##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-KSB

Annual Report under Section 13
of 15(d) of the Securities Exchange Act of
1934

For the fiscal year ended July 31, 2002

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

|                                                                                                 |  |                 
|------------------------------------------------------------------------------------------------ |  | ----------------
|7674 West Lake Mead Blvd., Suite 108, Las Vegas, Nevada
(Address of principal executive offices) |  | 89128
(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.  $0

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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 $1.26 for the Companys Common Stock, as reported by The NASDAQ Stock
Market, Inc. on October 25, 2002 was approximately $5,546,764 (assuming for
purposes of such calculation that all executive officers and directors of the
issuer are affiliates).

The number of shares outstanding of the issuers Common Stock at October
25, 2002 was 4,865,856.

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

DOCUMENTS INCORPORATED BY REFERENCE

None.

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|                                  |                                                                                                                         |  |  |  |  |  |  | 
|--------------------------------- | ----------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                           
|                                  | Item 1. Description of Business                                                                                        
|                                  | Item 2. Description of Property                                                                                        
|                                  | Item 3. Legal Proceedings                                                                                              
|                                  | Item 4. Submission of Matters to a Vote of Security Holders                                                            
|PART II                          
|                                  | Item 5. Market for the Companys Common Stock and Related Stockholder Matters                                          
|                                  | Item 6. Managements Discussion and Analysis or Plan of Operation                                                      
|                                  | Item 7. Financial Statements                                                                                           
|                                  | Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                           
|PART III                         
|                                  | Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act
|                                  | Item 10. Executive Compensation                                                                                        
|                                  | Item 11. Security Ownership of Certain Beneficial Owners and Management                                                
|                                  | Item 12. Certain Relationships and Related Transactions                                                                
|                                  | Item 13. Exhibits, List and Reports on Form 8-K                                                                        
|SIGNATURES                       
|CONSOLIDATED FINANCIAL STATEMENTS
|                                  | CONSOLIDATED FINANCIAL STATEMENTS                                                                                      
|EXHIBIT INDEX                    
|EX-3.1                           
|EX-3.2                           
|EX-4.1                           
|EX-10.19                         
|EX-10.20                         
|EX-10.21                         
|EX-10.22                         
|EX-10.23                         
|EX-10.24                         
|EX-10.25                         
|EX-10.26                         
|EX-10.27                         
|EX-21.1                          
|EX-23.1                          
|EX-24.1                          
|EX-99.1                          



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PART I

Item 1. Description of Business

Recent Developments

American Vantage Companies (the Company) is pursuing legal remedies
related to its casino consulting contract that was prematurely terminated. See
Item 1  Table Mountain Casino.

The Company is currently reviewing 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 one or more ongoing operations or through the Company entering
into one or more businesses. The Company has formed a special committee to
effectuate this strategy objective. The Company also has retained the services
of Gerard, Klauer, Mattison, Inc., a recognized investment banking firm, to
assist the Company in its selection of appropriate acquisition and merger
candidates.

In its fiscal year ended July 31, 2001, the Company sold a 20-acre parcel
of land owned by the Company. The Company may also sell certain of its other
assets in order to provide additional cash resources sufficient to effectuate
its merger and acquisition strategy.

Effective July 29, 2002, the Company initiated a complete corporate
restructuring which resulted in the severance of all executive and
administrative staff, with the exception of its Chief Executive Officer. In
addition, effective May 2002, the Company terminated its month-to-month lease
for its executive offices located at 6787 West Tropicana, Suite 200, Las Vegas,
Nevada 89103, and significantly reduced other administrative expenses. The
cost of this restructuring, including lease termination charges, resulted in a
one-time charge of approximately $1.5 million dollars for the Companys fiscal
year ended July 31, 2002. The Company estimates that the annual cost savings,
from this restructuring and lease termination will be approximately $1 million
dollars.

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). See Item 1.
Description of Business  Table Mountain Casino.

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.

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 and has
continued operations at the Companys fiscal year ended July 31, 2002. See
Item 1. Description of Business  Border Grill Restaurant.

On February 6, 2001, the Company completed a transaction pursuant to which
it transferred its 80% ownership interest in Placement 2000.com, Inc.
(Placement) to Michael Woloshin for certain consideration,

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effective January 31, 2001. Mr. Woloshin was a founder of Placement. See
Item 1. Description of Business  Placement.

In June 2001, the Company sold to P.T. Corporation, a Nevada corporation,
approximately 20 acres of undeveloped real property located in North Las Vegas,
Nevada for net proceeds of approximately $2,246,000. The Company acquired the
20-acre parcel in February 1998 for $1,350,000.

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 7674 West Lake Mead
Blvd., Suite 108, Las Vegas, Nevada 89128, and its telephone number is (702)
227-9800.

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 legal
counsel of the Table Mountain Tribe that the General Council (voting body of
the Tribe) of the Table Mountain Tribe voted to terminate the Companys
contract to provide consulting services to the Table Mountain Casino.

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 contract
with the Table Mountain Tribe. The lawsuit seeks to recover payments totaling
$3,150,000 due under the Termination Agreement and the Company seeks 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.

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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 filed by the Fresno County Superior Court.
Provided that the decision becomes final without material change, with the
reversal of the Superior Courts ruling, the Company will be able to pursue its
claim against the Table Mountain Tribe in California Superior Court. However,
a counterclaim by the Tribe that was previously dismissed may be reasserted.
The counterclaim asserted that the contracts were invalid and sought
restitution of fees paid relating to the contract.

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.

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 years
ended July 31, 2002 and 2001, income and a loss from discontinued restaurant
operations of $34,000 and $69,000, respectively (net of income tax benefit
totaling $18,000 and $35,000 respectively).

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 and the limited liability company. Since
inception, with this investment, the Company has received periodic
distributions. Such distributions totaled $650,000 and $700,000 during the
fiscal years ended July 31, 2002 and 2001, respectively.

Placement

On December 6, 1999, the Company entered into a stock purchase agreement,
dated as of December 1, 1999, to purchase 80% of the capital stock of Placement
(a New York-based privately-held IT recruiting company) for $1 million in cash.
The Company transferred its 80% ownership interest in Placement to a former
Placement founder, Michael Woloshin, effective January 31, 2001. In connection
with Placement, the Company recorded a net loss from discontinued recruitment
operations and net loss on disposal of discontinued recruitment operation of
$362,000 and $256,000, respectively for the fiscal year ended July 31, 2001.

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Employees

As of October 25, 2002, the Companys sole employee is its President and
Chief Executive Officer. Internal accounting and financial reporting functions
are outsourced under the direction of the Chief Executive Officer.




Item 2. Description of Property

The Companys executive offices are located in approximately 1,000 square
feet of shared office space at 7674 West Lake Mead Blvd., Suite 108, Las Vegas,
Nevada 89128. Currently, the Company does not pay a monthly rent on the space
nor is there an agreement between the parties for any future monthly rental.
The fair value of the Companys current arrangement is not material. However,
as business circumstances change, the Company may be required to make other
arrangements.

During May 2002, the Company terminated its month-to-month lease for its
previous office located at 6787 West Tropicana, Suite 200, Las Vegas, Nevada
89103. The previous lease agreement commenced on June 1, 1996 for
approximately 5,100 square feet of leased office space, at a monthly lease
amount of approximately $8,700, and expired on June 1, 2001.

In May 1997, the Company acquired approximately 40 acres of undeveloped
land in North Las Vegas, Nevada for approximately $3,500,000 in cash. The
Company may sell, develop or enter into a joint venture agreement related to
the 40-acre parcel of land.




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 knowledge of management of the Company 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 24, 2002
to consider and act upon the following matters: (i) to elect Jeanne Hood and
Steven G. Barringer as Class C directors of the Company to serve for the
ensuing three years or until their successors are duly elected and qualified;
and (ii) to ratify the appointment of Bradshaw, Smith & Co., LLP, as the
Companys independent auditors for its fiscal year ended July 31, 2002.

