock options or bonuses.  Mr.
Tassinari's  February 2003  agreement also contains  indemnification  provisions
relating  to  his  performance  of  services  on  the  Company's   behalf,   and
confidentiality,   non-disparagement,   non-competition   and   non-solicitation
provisions.

      Mr. Tassinari's  February 2003 employment agreement further provides that,
upon his death during the agreement's  term, the Company is obligated to pay his
designee  or  estate  a lump  sum  death  benefit  equal  to the  sum of (a) the
annualized average of the base salary paid to him during the five calendar years
immediately  preceding  his  death,  plus  (b)  the  annualized  average  of the
incentive  awards  granted  to him during the five  calendar  years  immediately
preceding his death.  The February 2003  agreement  also provides for disability
coverage,  including continuing to pay him his base salary and keeping in effect
any incentive awards during an initial period and then continuing to pay him for
a one year period at a rate equal to the annualized  average of the base salary,
plus the value of any incentive compensation,  paid to him during the prior five
calendar years.

         Mr. Tassinari's February 2003 employment agreement provides for
payments in the event of his termination "without cause" or if he terminates his
employment for "good reason," as such terms are used in the agreement. These
payments include (a) payment of a sum equal to 2.99 times the annualized average
of the base salary, plus the value of any incentive compensation, paid to him
during the prior five calendar years, (b) reimbursement of certain legal fees up
to $100,000, (c) continuation of, or the payment of an amount equal in value to,
all employee benefits which he was entitled to receive immediately prior to
termination for the remaining term of the employment agreement and (d)
continuation of, or the payment of an amount equal in value to, all medical
insurance coverage for him and his family for a twelve month period following
termination. The maximum amount of all of these payments may not exceed the
amount which would otherwise result in an "excess parachute payment" under
section 280G of the Internal Revenue Code, minus $1.00.


                                       37
<PAGE>

      The Company's  severance  agreements  with Audrey K.  Tassinari and Roy K.
Keefer provided for payments  totaling $757,900 to Ms. Tassinari and $551,060 to
Mr. Keefer. The severance agreements provided for their respective  resignations
as officers of the Company;  Ms.  Tassinari as its executive  vice president and
Mr. Keefer as its chief financial officer. Ms. Tassinari continues to serve as a
director of the Company.  The severance agreements also contain mutual releases,
indemnification  for acts  occurring  during their terms of  employment  and for
their retention of options granted to them previously.

      The Company entered into an employment  agreement with Anna Morrison,  the
Chief Accounting  Officer,  as of April 16, 2003, the date on which she became a
full-time  employee of the Company.  This  agreement has a term expiring on July
31, 2004 (subject to  extension)  and provides for a base salary of $135,000 per
year. Ms.  Morrison  received an option to purchase  50,000 shares of our common
stock, at $1.41 per share, upon entering into the agreement and will be entitled
to the health  insurance  and other  benefits  the  Company  have  traditionally
afforded its executive officers.  The Company has the right under this agreement
to increase Ms. Morrison's base salary and to grant her incentive  compensation,
such as  additional  options  or  bonuses.  Ms.  Morrison's  agreement  contains
severance or "golden parachute"  provisions  providing for payments to her equal
to 35% of her base salary if she is terminated  without cause or she  terminates
her  employment  following  a change in control  of the  Company.  Such  payment
percentage will increase by 5% annually, commencing in August 2004.

Item 11. Security Ownership of Certain Beneficial Owners and Management

      The  Company's  common  stock is the only  class of the  Company's  voting
securities presently outstanding.

      The following table sets forth  information with respect to the beneficial
ownership of shares of the Company's  common stock as of the record date for the
annual meeting by:

o     each person known to beneficially own 5% or more of the outstanding shares
      of such class of stock,  based on filings with the Securities and Exchange
      Commission and certain other information,

o     each of the Company's "named executive officers" and directors, and

o     all of the Company's executive officers and directors as a group.

      Beneficial ownership is determined in accordance with the rules of the SEC
and includes voting and investment power. In addition, under SEC rules, a person
is deemed to be the beneficial owner of securities which may be acquired by such
person  upon  the  exercise  of  options  and  warrants  or  the  conversion  of
convertible  securities  within  60  days  from  the  date on  which  beneficial
ownership is to be determined.

      The term "named  executive  officers" is defined in the SEC rules as those
executive  officers  that are required to be listed in the Summary  Compensation
Table provided in the discussion in this report.