The holders of 4,865,856 shares of Common Stock of the Company were
entitled to vote at the meeting, of which 4,557,825 shares of common stock were
represented in person or by proxy. The stockholders voted as follows with
respect to the election of Class C Directors to terms expiring in 2005:

|                    |  |     |           |                    |  |  |        | 
|------------------- |  | --- | --------- | ------------------ |  |  | ------ | 
|Name                |  | For |           | Withheld Authority
|                    |  |     |           |                   
|Jeanne Hood         |  |     | 4,372,596 |                    |  |  | 84,891 | 
|                   
|                   
|                   
|                   
|Steven G. Barringer |  |     | 4,423,487 |                    |  |  | 34,000 | 

The Board of Directors consists of five persons and is divided into three
term classes. Stephen K. Bannon is a Class B director whose term expires in
2003; Ronald J. Tassinari and Audrey K. Tassinari are Class A directors whose
terms expire in 2004; and, Jeanne Hood and Steven G. Barringer are Class C
directors whose terms expire in 2005.

The stockholders voted 4,401,825 shares in favor, 43,324 shares against,
and 12,338 shares abstaining the

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resolution ratifying the appointment of Bradshaw, Smith & Co., LLP, as the
Companys independent auditors for its fiscal year ended July 31, 2002. (See
also Item 8  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure).







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
reported by NASDAQ SmallCap. The prices represent inter-dealer quotations,
without retail mark-up, mark-down or commission, and may not necessarily
represent actual transactions:

|            |                                                      |          |   |         |  |  |   |      | 
|----------- | ---------------------------------------------------- | -------- | - | ------- |  |  | - | ---- | 
|Period      |                                                      | High Bid |   | Low Bid
|            |                                                      |          |   |        
|Fiscal 2001 |                                                      |          |   |         |  |  |   |     
|           
|           
|           
|           
|            | First Quarter (August 1, 2000 - October 31, 2000)    |          | $ | 2.13    |  |  | $ | 1.44 | 
|           
|           
|           
|           
|            | Second Quarter (November 1, 2000 - January 31, 2001) |          | $ | 2.88    |  |  | $ | 0.88 | 
|           
|           
|           
|           
|            | Third Quarter (February 1, 2001 - April 30, 2001)    |          | $ | 2.06    |  |  | $ | 1.19 | 
|           
|           
|           
|           
|            | Fourth Quarter (May 1, 2001- July 31, 2001)          |          | $ | 1.86    |  |  | $ | 1.46 | 
|           
|           
|           
|           
|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 | 

On October 25, 2002, the closing sale price per share for the Companys
common stock was $1.26.

Holders

On October 25, 2002, there were 860 holders of record of the 4,865,856
shares of the Companys common stock outstanding.

Dividends

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

Recent Sale of Unregistered Securities

On May 3, 2002, the Company granted to Gerard Klauer Mattison & Co., Inc.
for retained services, a warrant to purchase 25,000 shares of the Companys
common stock, at a purchase price of $1.65 per share,

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commencing on May 3, 2002 and expiring on May 3, 2007. The grant of warrants
was exempt from the registration requirements under Section 4(2) of the
Securities Act of 1933, as amended (the Securities Act), pursuant to an
exemption under Section 4(1) of the Securities Act.

On May 15, 2002, the Company granted to Snow Becker Krauss P.C., SEC
counsel to the Company, for services rendered, a non-qualified stock option to
purchase 65,000 shares of common stock of the Company at an exercise price of
$1.53 per share. The options became exercisable on the date of grant and
expire ten years from the date of grant.The grant of options was exempt from
the registration requirements under Section 4(2) of the Securities Act,
pursuant to an exemption under Section 4(1) of the Securities Act.




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

The following discussion and analysis should be read in conjunction with
the consolidated financial statements and notes thereto included elsewhere in
this report.

Statement on Forward-Looking Statements

In addition to historical information, this report contains certain
forward-looking statements. Such statements include those concerning the
Companys expected financial performance and its 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, 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.

Results of Operations

Year Ended July 31, 2002 (Fiscal 2002) Compared With the Year Ended July 31, 2001 (Fiscal 2001)

Revenues

The Company has no current source of revenue from operations but is
investigating opportunities to acquire ongoing operations through mergers
and/or acquisitions.

Costs and Expenses

General and administrative expenses increased from $2,358,000 at July 31,
2001 to $2,610,000 at July 31, 2002 for an overall increase of $252,000 or
10.7% due to legal and consulting expenses incurred in connection with the
identification of potential merger and acquisition candidates and related due
diligence. These increases in legal and consulting expenses were offset by a
reduction in other expenses. During late Fiscal 2001 and throughout Fiscal
2002, the Company began a search for an acquisition or merger candidate with
revenue and earnings to complement its balance sheet. Three potential
prospects were identified and significant time and effort was spent on planning
and due diligence by the Companys management, its Board of Directors, its
retained investment bankers, its corporate and SEC legal counsel and its
accountants. For various reasons none of the three proposed transactions were
successfully completed.

During May 2002, the Company terminated its lease for its executive
offices located at 6787 West Tropicana, Las Vegas, Nevada. The termination of
the month-to-month lease resulted in lower Fiscal 2002 rental

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expenses totaling $16,000.

Board of Directors fees and meeting expenses also decreased by $60,000
during Fiscal 2002. At July 31, 2001 there were five directors in comparison
to seven directors during Fiscal 2001. There was also a related decrease in
travel costs by the non-resident directors. In addition, during Fiscal 2001,
the Board of Directors formed a Special Committee to steer due diligence
efforts related to a potential merger and acquisition candidate (see
Item 12 - Certain Relationships and Related Transactions).

Prior to July 31, 2002, the Board of Directors approved a corporate
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. The cost of this restructuring is a one-time charge of approximately
$1,539,000 as reflected in the Fiscal 2002 consolidated statements of
operations.

Non-operating Income

Income from the Companys unconsolidated restaurant investee (see Item 1 
Border Grill Restaurant) decreased $119,000 in 2002 primarily as a result of
the events of September 11, 2001 and its effects on tourism in Las Vegas,
Nevada.

Interest income decreased from $616,000 at July 31, 2001 to $255,000 at
July 31, 2002. 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 and certificates of
deposit on the consolidated balance sheets). The Companys cash and cash
equivalents and U.S. treasury securities and certificates of deposit balances
decreased from $11,565,000 at July 31, 2001 to $9,345,000 at July 31, 2002,
primarily as a result of a restructuring charge which was paid during July 2002
($1,444,000 representing the cash payment portion of the total restructuring
amount). As this transaction occurred during late July 2002, overall Fiscal
2002 interest income was not significantly impacted.

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, 2002, the Company had cash and cash equivalents totaling
$1,560,000. Of this amount, the Company holds $1,548,000 in various money
market accounts. The Company also had consolidated working capital of
$10,667,000, as compared with its working capital of $12,322,000 at July 31,
2001. As discussed previously, the Company has no current operating revenue
source. Hence, recurring operating costs, currently estimated to approximate
$80,000 per month, decrease the Companys working capital. Interest income and
capital distributions from its investment in Border Grill should 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.

The Company intends to fund its operating costs and merger and acquisition
activities from its existing working capital resources. It is possible that
future merger and acquisition opportunities may require additional resources.
Historically, the Company has provided for such requirements with financing
from financial institutions and the issuance of equity securities and will
continue to consider such alternatives.

Impact of Inflation

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

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Factors That May Affect Future Results

During Fiscal 2001, the Company began to divest itself of its non-core
assets including the sale of its 20-acre parcel of land located in North Las
Vegas, Nevada and the disposition of other existing operations/investments.

Prior to fiscal year end July 31, 2002, the Board of Directors determined
that it was in the Companys best interests to also downsize and minimize
corporate overhead. Hence, a corporate restructuring program was implemented
which resulted in the termination of all employees (except the Chief Executive
Officer) in an effort to lower ongoing salaries and general and administrative
expenses. Internal accounting and financial reporting functions were
subsequently outsourced under the direction of the Chief Executive Officer.

Further to the above, the Board of Directors organized an Advisory
Committee and retained the investment banker, Gerard Klauer Mattison & Co.,
Inc. (GKM) of New York, to seek, review and advise the Board on merger and
acquisition candidates.

Qualitative and Quantitative Disclosures About Market and Interest Rate Risk

Except for exceeding insured deposit limits (approximately $1,400,000 at
July 31, 2002), 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, 2002, the Companys
cash and cash equivalents and U.S. treasury securities 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

The consolidated financial statements of the Company are set forth in a
separate section of this Report following Part III.




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.

The audit reports of Bradshaw on the consolidated financial statements of
the Company and its subsidiaries as of and for the fiscal years ended July 31, 2001 and
2000 did not contain an adverse opinion or disclaimer of opinion, nor were they
modified as to uncertainty, audit scope or accounting principles.

During the Companys two most recent fiscal years and through September
10, 2002, there were no disagreements between the Company and Bradshaw, 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
Bradshaws satisfaction would have caused Bradshaw to make reference to the
subject matter of the disagreement(s) in connection with its reports.

During the Companys two most recent fiscal years and through September
10, 2002, the Company did not consult with Piercy with respect to the
application of accounting principles to a specific completed or contemplated

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transaction, or the type of audit opinion that might be rendered on the
Companys consolidated financial statements, or any other matters or reportable
events listed in Item 304(a)(2)(i) and (ii) of Regulation S-B.







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 sole executive
officer of the Company along with certain information relating to the business
experience of each of the listed directors and officer.

|                    |  |     |    |          |  |                                                                                
|------------------- |  | --- | -- | -------- |  | -------------------------------------------------------------------------------
|Name                |  | Age |    | Position
|                    |  |     |    |         
|Ronald J. Tassinari |  |     | 59 |          |  | Chief Executive Officer, President, Director and
Acting Chief Financial Officer
|                   
|                   
|                   
|                   
|Audrey K. Tassinari |  |     | 63 |          |  | Director                                                                       
|                   
|                   
|                   
|                   
|Jeanne Hood         |  |     | 75 |          |  | Director                                                                       
|                   
|                   
|                   
|                   
|Steven G. Barringer |  |     | 46 |          |  | Director                                                                       
|                   
|                   
|                   
|                   
|Stephen K. Bannon   |  |     | 48 |          |  | Vice-Chairman and Director                                                     

Ronald J. Tassinarihas been Chairman of the Board of Directors, Chief
Executive Officer and President of the Company since its inception in August
1979. Mr. Tassinari became acting Chief Financial Officer of the Company in
August 2002.

Audrey K. Tassinarihas been a director of the Company since March 1985.
Ms. Tassinari was Executive Vice President of the Company from April 1986 until
July 2002. Ms. Tassinari is the wife of Ronald J. Tassinari, the Companys
Chief Executive Officer and President.

Jeanne Hoodhas 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.

Steven G. Barringerhas been a director of the Company since February
1998. Mr. Barringer has been a member of the government relations firm of
McClure, Gerard & Neuenschwander, 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. Before forming Singer, Brown and Barringer in
January 1996, Mr. Barringer was a member of the law firm of Holland & Hart in
Washington, D.C.

Stephen K. Bannonhas 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

11



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##### Table of Contents



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. In 1996, Bannon & Co., Inc. formed a joint
venture with Societe Generale creating Societe Generale Bannon to undertake
media and entertainment investment banking. This joint venture was purchased
in July 1998 by Societe Generale. Prior to forming Bannon & Co., Inc., Mr.
Bannon was a Vice-President in the Mergers and Acquisitions department at
Goldman & Sachs Co. 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 Axiom Navigation Inc., a privately held
company in the global positioning satellite communications industry.

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, 2002, except that two reports were
filed late for each of Ronald J. Tassinari and Audrey K. Tassinari, and one report was filed late for each of Jeanne Hood and Boyad Tanner.
All late report filings were in connection with the grant and/or
cancellation of options to each of the individuals. One report on
Form 4 for Roy K. Keefer has not been filed in connection with the
cancellation of his options granted for the fiscal year ending July
31, 2002.




Item 10. Executive Compensation

Summary Compensation Table

The following table sets forth all compensation awarded to, earned by, or
paid for all services rendered to the Company during the last three fiscal
years by the Companys Chief Executive Officer and all other executive officers
whose total compensation exceeded $100,000 in those years.

|                      |  |      |      |           |  |                     |         |                 |  |                 |   |                        |  |              |         |            |  |            |   |  |  |  |        |    
|--------------------- |  | ---- | ---- | --------- |  | ------------------- | ------- | --------------- |  | --------------- | - | ---------------------- |  | ------------ | ------- | ---------- |  | ---------- | - |  |  |  | ------ | ---
|                      |  |      |      |           |  | Annual Compensation |         |                 |  |                 |   | Long-Term Compensation
|                      |  |      |      |           |  |                     |         |                 |  |                 |   | Awards                
|                      |  |      |      |           |  |                     |         |                 |  |                 |   |                        |  |              |         |            |  |           
|Name and              |  |      |      |           |  |                     |         |                 |  |                 |   |                        |  | Other Annual |         | Restricted |  | Securities
|Principal Position    |  | Year |      | Salary($) |  | Bonus($)            |         | Compensation($) |  | Stock Awards($) |   | Underlying Options(#) 
|                      |  |      |      |           |  |                     |         |                 |  |                 |   |                       
|Ronald J. Tassinari,  |  |      | 2002 |           |  | $                   | 408,140 |                 |  | $               | 0 |                        |  | $            | 40,000  | (1)        |  | $          | 0 |  |  |  | 28,470 | (8)
|Chief Executive       |  |      | 2001 |           |  | $                   | 451,500 |                 |  | $               | 0 |                        |  | $            | 84,177  | (3)(4)     |  | $          | 0 |  |  |  | 0      |    
|Officer
and President |  |      | 2000 |           |  | $                   | 451,500 |                 |  | $               | 0 |                        |  | $            | 69,320  | (5)        |  | $          | 0 |  |  |  | 43,859 | (9)
|                     
|                     
|                     
|                     
|Audrey K. Tassinari,  |  |      | 2002 |           |  | $                   | 913,742 | (2)             |  | $               | 0 |                        |  | $            | 59,332  | (1)(2)     |  | $          | 0 |  |  |  | 10,726 | (8)
|Executive             |  |      | 2001 |           |  | $                   | 170,100 |                 |  | $               | 0 |                        |  | $            | 67,521  | (3)        |  | $          | 0 |  |  |  | 0      |    
|Vice President        |  |      | 2000 |           |  | $                   | 170,100 |                 |  | $               | 0 |                        |  | $            | 113,439 | (5)(7)     |  | $          | 0 |  |  |  | 27,778 | (9)
|                     
|                     
|                     
|                     
|Roy K. Keefer         |  |      | 2002 |           |  | $                   | 716,255 | (2)             |  | $               | 0 |                        |  | $            | 81,199  | (1)(2)(6)  |  | $          | 0 |  |  |  | 9,269  | (8)
|Chief Financial       |  |      | 2001 |           |  | $                   | 147,000 |                 |  | $               | 0 |                        |  | $            | 47,126  | (3)        |  | $          | 0 |  |  |  | 0      |    
|Officer               |  |      | 2000 |           |  | $                   | 147,000 |                 |  | $               | 0 |                        |  | $            | 35,931  | (5)        |  | $          | 0 |  |  |  | 33,334 | (9)