Except as otherwise indicated in the notes to the following table,

o     The  Company  believes  that  all  shares  are  beneficially   owned,  and
      investment and voting power is held by, the persons named as owners, and

o     the  address  for each  beneficial  owner  listed in the table is American
      Vantage Companies, 4735 S. Durango Dr., Suite 105, Las Vegas, NV, 89147.


                                       38
<PAGE>

<TABLE>
<CAPTION>
                                                                  Amount and Nature of        Percentage of
Name and Address of Stockholder                                   Beneficial Ownership     Outstanding Shares
-------------------------------                                   --------------------     ------------------
<S>                                                                <C>                            <C>
YaYa, LLC (1)..................................................       824,811 (2)                 14.5
Ronald J. Tassinari (3)........................................       555,329 (2) (4)              9.8
Audrey K. Tassinari (5)........................................       555,329 (2) (6)              9.8
Engex, Inc. (7)................................................       949,201 (8)                 16.7
Rosalind Davidowitz (9)........................................       949,201 (10)                16.7
Jay H. and Sharyn Brown (11)...................................       348,211 (12)                 6.0
Kinder Investments, L.P., Nesher, LLC and Dov Perlysky (13)....       274,100 (14)                 4.8
Stephen K. Bannon (15).........................................       200,000 (2) (16)             3.4
Jeanne Hood (17)...............................................        77,501 (2) (18)             1.4
Steven G. Barringer (19).......................................        45,000 (2) (20)             0.8
Anna M. Morrison (21)..........................................        25,000 (22)                 0.4
Randolph C. Read (23)..........................................        12,500 (2) (24)             0.2

All executive officers and directors as a group
   (seven persons) (25)........................................     1,740,141 (26)                28.5
</TABLE>

----------

(1)   The address for YaYa,  LLC is 1250 4th Street - Suite 580,  Santa  Monica,
      California 90401.

(2)   YaYa, LLC has granted the Company's  board of directors a limited power to
      direct  how  YaYa,  LLC is to vote its  shares  of  Company  common  stock
      pursuant to a voting  agreement dated as of April 16, 2003. This power has
      been granted to the Company's board as a group,  and not to any individual
      director.  The Company  believes that such voting power is not held by any
      individual  since the board is required to act by  plurality.  As such, no
      individual  director  named in this  stockholder  table is  listed  as the
      beneficial owner of the 824,811 shares owned by YaYa, LLC as of the record
      date.

(3)   Mr. Tassinari is the Company's President and Chief Executive Officer.  Mr.
      Tassinari also serves as Chairman of the Company's board of directors. Mr.
      Tassinari  is the  husband  by  Audrey K.  Tassinari,  a  director  of the
      Company.

(4)   Includes (a) 3,698  shares of Company  common stock owned of record by Mr.
      Tassinari,  his spouse and child,  as joint  tenants,  (b) 443,293  shares
      owned by the Tassinari Family Trust, a family trust in which Mr. Tassinari
      and his wife are trustees and  beneficiaries,  (c) 80,555 shares  issuable
      upon  exercise  of options  granted  to Mr.  Tassinari,  which  shares are
      exercisable  within the next 60 days, and (d) 27,778 shares  issuable upon
      exercise of options  granted to Mr.  Tassinari's  wife,  which  shares are
      exercisable  within the next 60 days. Mr. Tassinari  disclaims  beneficial
      ownership to the (x) 27,778 shares underlying options granted his wife and
      (y) 221,646  shares held by the  Tassinari  Family  Trust in excess of his
      pecuniary interest in such trust.

(5)   Ms.  Tassinari  resigned  as  the  Company's   Executive  Vice  President,
      effective  July 31, 2002. Ms.  Tassinari  continues to serve as one of the
      Company's directors. Ms. Tassinari is the wife of Ronald J. Tassinari.

(6)   Includes (a) 3,698  shares of Company  common stock owned of record by Ms.
      Tassinari, her spouse and child as joint tenants, (b) 443,293 shares owned
      by the Tassinari  Family Trust, a family trust in which Ms.  Tassinari and
      her husband are trustees and  beneficiaries,  (c) 27,778  shares  issuable
      upon  exercise  of options  granted  to Ms.  Tassinari,  which  shares are
      exercisable  within the next 60 days,  (d)  80,555  shares  issuable  upon
      exercise  of  options  granted  to  Ms.  Tassinari's   husband  which  are
      exercisable  within the next 60 days and (e) five shares held of record by
      Ms. Tassinari's  husband.  Ms. Tassinari disclaims beneficial ownership to
      the (x) 80,555 shares underlying options granted her husband,  (y) 221,647
      shares  held by the  Tassinari  Family  Trust in excess  of her  pecuniary
      interest  in  such  trust  and  (z)  the  shares  held  of  record  by Ms.
      Tassinari's husband.