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---

|(1) |  | Includes SAR/SEP retirement plan contributions made by the Company
totaling $40,000 for each executive.                                                                                                                                                                                                                                                                                    
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Annual Compensation includes severance compensation related to the
Companys July 2002 organizational restructuring in the amount of $720,097
and $514,579 for Audrey K. Tassinari and Roy K. Keefer, respectively.
Other Annual Compensation includes other severance insurance benefits in
the amount of $19,332 and $22,997 for Audrey K. Tassinari and Roy K.
Keefer, respectively.
|   
|   
|   
|   
|(3) |  | Includes SAR/SEP retirement plan contribution made by the Company in the
amount of $24,000, $17,751 and $23,657 for Ronald J. Tassinari, Audrey K.
Tassinari and Roy K. Keefer, respectively.                                                                                                                                                                                              
|   
|   
|   
|   
|(4) |  | Includes the value of an automobile in the amount of $20,496.                                                                                                                                                                                                                                                                                                                              
|   
|   
|   
|   
|(5) |  | Includes SAR/SEP retirement plan contribution made by the Company in the
amount of $24,000, $22,094 and $13,891 for Ronald J. Tassinari,
Audrey K. Tassinari and Roy K. Keefer, respectively.                                                                                                                                                                                              
|   
|   
|   
|   
|(6) |  | Includes the value of an automobile in the amount of $18,202.                                                                                                                                                                                                                                                                                                                              
|   
|   
|   
|   
|(7) |  | Includes the value of an automobile in the amount of $38,853.                                                                                                                                                                                                                                                                                                                              
|   
|   
|   
|   
|(8) |  | Effective July 31, 2002
the options granted to Ronald J. Tassinari, Audrey K. Tassinari and
Roy K. Keefer, to purchase 28,470, 10,726 and 9,269, respectively,
of the Companys
common stock were cancelled.                                                                                                                                                                               
|   
|   
|   
|   
|(9) |  | Represents options which were granted in February 2000 at an exercise price
of $1.125 per share.                                                                                                                                                                                                                                                                                           

Option Grants In Last Fiscal Year

The table below includes the number of stock options granted to the
executive officers named in the Summary Compensation Table during the fiscal
year ended July 31, 2002.

|                    |  |                    |        |                     |  |                  |      |            |  |   |      |  |  |                |  | 
|------------------- |  | ------------------ | ------ | ------------------- |  | ---------------- | ---- | ---------- |  | - | ---- |  |  | -------------- |  | 
|                    |  |                    |        |                     |  | Percent of       |      |            |  |   |      |  |  |               
|                    |  | Number of          |        | Total Options       |  |                  |      |            |  |   |      | 
|                    |  | Securities         |        | Granted to          |  | Exercise or Base |      |            |  |  
|                    |  | Underlying Options |        | Employees in Fiscal |  | Price            |      | Expiration
|Name                |  | Granted(#)         |        | Year                |  | ($/Share)        |      | Date      
|                    |  |                    |        |                     |  |                  |      |           
|Ronald J. Tassinari |  |                    | 28,470 |                     |  |                  | 58.8 | %          |  | $ | 2.49 |  |  | March 31, 2012
|                   
|                   
|                   
|                   
|Audrey K. Tassinari |  |                    | 10,726 |                     |  |                  | 22.1 | %          |  | $ | 2.49 |  |  | March 31, 2012
|                   
|                   
|                   
|                   
|Roy K. Keefer       |  |                    | 9,269  |                     |  |                  | 19.1 | %          |  | $ | 2.49 |  |  | March 31, 2012

Effective July 31, 2002, based on the recommendation of the Compensation
Committee, the Companys Board of Directors cancelled these fiscal year 2002
option grants.

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, 2002.

|                    |  |                    |   |                   |  |     |   |               |  |                     |           |              |  |   |          | 
|------------------- |  | ------------------ | - | ----------------- |  | --- | - | ------------- |  | ------------------- | --------- | ------------ |  | - | -------- | 
|                    |  |                    |   |                   |  |     |   |               |  | Number of           |           | Value of    
|                    |  |                    |   |                   |  |     |   |               |  | Securities          |           | Unexercised 
|                    |  |                    |   |                   |  |     |   |               |  | Underlying          |           | In-The-Money
|                    |  |                    |   |                   |  |     |   |               |  | Unexercised Options |           | Options at  
|                    |  |                    |   |                   |  |     |   |               |  | at FY-End(#)        |           | FY-End($)   
|                    |  |                    |   |                   |  |     |   |               |  | Exercisable/        |           | Exercisable/
|                    |  | Shares Acquired on |   |                   |  |     |   | Unexercisable |  | Unexercisable      
|Name                |  | Exercise(#)        |   | Value Realized($) |  | (1) |   | (1)          
|                    |  |                    |   |                   |  |     |   |              
|Ronald J. Tassinari |  |                    | 0 |                   |  | $   | 0 |               |  |                     | 134,890/0 |              |  | $ | 62,499/0 | 

13



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|                    |  |                    |   |                   |  |     |   |               |  |                     |          |              |  |   |          | 
|------------------- |  | ------------------ | - | ----------------- |  | --- | - | ------------- |  | ------------------- | -------- | ------------ |  | - | -------- | 
|                    |  |                    |   |                   |  |     |   |               |  | Number of           |          | Value of    
|                    |  |                    |   |                   |  |     |   |               |  | Securities          |          | Unexercised 
|                    |  |                    |   |                   |  |     |   |               |  | Underlying          |          | In-The-Money
|                    |  |                    |   |                   |  |     |   |               |  | Unexercised Options |          | Options at  
|                    |  |                    |   |                   |  |     |   |               |  | at FY-End(#)        |          | FY-End($)   
|                    |  |                    |   |                   |  |     |   |               |  | Exercisable/        |          | Exercisable/
|                    |  | Shares Acquired on |   |                   |  |     |   | Unexercisable |  | Unexercisable      
|Name                |  | Exercise(#)        |   | Value Realized($) |  | (1) |   | (1)          
|                    |  |                    |   |                   |  |     |   |              
|                   
|                   
|                   
|                   
|Audrey K. Tassinari |  |                    | 0 |                   |  | $   | 0 |               |  |                     | 75,781/0 |              |  | $ | 31,250/0 | 
|                   
|                   
|                   
|                   
|Roy K. Keefer       |  |                    | 0 |                   |  | $   | 0 |               |  |                     | 48,001/0 |              |  | $ | 37,501/0 | 



---

|(1) |  | The closing price for the Companys common shares on July 31, 2002 was
$1.69 per share.
|--- |  | ---------------------------------------------------------------------------------------

Compensation of Directors

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 of
the Directors. However, all directors are compensated for expenses incurred in
attending meetings of the Board.

Jeanne Hood and Steve Barringer also received $10,000 each for serving as
the Chairpersons for the Audit and Compensation Committees, respectively.

Employment Agreements

On March 15, 1995, the Company entered into employment agreements with
each of Ronald J. Tassinari, Audrey K. Tassinari and Roy K. Keefer, as amended
as of July 20, 1995 and by letter on December 21, 2001 (collectively, the
Prior Agreements). The Prior Agreements had a term expiring on March 31,
2002, subject to an extension for an unlimited number of additional one year
terms unless either party provides written notice to the other party at least
30 days prior to the date of termination. On April 1, 2002, the Company
entered into substantially similar employment agreements (collectively, the
Agreements) with Ronald J. Tassinari, to serve as the Companys Chief
Executive Officer and President, Audrey K. Tassinari, to serve as the Companys
Executive Vice President, and Roy K. Keefer to serve as the Companys Chief
Financial Officer (individually, the Employee). The Agreements supercede the
Prior Agreements in all respects. The Agreements for Audrey K. Tassinari and
Roy K. Keefer were terminated as of July 31, 2002. See
Item 10  Executive Compensation  Settlement Agreements
below.

The Agreements provide for an initial term, which concluded on September
30, 2002, and an extended term to expire on March 31, 2005 (the Extended
Term). The initial term of the Agreement of Ronald J. Tassinari was extended
from September 30, 2002 to November 30, 2002 pursuant to a letter agreement
between the Company and Mr. Tassinari, dated September 27, 2002. The
Agreements provide for annual salaries of $240,000, $120,000 and $147,000,
respectively, for Mr. Tassinari, Ms. Tassinari and Mr. Keefer, subject to
withholding and other deductions as required by law or otherwise authorized in
writing by the Employee. The Agreements further provide that the base salaries
of the Employees shall be increased on an annual basis, effective as of January
1st of each calendar year, based upon no less than the greater of (i) the
proportional annual increase provided to any of the Companys other salaried
executives or (ii) the proportional increase in a specified cost of living
index (CPI-U), during the most recent twelve month period prior to the
effective date of any such increase. The Board of Directors through its
Compensation Committee shall determine in good faith annual increases in base
salary.

In addition, under the Agreements, the Employees are entitled to receive
incentive compensation as determined by the Board of Directors, through its
Compensation Committee, in accordance with any stock option plan or incentive
or bonus compensations programs in accordance with the Companys then practice,
and the Company is required to reimburse Employees for their personal legal and
financial consulting expenses, subject to a maximum of three percent (3%) of
their prior calendar years base salary. Mr. Tassinari, Ms. Tassinari and Mr.
Keefer are entitled to life insurance policies with a minimum death benefit of
$2,000,000, $1,500,000 and $1,000,000, respectively, payable to beneficiaries
of their designation. The Company has agreed to pay for all normal expenses
relating to the use of Mr. Tassinari and Ms. Tassinaris personal automobile
for Company purposes, and has agreed to provide Mr. Keefer with the use of an
automobile compatible with his position and further agrees to pay all normal
expenses relating to the use of such automobile for Company purposes. The
Agreements also provide for indemnification of the Employees in connection with
their services to the Company.

In addition, for compensation to the Employees for increases in CPI  U
(See Item 10  Executive Compensation 
Cancellation of Officers Fiscal Year 2002 Option Grants) not paid to the Employees for the

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##### Table of Contents



calendar years ended December 31, 2000 and 2001, on April 1, 2002, the
Company agreed to grant to each Employee a ten-year stock option to purchase
one share of the Companys common stock for each dollar of increase not paid to
such Employee, at an exercise price of the fair market value on the date of the
Agreements.

If the employment of any of the Employees is terminated by reason of
death, the Company shall pay to such person as the Employee has designated or
if no such person has been designated, to the deceased Employees estate as a
lump sum death benefit, an amount equal to the sum of (i) the annualized
average of the base salary paid to the Employee for the five calendar years
immediately preceding the Employees death, plus (ii) the annualized average of
the incentive awards paid to the Employee for the five calendar years
immediately preceding the Employees death.

If the employment of any of the Employees is terminated by reason of
disability, the Employee shall continue to receive his Total Compensation
(Total Compensation is defined as the sum of the Employees base salary and
incentive awards) during the initial waiting period as provided by the
Companys existing or thereafter adopted disability insurance plan, and upon
becoming disabled, shall be paid 100% of the five calendar year average of his
Total Compensation for one year, less payments made by social security and less
payments made by the Companys long-term disability plan currently existing or
thereafter adopted by the Company during the term of the Agreement.

If the employment of any of the Employees is terminated for cause, the
Company shall pay to such Employee his or her full base salary through the
termination date at the rate in effect at the time the notice of termination is
given.

If any of the Employees are terminated for other than cause, death or
disability or if any of the Employees terminates his or her employment for good
reason, as defined in the Agreement (includes, but is not limited to, a change
in control of the Company as defined in the Agreement): (i) within 90 days
following the termination date, the Company shall pay the Employee an amount
equal to (A) the sum of the annualized total average of the base salary and
incentive awards granted during the five calendar year period ended immediately
prior to the termination date, (B) multiplied by two and ninety-nine one
hundredths (2.99); (ii) within 30 days following the termination date, the
Company shall pay the Employee his Total Compensation through the termination
date to the extent not yet paid; (iii) within 30 days following the presentment
of any legal bills (including retainer fees) relating to the Employees
enforcement of his rights under the Agreement, including bills relating to the
interpretation of Employees rights under the Agreement, the Company shall pay
up to $100,000 of such bills; and (iv) all outstanding unexercised stock
options granted to the Employee under the Companys stock option plans and/or
other incentive awards held or contingently payable to the Employee as of the
termination date shall become fully vested and exercisable as of the
termination date and shall continue to be exercisable for the life of such
option or incentive award, as the case may be.

The maximum amount payable to any Employee, which may be due or payable to
Employee under the Agreement as result of the termination of employment of
Employee by the Company, shall be equal to the amount which would otherwise
result in an excess parachute payment under section 280G of the Internal
Revenue Code of 1986, as amended (the Code), or to any successor to said
section or the Code, minus $1.00, in each case giving effect to the present
value of any future payment required under the Agreement.

If an Employee terminates for good reason, the Company shall establish an
irrevocable grantor trust for the purposes of providing funds for payment of
the benefits payable pursuant to the Agreement and make an irrevocable
contribution to such trust in an amount that is sufficient to fund the
obligations of the Company pursuant to the Agreement.

Each Employee covenants not to compete and not to solicit customers and
personnel of the Company in accordance with the provisions of the Agreement,
during the term of the Agreement and for a period of five years commencing
immediately upon the termination of the Employees employment with the Company
(the Restricted Period). Each Employee further covenants that he or she will
not disparage the Company or divulge confidential information during the
Restricted Period or thereafter.

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##### Table of Contents



Cancellation of Officers Fiscal Year 2002 Option Grants

Based
on the recommendation of the Compensation Committee, the options
granted to Ronald J. Tassinari, Audrey K. Tassinari and
Roy K. Keefer to purchase 28,470, 10,726 and 9,269, respectively, of the
Companys common stock have been cancelled, effective July 31,
2002, pursuant to a letter agreement dated October 25, 2002 between
the Company and each of Mr. Tassinari, Ms. Tassinari and Mr. Keefer.
The options were granted as compensation to Mr. Tassinari, Ms.
Tassinari and Mr. Keefer pursuant to their employment agreements. See
Item 10  Executive Compensation  Employment
Agreements.

Settlement Agreements

The Company entered into substantially similar terms of
Settlement and General Release Agreements (the Settlement Agreements), dated as of July 29,
2002, with
Audrey K. Tassinari and Roy K. Keefer (jointly referred to as the
Executives), wherein Ms. Tassinari and Mr. Keefer resigned as Executive Vice
President and Chief Financial Officer, respectively, of the Company, effective
July 31, 2002. In return for their resignations, the Company paid severance
payments (including wages and various insurances) of $739,429 to Ms. Tassinari
and $537,576 to Mr. Keefer. In addition, Ms. Tassinari and Mr. Keefer received
payments totaling $18,471 and $13,484, respectively, for their respective
SAR-SEP accounts.

The Settlement Agreements provided for the mutual waiver, release and
discharge by the Company and the Executives, from any and all manner of action,
claims, liens, demands, liabilities, causes of action, charges, complaints,
suits (judicial, administrative, or otherwise), damages, debts, demands,
obligations of any other nature, past or present, known or unknown, whether in
law or in equity, whether founded upon contract (expressed or implied), tort
(including, but not limited to, defamation), statute or regulation (federal,
state or local), common law and/or any other theory or basis, from the
beginning of the world to the date hereof, including, but not limited to, any
claim that either the Company, Ms. Tassinari or Mr. Keefer has asserted, now
asserts or could have asserted.

Notwithstanding the foregoing, Executives waiver, release and discharge
is not intended to release any rights Executives have (i) with respect to
Executives participation in the Companys sponsored stock option plans,
including any options granted to the Executives, which options shall continue
to remain in effect for their full original terms and (ii) to seek and obtain
indemnification and/or defense pursuant to the provisions of the Employment
Agreements, the Certificate of Incorporation and By-laws of the Company (each
as amended through the effective date of the execution of the Settlement
Agreements) and the laws of the State of Nevada, in the event that any claim is
asserted against any Executive by a third party.