(7)   The address for Engex, Inc. is 44 Wall Street, New York, New York 10005.


                                       39
<PAGE>

(8)   According to a Schedule 13D of Engex, Inc., filed with the SEC on July 10,
      2003, Engex claims to have sole voting and dispositive  power with respect
      to 474,500  shares of Company  common stock and is not a member of a group
      for  Schedule  13D  purposes.  The  president  and chairman of Engex is J.
      Morton Davis.  According to the proxy  statement of Engex,  filed with the
      SEC on January 13, 2003, the principal  stockholders  of Engex are (a) Mr.
      Davis,  the reported  beneficial  owner of 6.2% of the outstanding  common
      stock of Engex,  (b) Mr. Davis' wife,  Rosalind  Davidowitz,  the reported
      beneficial  owner of 28.2% of the outstanding  common stock of Engex,  (c)
      Kinder  Investments  L.P., the reported  beneficial  owner of 11.2% of the
      outstanding  common stock of Engex,  and (d)  Venturetek  LP, the reported
      beneficial  owner of 11.4% of the outstanding  common stock of Engex.  The
      Engex proxy statement also reports that Dov Perlysky,  the managing member
      of the general partner of Kinder,  is the son-in-law of Mr. and Ms. Davis.
      The shares listed in the principal stockholders table are limited to those
      shares set forth in the Schedule 13D. See note (14) for  information  with
      respect to Kinder's direct ownership interest in the Company's outstanding
      common stock.

(9)   The address of Rosalind Davidowitz is 7 Sutton Place South,  Lawrence, New
      York 11563.

(10)  According  to a  Schedule  13G of Ms.  Davidowitz,  filed  with the SEC on
      February  4,  2003,  Ms.   Davidowitz  claims  to  have  sole  voting  and
      dispositive  powers with respect to these  shares of Company  common stock
      and that she is not a member of a group for  Schedule  13G  purposes.  The
      Schedule  13G notes that  neither  Kinder,  Nesher nor Mr.  Perlysky are a
      member of a group for  Schedule  13G  purposes.  The shares  listed in the
      principal  stockholders table are limited to those shares set forth in the
      Schedule  13G.  See  notes  (8) and (14) for  information  concerning  Ms.
      Davidowitz's and Kinder  Investments,  L.P.'s ownership interest in Engex,
      another  principal  stockholder of the Company,  Ms.  Davidowitz's  family
      relationship  with J. Morton  Davis,  the chairman and president of Engex,
      and Dov Perlysky,  the managing member of Nesher, LLC, the general partner
      of Kinder, a principal stockholder of Engex and the Company.

(11)  These  stockholders  hold 260,711 shares of Company common stock of record
      as  tenants-in-common.  Mr. Brown  provides  legal services to us and is a
      member  of the  advisory  group we  formed to  assist  our  management  in
      evaluating merger and acquisition candidates. Mr. Brown received an option
      to purchase  87,500 shares of our common stock upon his appointment to the
      advisory group,  which shares were to become exercisable upon consummation
      of a merger or  acquisition  transaction  involving the Company during the
      term  of  the  advisory  group.   Such  an  acquisition   transaction  was
      consummated  on April 16, 2003.  The address for Mr. and Ms. Brown is 1801
      Waldman Avenue, Las Vegas, Nevada 89102.

(12)  Includes  87,500  shares  that are  issuable  upon  exercise  of an option
      granted to Mr.  Brown,  which  shares are  exercisable  within the next 60
      days.

(13)  The business  address for Kinder  Investments  L.P.,  Nesher,  LLC and Dov
      Perlysky is c/o Laidlaw & Co., 100 Park Avenue, New York, New York 10017.