Item 11. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of October 25, 2002, certain
information concerning those persons known to the Company, based on information
obtained from such persons, with respect to the beneficial ownership (as such
term is defined in Rule 13d-3 under the Securities Exchange Act of 1934) of
shares of common stock, $.01 par value, of the Company by (i) each person known
by the Company to be the owner of more than 5% of the outstanding shares of
common stock of the Company, (ii) each nominee and director of the Company,
(iii) each executive officer named in the Summary Compensation Table and (iv)
all executive officers and directors of the Company as a group. The address of
each of the directors and executive officers listed below is c/o American
Vantage Companies, 7674 West Lake Mead Blvd, Suite 108, Las Vegas, Nevada
89128.

|                                     |  |                      |  |                     |       |  
|------------------------------------ |  | -------------------- |  | ------------------- | ----- | -
|                                     |  | Amount and Nature of |  |                     |       |  
|                                     |  | Beneficial Ownership |  | Percentage of Class
|Name and Address of Beneficial Owner |  | (1)                  |  | (2)                
|                                     |  |                      |  |                    
|Ronald J. Tassinari                  |  | 657,667(3)           |  |                     | 12.96 | %
|                                    
|                                    
|                                    
|                                    
|Audrey K. Tassinari                  |  | 657,667(4)           |  |                     | 12.96 | %
|                                    
|                                    
|                                    
|                                    
|Jeanne Hood                          |  | 57,501(5)            |  |                     | 1.17  | %
|                                    
|                                    
|                                    
|                                    
|Steve G. Barringer                   |  | 25,000(6)            |  |                     | *     |  

16



---



##### Table of Contents



|                                                                                                       |  |                      |  |                     |       |  
|------------------------------------------------------------------------------------------------------ |  | -------------------- |  | ------------------- | ----- | -
|                                                                                                       |  | Amount and Nature of |  |                     |       |  
|                                                                                                       |  | Beneficial Ownership |  | Percentage of Class
|Name and Address of Beneficial Owner                                                                   |  | (1)                  |  | (2)                
|                                                                                                       |  |                      |  |                    
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Stephen K. Bannon                                                                                      |  | 0                    |  |                     | 0.0   | %
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|All officers and directors as a group (5 persons)                                                      |  | 740,168(7)           |  |                     | 14.39 | %
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Roy K. Keefer
6101 Golden Saddle Street
Las Vegas, NV 89130                                            |  | 48,001(8)            |  |                     | *     |  
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Jay H. Brown
520 South Fourth Street
Las Vegas, NV 89107                                               |  | 260,711(9)           |  |                     | 5.36  | %
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Engex, Inc.
44 Wall Street
New York, NY 10005                                                          |  | 857,934(10)          |  |                     | 17.63 | %
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Kinder Investments, L.P.
Nesher, LLC
Dov Perlysky
c/o Laidlaw & Co.
100 Park Avenue
New York, NY 10017 |  | 261,900(11)          |  |                     | 5.38  | %
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Rosalind Davidowitz
7 Sutton Place South
Lawrence, New York 11563                                      |  | 857,934(12)          |  |                     | 17.63 | %



---

|*   |  | Indicates less than 1%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(1) |  | Except as otherwise noted in the footnotes to this table, the named
person owns directly and exercises sole voting and investment power over
the shares listed as beneficially owned by such persons. Includes any
securities that such person has the right to acquire within 60 days
pursuant to options, warrants, conversion privileges or other rights.                                                                                                                                                                                                                       
|   
|   
|   
|   
|(2) |  | Based on 4,865,856 shares outstanding as of October 25, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|   
|   
|   
|(3) |  | Includes 3,698 shares owned of record by Mr. Tassinari as custodian for
his son, 443,293 shares owned by the Tassinari Family Trust in which Mr.
Tassinari and his wife, Audrey K. Tassinari, are the trustees and
beneficiaries (the Tassinari Family Trust), 75,781 shares subject to
currently exercisable stock options beneficially owned by Mr. Tassinaris
wife and 134,890 shares issuable upon exercise of currently exercisable
stock options owned by Mr. Tassinari. Mr. Tassinari disclaims beneficial
ownership of the 75,781 shares beneficially owned by his wife.
|   
|   
|   
|   
|(4) |  | Includes 443,293 shares owned by the Tassinari Family Trust, 3,698 shares
owned of record by Ms. Tassinaris husband, Ronald J. Tassinari, as
custodian for their son, 134,895 shares (including 134,890 shares subject
to currently exercisable stock options) beneficially owned by Ms.
Tassinaris husband, and an aggregate of 75,781 shares issuable upon
exercise of currently exercisable stock options owned by Ms. Tassinari.
Ms. Tassinari disclaims beneficial ownership of the 134,895 shares
beneficially owned by her husband.                                       
|   
|   
|   
|   
|(5) |  | Includes 40,834 shares issuable on the exercise of currently
exercisable stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|   
|   
|   
|(6) |  | Represents 25,000 shares issuable on the exercise of currently
exercisable stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|   
|   
|   
|(7) |  | Includes 276,505 shares issuable on the exercise of currently
exercisable stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

17



---



##### Table of Contents



|(8)  |  | Includes 48,001 shares issuable on the exercise of currently exercisable
stock options. Up and until July 31, 2002, Roy K. Keefer served as Chief
Financial Officer for the Company and is therefore, included in Item 10.
Executive Compensation of this Annual Report. However, Mr. Keefer is not
deemed to be an executive officer under this Item 11 for purposes of
calculating the number of shares owned by all executive officers and
directors as a group.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|    
|    
|    
|(9)  |  | All shares are held with his wife, Sharon Brown, as
Tenants-in-Common.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    
|    
|    
|    
|(10) |  | Pursuant to Schedule 13G/A filed by Engex, Inc. with the Securities and
Exchange Commission on February 13, 2001. Includes 383,434 shares owned
by Rosalind Davidowitz, the wife of J. Morton Davis. The following
information was obtained from the Proxy Statement of Engex, Inc. as filed
with the Securities and Exchange Commission on January 30, 2002. Mr.
Davis is the President and a director of Engex, Inc. As of January 25,
2002, D.H. Blair Investment Banking Corp., of which Mr. Davis is
President, Chairman and the sole stockholder, owned approximately 6% of
the issued and outstanding shares of Engex, Inc. As of January 25, 2002,
Ms. Davidowitz owned approximately 28.2% of the issued and outstanding
shares of Engex, Inc. (includes approximately 17.1% owned by Rivkalex
Corp. of which Ms. Davidowitz is the sole stockholder). Mr. Davis
disclaims beneficial ownership of all shares of Engex, Inc. other than
those held by D.H. Blair Investment Banking Corp. Ms. Davidowitz
disclaims beneficial ownership of all shares of Engex, Inc. other than
those held by her personally and those held by Rivkalex Corp. (See
Footnote (12) below).
|    
|    
|    
|    
|(11) |  | Pursuant to Schedule 13G jointly filed by Kinder Investments, L.P.,
Nesher, LLC and Dov Perlysky with the Securities and Exchange Commission
on July 2, 2001. Kinder Investments, L.P., a limited partnership of which
the children and grandchildren of J. Morton Davis are the limited
partners, directly owns 261,900 shares of the Companys Common Stock.
Nesher, LLC is the general partner of Kinder Investments, L.P. Dov
Perlysky, the son-in-law of Mr. Davis, is the managing member of Nesher,
LLC and has sole voting and dispositive control of the Companys shares of
Common Stock owned by Kinder Investments, L.P. These 261,900 shares of
the Companys Common Stock do not include 5,000 shares of the Companys
Common Stock owned by another limited partnership, some of whose limited
partners are also limited partners of Kinder Investments, L.P. or shares
owned by limited partners of Kinder Investments, L.P.                                                                                                                                                                                                                                     
|    
|    
|    
|    
|(12) |  | Pursuant to Schedule 13G filed by Rosalind Davidowitz with the Securities
and Exchange Commission on February 14, 2002. Also includes 474,500 shares
of the Companys Common Stock owned by Engex, Inc. (See Footnote (10)
above).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Securities Authorized For Issuance Under Equity Compensation Plans