(14)  According to a Schedule 13G of Kinder  Investments,  L.P., Nesher, LLC and
      Dov Perlysky, filed with the SEC on July 17, 2003, (a) Kinder is the owner
      of these  shares  of  Company  common  stock and (b) Mr.  Perlysky  is the
      managing member of Nesher and Nesher is the general partner of Kinder. The
      Schedule 13G also  reports  that Kinder and Nesher have shared  voting and
      dispositive powers with respect to the shares, while Mr. Perlysky,  as the
      managing  member of Nesher,  has sole voting and  dispositive  powers with
      respect to the shares. The Schedule 13G notes that neither Kinder,  Nesher
      nor Mr.  Perlysky are a member of a group for Schedule 13G  purposes.  The
      shares  listed in the  principal  stockholders  table are limited to those
      shares  set  forth in the  Schedule  13G.  See  note  (8) for  information
      concerning  Kinder's  ownership  interest  in  Engex,   another  principal
      stockholder  of the  Company.  See  notes  (8) and  (10)  for  information
      concerning Mr.  Perlysky's  family  relationship with J. Morton Davis, the
      chairman and president of Engex, and Rosalind Davidowitz,  the wife of Mr.
      Davis and a principal stockholder of Engex and the Company.

(15)  Mr.  Bannon is  Vice-Chairman  of the Company's  board of  directors.  Mr.
      Bannon  also is a member  of the  advisory  group  formed  to  assist  the
      Company's management in evaluating merger and acquisition candidates.  Mr.
      Bannon  received an option to purchase  175,000  shares of Company  common
      stock upon his  appointment  to the advisory  group,  which shares were to
      become   exercisable   upon   consummation  of  a  merger  or  acquisition
      transaction  involving the Company during the term of the advisory  group.
      Such an acquisition transaction was consummated on April 16, 2003.


                                       40
<PAGE>

(16)  Represents  200,000  shares of Company common stock issuable upon exercise
      of options granted to Mr. Bannon,  which shares are exercisable within the
      next 60 days.

(17)  Ms. Hood is a director of the Company.

(18)  Includes  60,834 shares of Company  common stock issuable upon exercise of
      options granted to Ms. Hood that are exercisable within the next 60 days.

(19)  Mr. Barringer is a director of the Company.

(20)  Represents 45,000 shares of Company common stock issuable upon exercise of
      options granted to Mr. Barringer,  which shares are exercisable within the
      next 60 days.

(21)  Ms. Morrison became the Company's  Chief  Accounting  Officer on April 16,
      2003.

(22)  Includes  25,000 shares of Company  common stock issuable upon exercise of
      an option granted to Ms. Morrison, which shares are exercisable within the
      next 60 days.  Does not  include  25,000  shares of Company  common  stock
      issuable upon exercise of an option granted to Ms. Morrison,  which shares
      are not exercisable within the next 60 days.

(23)  Mr. Read became a director of the Company on May 20, 2003.

(24)  Includes  12,500 shares of Company  common stock issuable upon exercise of
      an option  granted to Mr. Read,  which shares are  exercisable  within the
      next 60 days.  Does not  include  12,500  shares of Company  common  stock
      issuable upon exercise of an option granted to Mr. Read,  which shares are
      not exercisable within the next 60 days.

(25)  Includes only current executive officers and directors.

(26)  Includes  those  shares   beneficially  owned  by  the  Company's  current
      executive  officers and  directors,  as set forth in notes (2),  (4), (6),
      (16), (18), (20), (22) and (24).

Securities Authorized For Issuance Under Equity Compensation Plans

Equity Compensation Plan Information

      The following table sets forth, as of July 31, 2003:

o     the number of shares of Company  common stock  issuable  upon  exercise of
      outstanding options,  warrants and rights,  separately identified by those
      granted   under  equity   incentive   plans   approved  by  the  Company's
      stockholders   and  those  granted  under  plans,   including   individual
      compensation contracts, not approved by the Company's stockholders (column
      A),

o     the weighted average exercise price of such options,  warrants and rights,
      also as separately identified (column B), and

o     the number of shares  remaining  available for future  issuance under such
      plans,  other than those  shares  issuable  upon  exercise of  outstanding
      options, warrants and rights (column C).