Equity Compensation Plan Information

|                                                           |  |                            |         |                           |  |                           |      |  |  |                      |           |    
|---------------------------------------------------------- |  | -------------------------- | ------- | ------------------------- |  | ------------------------- | ---- |  |  | -------------------- | --------- | ---
|                                                           |  |                            |         |                           |  |                           |      |  |  | (c)                 
|                                                           |  |                            |         |                           |  |                           |      |  |  | Number of securities
|                                                           |  | (a)                        |         | (b)                       |  | remaining available for  
|                                                           |  | Number of securities to be |         | Weighted-average exercise |  | future issuance under    
|                                                           |  | issued upon exercise of    |         | price of outstanding      |  | equity compensation plans
|                                                           |  | outstanding options,       |         | options, warrants and     |  | (excluding securities    
|Plan Category                                              |  | warrants and rights        |         | rights                    |  | reflected in column (a)) 
|                                                           |  |                            |         |                           |  |                          
|Equity compensation plans approved by security holders     |  |                            | 304,339 | (1)                       |  | $                         | 2.24 |  |  |                      | 1,339,530 | (3)
|                                                          
|                                                          
|                                                          
|                                                          
|Equity compensation plans not approved by security holders |  |                            | 172,501 | (2)                       |  | $                         | 1.84 |  |  |                      | N/A       |    

18



---



##### Table of Contents



|              |  |                            |         |                           |  |                           |      |  |  |                      |           | 
|------------- |  | -------------------------- | ------- | ------------------------- |  | ------------------------- | ---- |  |  | -------------------- | --------- | 
|              |  |                            |         |                           |  |                           |      |  |  | (c)                 
|              |  |                            |         |                           |  |                           |      |  |  | Number of securities
|              |  | (a)                        |         | (b)                       |  | remaining available for  
|              |  | Number of securities to be |         | Weighted-average exercise |  | future issuance under    
|              |  | issued upon exercise of    |         | price of outstanding      |  | equity compensation plans
|              |  | outstanding options,       |         | options, warrants and     |  | (excluding securities    
|Plan Category |  | warrants and rights        |         | rights                    |  | reflected in column (a)) 
|              |  |                            |         |                           |  |                          
|             
|             
|             
|             
|Total         |  |                            | 476,840 |                           |  | $                         | 2.14 |  |  |                      | 1,339,530 | 



---

|(1) |  | Represents 11,696, 175,972 and
116,671 shares issuable on the
exercise of currently exercisable stock options granted pursuant to the
Companys 1991 Officers Stock Option Plan, 1992 Employee Stock Option
Plan and 1996 Stock Option Plan, respectively.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Includes 147,501 shares issuable on the exercise of currently
exercisable stock options, and 25,000 shares issuable on the exercise
of a currently exercisable warrant.                                                                                   
|   
|   
|   
|   
|(3) |  | Represents 447,274, 197,926
and 694,330 shares available for
issuance under the Companys 1991 Officers Stock Option Plan, 1992
Employee Stock Option Plan and 1996 Stock Option Plan, respectively.                                                      




Item 12. Certain Relationships and Related Transactions

On June 26, 2001, the Company paid to a former director, as chairman of a
special committee formed for the purpose of evaluating a potential acquisition
(the Special Committee), a fee of $10,000 for his services on the Special
Committee, and a fee of $7,500 to each of Jeanne Hood and two former directors
of the Company for their services on the Special Committee. The Company also
granted to Jeanne Hood for her services on the Special Committee, a
non-qualified stock option to purchase 7,500 shares of the Companys common
stock, excluding non-qualified stock options granted to three former directors
of the Company for their services on the Special Committee to purchase an
aggregate of 60,000 shares, which options have lapsed as a result of their
resignations. The options are exercisable at an exercise price of $1.65 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.

Jeanne Hood, a director of the Company, also acted as a consultant to the
Company and received consulting fees from September 2000 through February 2001
aggregating $17,500.

Jay H. Brown, a beneficial owner of more than five percent of the
Companys common stock, received $92,833 in the fiscal year ended July 31, 2002
and $119,167 in the fiscal year ended July 31, 2001, in consideration for
consulting and legal services.

On April 1, 2002, the Company granted to each of Ronald J. Tassinari,
Audrey K. Tassinari and Roy K Keefer, an incentive stock option pursuant to the
Companys 1992 Employee Stock Option Plan to purchase 28,470, 10,726 and 9,269
shares, respectively of common stock of the Company at an exercise price of
$2.49 per share. The options became exercisable on the date of grant and
expire ten years from the date of grant. The options were granted as
compensation for increases in the cost of living not paid to such persons for
the calendar years ended December 31, 2000 and 2001 pursuant to an Employment
Agreement dated April 1, 2002, between the Company and each of the foregoing
named persons. See Item 10  Executive Compensation  Employment Agreements.
Based on the recommendation of the Compensation Committee, the
options granted to Ronald J. Tassinari, Audrey K. Tassinari and Roy
K. Keefer to purchase 28,470, 10,726 and 9,269, respectively, of the
Companys common stock have been cancelled, effective July 31, 2002,
pursuant to a letter agreement dated October 25, between the Company
and each of Mr. Tassinari, Ms. Tassinari and
Mr. Keefer.

The Company entered into substantially similar terms of
Settlement and General Release Agreements (the Settlement
Agreements), dated as of July 29, 2002, with
Audrey K. Tassinari and Roy K. Keefer, wherein Ms. Tassinari resigned as
Executive Vice President of the Company and Mr. Keefer resigned as Chief
Financial Officer of the Company, effective July 31, 2002. In return for their
resignations, the Company paid severance payments of $739,429 to Ms. Tassinari
and $537,576 to Mr. Keefer. In addition, Ms. Tassinari and Mr. Keefer received
payments totaling $18,471 and $13,484, respectively, for their respective
SAR/SEP accounts. See Item 10  Executive Compensation  Settlement
Agreements.

19



---



##### Table of Contents






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



|(a) |  | Exhibits
|--- |  | --------

| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
| |  |  | ----- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | 3.1   |  |  | Composite of
Articles of Incorporation.*                                                                                                                                                                                                                                                   
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 3.2   |  |  | Composite of By
Laws.*                                                                                                                                                                                                                                                                     
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 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.*                                                                                                                                         
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 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. (1)                                                                                                                                                                                                                              
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 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. (2)                                                                                                                                                                                          
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 10.9  |  |  | Settlement Agreement, dated February 1, 1996, between the Company and the
National Indian Gaming Commission. (3)                                                                                                                                                                           
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 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. (3)
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 10.11 |  |  | Consulting Agreement, dated February 1, 1996, between the Company and Table
Mountain Rancheria. (3)                                                                                                                                                                                        
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 10.12 |  |  | Amendment to Consulting Agreement, dated June 26, 1997, between the Company and
Table Mountain Rancheria. (4)                                                                                                                                                                              
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 10.13 |  |  | Joint Venture Agreement, dated as of February 1, 1996, between the Company and
the Table Mountain Rancheria. (5)                                                                                                                                                                           
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 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). (5)                                               