                                       41
<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                            (A)                         (B)                            (C)
Plan Category                   Number of securities to be    Weighted-average exercise      Number of securities
                                  issued upon exercise of       price of outstanding        remaining available for
                                   outstanding options,         options, warrants and        future issuance under
                                    warrants and rights                rights              equity compensation plans
                                                                                             (excluding securities
                                                                                            reflected in column (A)
----------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                        <C>                          <C>
Equity compensation plans                    699,835                    $1.76                        858,335
approved by security holders

Equity compensation plans not                 25,000                    $1.65                          N/A
approved by security holders

Total                                        724,835                    $1.75                        858,335

----------------------------------------------------------------------------------------------------------------------
</TABLE>

      The shares to be issued upon exercise of outstanding options, warrants and
rights granted under plans not approved by stockholders consist of:

o     25,000 warrants granted to Gerard, Klauer,  Mattison,  Inc. on May 3, 2002
      in connection with such firm's rendering of investment banking services to
      the Company.  Each of these  warrants  entitles its holder to purchase one
      share of Company common stock,  at a purchase price of $1.65 per share and
      expires on May 3, 2007.

Item 12. Certain Relationships and Related Transactions

      As compensation for serving on the Company's board or as a board committee
chair,  on October 25,  2002,  the  Company  granted to Jeanne  Hood,  Steven G.
Barringer and Stephen K. Bannon, non-qualified stock options to purchase 20,000,
20,000 and 25,000 shares, respectively, of the Company's common stock each at an
exercise price of $1.26 per share. The options became exercisable on the date of
grant and  expire  upon the  earlier  of (i) ten years from the date of grant or
(ii)  upon the  removal  or  resignation  of such  person as a  director  of the
Company.

      In  connection  with the  execution of their  employment  agreements,  the
Company  granted to Ronald J.  Tassinari and Anna M. Morrison,  qualified  stock
options to purchase  25,000 and 50,000  shares,  respectively  of the  Company's
common  stock  each at an  exercise  price of $1.41 per share.  Mr.  Tassinari's
shares  became  exercisable  on the date of grant.  One-half  of Ms.  Morrison's
shares became  exercisable  on the date of grant and the remaining  one-half are
exercisable on April 16, 2004. Both option grants expire ten years from the date
of grant.

      The April 16, 2003 closing of the YaYa acquisition resulted in the options
previously  granted to Stephen K.  Bannon on July 12,  2002,  to  purchase up to
175,000  shares of the Company's  common stock at $1.41 per share and the option
previously  granted to Jay H. Brown on July 12,  2002,  to purchase up to 87,500
shares of the  Company's  common  stock at $1.41 per share to each become  fully
exercisable.  Mr. Bannon is the  Vice-Chairman of the Board of Directors and Mr.
Brown is a beneficial  owner of more than five percent of the  Company's  common
stock.  These options were granted as compensation  for future and past services
while serving on the Company's special advisory group to the Board of Directors.
The special advisory group was established on July 12, 2002, to identify, review
and perform initial due diligence  services of potential  merger and acquisition
candidates on behalf of the Company.  The options have a ten-year  exercise term
and an exercise price equal to the closing price of the common stock on July 12,
2002.

      Jay H.  Brown,  a  beneficial  owner of more than five  percent of Company
common  stock,  received  $90,000  in the fiscal  year  ended July 31,  2003 and
$92,833 in the fiscal year ended July 31, 2002, in consideration  for consulting
and legal services he performed for the Company's benefit.


                                       42
<PAGE>

      During the fiscal  years  ended July 31,  2003 and 2002,  Mr.  Bannon also
received $60,000 and $20,000 in consideration for consulting services.

      Mr. Brown also received $90,000 in the fiscal year ended July 31, 2003 and
$93,000 in the fiscal year ended July 31, 2002, in consideration  for consulting
and legal services.

      See  subsection  entitled   "Employment  and  Severance   Agreements"  for
discussions of the April 2002  employment  agreements  the Company  entered into
with each of Ronald J.  Tassinari,  Audrey K.  Tassinari  and Roy K Keefer,  the
options  granted  to  these  executive  officers  pursuant  to  such  employment
agreements, the subsequent voluntary cancellations of certain of such options in
July 2002 and the July 2002 severance  agreements  entered into with each of Ms.
Tassinari and Mr. Keefer in connection  with the Company's  July 2002  corporate
restructuring.

Item 13. Exhibits, List and Reports on Form 8-K

(a)      Exhibits

         2.1        Asset Purchase Agreement,  dated as of April 16, 2003, among
                    YaYa, LLC,  American Vantage  Companies and YaYa Media, Inc.
                    (13)

         4.1        American Vantage  Companies Common Stock Purchase Warrant to
                    Gerard Klauer Mattison & Co., Inc. (Certificate No.: GKM-1),
                    dated as of May 3, 2002. (12)

         10.1       American Casino Enterprises, Inc. 1991 Officers Stock Option
                    Plan, as amended. (1)

         10.2       American Casino Enterprises, Inc. 1992 Employee Stock Option
                    Plan. (1)

         10.3       American  Casino  Enterprises,  Inc. 1996 Stock Option Plan.
                    (7)

         10.4       Management  Consultant  Contract,   dated  March  27,  1993,
                    between the Company and the Table  Mountain Band of Indians.
                    (2)

         10.5       Employment  Agreement,  dated  July 20,  1995,  between  the
                    Company and Ronald J. Tassinari. (2)

         10.6       Employment  Agreement,  dated  July 20,  1995,  between  the
                    Company and Audrey K. Tassinari. (2)

         10.7       Employment  Agreement,  dated  July 20,  1995,  between  the
                    Company and Roy K. Keefer. (2)

         10.8       Letter  Agreement,  dated  September  11, 1995,  between the
                    Company and Table Mountain Rancheria. (7)

         10.9       Settlement  Agreement,  dated February 1, 1996,  between the
                    Company and the National Indian Gaming Commission. (7)

         10.10      Termination  Agreement,  dated February 1, 1996, between the
                    Company and the Table Mountain  Rancheria.  Exhibit A to the
                    Termination  Agreement  is set forth as Exhibit  99.1 below,
                    and Exhibit B to the  Termination  Agreement is incorporated
                    herein by reference from Exhibit 10.3 above. (7)

         10.11      Consulting  Agreement,  dated February 1, 1996,  between the
                    Company and Table Mountain Rancheria. (7)

         10.12      Amendment  to  Consulting  Agreement,  dated June 26,  1997,
                    between the Company and Table Mountain Rancheria. (9)

         10.13      Joint  Venture  Agreement,  dated as of  February  1,  1996,
                    between the Company and the Table Mountain Rancheria. (7)


                                       43
<PAGE>

         10.14      Funding and Loan Agreement,  dated February 1, 1996, between
                    United Auburn Indian Community and Table Mountain/ACES Joint
                    Venture  (joint  venture   between  the  Company  and  Table
                    Mountain Band of Indians of the Table  Mountain  Rancheria).
                    (7)

         10.15      Lease,  dated June 10, 2003, between the Company and Durango
                    Trop, L.L.C. (14)

         10.16      Operating  Agreement for Border Grill Las Vegas,  LLC, dated
                    November 12, 1998, by and between TT&T,  LLC and Vantage Bay
                    Group, Inc. (8)

         10.17      Employment  Agreement,  dated as of April 1,  2002,  between
                    American Vantage Companies and Ronald J. Tassinari. (12)

         10.18      Employment  Agreement,  dated as of April 1,  2002,  between
                    American Vantage Companies and Audrey K. Tassinari. (12)

         10.19      Employment  Agreement,  dated as of April 1,  2002,  between
                    American Vantage Companies and Roy K. Keefer. (12)

         10.20      Settlement and General Release  Agreement,  dated as of July
                    29,  2002,  between  Roy  K.  Keefer  and  American  Vantage
                    Companies. (12)

         10.21      Settlement and General Release  Agreement,  dated as of July
                    29, 2002,  between Audrey K. Tassinari and American  Vantage
                    Companies. (12)

         10.22      Employment   Letter  Agreement  dated  September  27,  2002,
                    between Ronald J. Tassinari and American Vantage  Companies.
                    (12)

         10.23      Letter  agreement,  dated July 31, 2002,  between  Ronald J.
                    Tassinari and American Vantage Companies. (21)

         10.24      Letter  agreement,  dated July 31, 2002,  between  Audrey K.
                    Tassinari and American Vantage Companies. (12)

         10.25      Letter agreement, dated July 31, 2002, between Roy K. Keefer
                    and American Vantage Companies. (12)

         10.26      Employment Agreement,  dated as of February 1, 2003, between
                    Ronald J. Tassinari and American Vantage Companies. (14)

         10.27      Employment Agreement,  dated April 16, 2003, between Anna M.
                    Morrison and American Vantage Companies. (14)

         10.28      Voting  Agreement,  dated as of April 16, 2003,  among YaYa,
                    LLC and American Vantage Companies. (13)

         14.1       Code of Ethics, dated as of July 31, 2003. (14)

         21.1       Subsidiaries of the Registrant. (14)

         31.1       Certification  of Ronald J.  Tassinari  pursuant to Exchange
                    Act Rule 13a-14(a) **

         31.2       Certification  of Anna M. Morrison  pursuant to Exchange Act
                    Rule 13a-14(a) **


                                       44
<PAGE>

         32.1       Certification  of Ronald J. Tassinari  pursuant to 18 U.S.C.
                    Section 1350 **

         32.2       Certification  of Anna M.  Morrison  pursuant  to 18  U.S.C.
                    Section 1350 **

-------------------------

(1)   Incorporated by reference to the Company's  Annual Report on Form 10-K for
      July 31, 1992.

(2)   Incorporated by reference to the Company's  Registration Statement on Form
      S-8 (File No. 333-00905) declared effective on February 13, 1996.

(3)   Incorporated  by reference to the  Company's  Annual Report on Form 10-KSB
      for the year ended July 31, 1994.

(4)   Incorporated  by reference to the  Company's  Annual Report on Form 10-KSB
      for the year ended July 31, 1995.

(5)   Incorporated  by reference  from the Company's  Current Report on Form 8-K
      filed on February 2, 1996.

(6)   Incorporated  by reference  from the Company's  Current Report on Form 8-K
      filed on July 2, 1996.

(7)   Incorporated  by reference to the  Company's  Annual Report on Form 10-KSB
      for the year ended July 31, 1996.

(8)   Incorporated  by reference to the  Company's  Annual Report on Form 10-KSB
      for the year ended July 31, 1999.

(9)   Incorporated by reference from the Company's  Annual Report on Form 10-KSB
      for the year ended July 31, 1997.

(10)  Incorporated  by reference  from the Company's  Current Report on Form 8-K
      filed on June 26, 2001.

(11)  Incorporated  by reference  from the Company's  Current Report on Form 8-K
      filed on September 18, 2002.

(12)  Incorporated by reference from the Company's  Annual Report on Form 10-KSB
      for the year ended July 31, 2002.

(13)  Incorporated  by reference  from the Company's  Current Report on Form 8-K
      filed on April 16, 2003.

(14)  Incorporated by reference from the Company's  Annual Report on Form 10-KSB
      for the year ended July 31, 2003.

-------------------
** Filed herewith.

(b)   Reports on Form 8-K.

      No reports on Form 8-K were filed by the Company  during the last  quarter
      of Fiscal 2003.


                                       45
<PAGE>

Item 14. Principal Accountant Fees and Services

      During  Fiscal 2003 and 2002,  Piercy Bowler Taylor & Kern were engaged to
audit  our  consolidated  financial  statements  and to  perform  certain  other
non-audit services on our behalf.  Fees billed to us by this accounting firm for
services  rendered  with  respect to our fiscal year ended July 31, 2003 were as
follows:

o     Audit fees: $48,000;

o     Financial information systems design and implementation fees: $0; and

o     All other fees: $29,000.

      Other fees relate  primarily to federal tax return  preparation and review
of the Company's quarterly consolidated financial statements.


                                       46
<PAGE>

                                   SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange  Act of 1934,  the  Company has duly caused this report to be signed on
its behalf by the undersigned, thereunder duly authorized.

Dated:  May 3, 2005

                                        AMERICAN VANTAGE COMPANIES

                                        By: /s/ Ronald J. Tassinari
                                            ------------------------------------
                                            Ronald J. Tassinari, President and
                                            Chief Executive Officer

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the date indicated.

<TABLE>
<CAPTION>
         Signature                     Title                                Date
         ---------                     -----                                ----
<S>                            <C>                                          <C>
/s/ Ronald J. Tassinari        President and Chief Executive Officer,       May 3, 2005
-------------------------      Director (Principal Executive)
Ronald J. Tassinari

/s/ Anna M. Morrison           Chief Accounting Officer                     May 3, 2005
-------------------------      (Principal Financial Officer)
Anna M. Morrison

/s/ Steven G. Barringer        Director                                     May 3, 2005
-------------------------
Steven G. Barringer

/s/ Jeanne Hood                Director                                     May 3, 2005
-------------------------
Jeanne Hood

/s/ Randolph C. Read           Director                                     May 3, 2005
-------------------------
Randolph C. Read

/s/ Audrey K. Tassinari        Director                                     May 3, 2005
-------------------------
Audrey K. Tassinari
</TABLE>


                                       47