20



---



##### Table of Contents



| |  |  |       |  |  |                                                                                                                                                   
| |  |  | ----- |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|
| |  |  | 10.15 |  |  | Lease, dated March 14, 1996, between the Company and Tropicana Trail Limited
Partnership. (5)                                                     
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 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. (6)            
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.17 |  |  | Settlement Agreement, dated as of January 31, 2001, by and among the Company,
Placement 2000.com, Inc. and Michael Woloshin. (7)                  
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.18 |  |  | Agreement of Purchase and Sale of Property and Escrow Instructions, dated as of
May 21, 2001, by and between the Company and P.T. Corporation. (8)
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.19 |  |  | Employment Agreement, dated as of April 1, 2002, between American Vantage
Companies and Ronald J. Tassinari.*                                     
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.20 |  |  | Employment Agreement, dated as of April 1, 2002, between American Vantage
Companies and Audrey K. Tassinari.*                                     
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.21 |  |  | Employment Agreement, dated as of April 1, 2002, between American Vantage
Companies and Roy K. Keefer.*                                           
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.22 |  |  | Settlement and General Release Agreement, dated as of July 29, 2002, between Roy
K. Keefer and American Vantage Companies.*                       
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.23 |  |  | Settlement and General Release Agreement, dated as of July 29, 2002, between
Audrey K. Tassinari and American Vantage Companies.*                 
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.24 |  |  | Employment Letter Agreement dated September 27, 2002, between Ronald J.
Tassinari and American Vantage Companies.*                                
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.25 |  |  | Letter
agreement, dated July 31, 2002, between Ronald J. Tassinari and
American Vantage Companies *                                               
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.26 |  |  | Letter
agreement, dated July 31, 2002, between Audrey K. Tassinari and
American Vantage Companies *                                               
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.27 |  |  | Letter
agreement, dated July 31, 2002, between Roy K. Keefer and American
Vantage Companies *                                                     
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 16.1  |  |  | Letter of Bradshaw, Smith & Co., LLP regarding change in certifying accountant,
dated September 13, 2002 (9)                                      
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 21.1  |  |  | Subsidiaries of
the Registrant.*                                                                                                                  
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 23.1  |  |  | Consent of Piercy Bowler Taylor & Kern, Certified Public Accountants and
Business Advisors, a professional corporation.*                          
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 24.1  |  |  | Consent of Bradshaw, Smith & Co., LLP, public accountants. *                                                                                      
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 99.1  |  |  | Certification of Ronald J. Tassinari pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*   



---

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

21



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##### Table of Contents



|(1) |  | Incorporated by reference to the Companys Registration Statement on Form
S-8 (File No. 333-00905) declared effective on February 13, 1996.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1995.                                  
|   
|   
|   
|   
|(3) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on February 2, 1996.                                         
|   
|   
|   
|   
|(4) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on July 2, 1996.                                             
|   
|   
|   
|   
|(5) |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1996.                                  
|   
|   
|   
|   
|(6) |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1999.                                  
|   
|   
|   
|   
|(7) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on February 20, 2001.                                        
|   
|   
|   
|   
|(8) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on June 26, 2001.                                            
|   
|   
|   
|   
|(9) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on September 18, 2002.                                       



|(b) |  | Reports on Form 8-K.
|--- |  | --------------------

On July 16, 2002, the Registrant filed a current Report on Form 8-K under
Item 5, reporting on the status of the legal action against Table Mountain
Rancheria Band of Indians.

On August 28, 2002, the Registrant filed a current Report on Form 8-K
under Item 5, reporting on: 1) the formation of a special committee to seek
and evaluate acquisition opportunities; 2) the Companys corporate
restructuring which resulted in the severance of all executive and
administrative staff, with the exception of its Chief Executive Officer; and,
3) agreement by the former Chief Financial Officer to provide consulting
services for the Company in connection with the audit and preparation of its
Annual Report on Form 10-KSB with respect to the fiscal year ended July 31,
2002.

On September 18, 2002, the Registrant filed a current Report on Form 8-K
under Item 4 reporting on the Companys change in independent public
accountants.

22



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##### Table of Contents






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: October 25, 2002

| |  |                            |  |                               
| |  | -------------------------- |  | ------------------------------
| |  | AMERICAN VANTAGE COMPANIES
|
|
|
|
| |  |                            |  |                               
|
|
|
|
| |  | By:                        |  | /s/ Ronald J. Tassinari       
| |  |                            |  |                               
| |  |                            |  | Ronald J. Tassinari, President

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.

|                                             |  |                                                                                                   |  |                 
|-------------------------------------------- |  | ------------------------------------------------------------------------------------------------- |  | ----------------
|Signature                                    |  | Title                                                                                             |  | Date            
|                                             |  |                                                                                                   |  |                 
|/s/ Ronald J. Tassinari

Ronald J. Tassinari |  | President, Director and Acting Chief
Financial Officer (Principal Executive
& Accounting Officer) |  | October 25, 2002
|                                             |  |                                                                                                   |  |                 
|/s/ Audrey K. Tassinari

Audrey K. Tassinari |  | Director                                                                                          |  | October 25, 2002
|                                             |  |                                                                                                   |  |                 
|/s/ Jeanne Hood

Jeanne Hood                 |  | Director                                                                                          |  | October 25, 2002
|                                             |  |                                                                                                   |  |                 
|/s/ Steven G. Barringer

Steven G. Barringer |  | Director                                                                                          |  | October 25, 2002
|                                             |  |                                                                                                   |  |                 
|/s/ Stephen K. Bannon

Stephen K. Bannon     |  | Director                                                                                          |  | October 25, 2002

23



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##### Table of Contents






AMERICAN VANTAGE COMPANIES

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JULY 31, 2002 AND 2001





---



##### Table of Contents



INDEPENDENT AUDITORS REPORT

Board of Directors and Stockholders
American Vantage Companies

We have audited the accompanying consolidated balance sheets of American
Vantage Companies as of July 31, 2002, and the related consolidated statements
of operations, changes in stockholders equity and cash flows for the year then
ended. These consolidated 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 audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

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

/s/ PIERCY BOWLER TAYLOR & KERN
Certified Public Accountants and Business Advisors,
A Professional Corporation

October 25, 2002
Las Vegas, Nevada





---



##### Table of Contents



INDEPENDENT AUDITORS REPORT

Board of Directors
American Vantage Companies

We have audited the accompanying consolidated balance sheets of American
Vantage Companies as of July 31, 2001, and the related consolidated statements
of operations, changes in stockholders equity and cash flows for the year then
ended. These consolidated 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 audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of American Vantage
Companies as of July 31, 2001, and the results of its operations and cash flows
for the year then ended in conformity with accounting principles generally
accepted in the United States of America.

/s/ Bradshaw, Smith & Co., LLP

October 9, 2001
Las Vegas, Nevada





---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

CONSOLIDATED BALANCE SHEETS

JULY 31, 2002 AND 2001

|                                        |                                                                                               |                           |            |            |         |      |            |            |         | 
|--------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------- | ---------- | ---------- | ------- | ---- | ---------- | ---------- | ------- | 
|                                        |                                                                                               |                           |            | 2002       |         | 2001
|                                        |                                                                                               |                           |            |            |         |     
|ASSETS                                  |                                                                                               |                           |            |            |         |      |            |           
|                                       
|                                       
|                                       
|                                       
|Current assets:                         |                                                                                               |                           |            |            |         |      |            |           
|                                       
|                                       
|                                       
|                                       
|                                        | Cash and cash equivalents                                                                     |                           | $          | 1,560,000  |         |      | $          | 5,720,000  |        
|                                       
|                                       
|                                       
|                                       
|                                        | U.S. treasury securities and certificates of deposit                                          |                           |            | 7,785,000  |         |      |            | 5,845,000  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Refundable income taxes                                                                       |                           |            | 1,448,000  |         |      |            | 1,024,000  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Other                                                                                         |                           |            | 63,000     |         |      |            | 66,000     |        
|                                        |                                                                                               |                           |            |            |         |      |            |           
|                                        |                                                                                               |                           | 10,856,000 |            |         |      | 12,655,000 |           
|                                       
|                                       
|                                       
|                                       
|Land held for development or sale       |                                                                                               |                           | 3,544,000  |            |         |      | 3,544,000  |           
|                                       
|                                       
|                                       
|                                       
|Investment in unconsolidated restaurant |                                                                                               |                           | 1,615,000  |            |         |      | 1,861,000  |           
|                                       
|                                       
|                                       
|                                       
|Other assets                            |                                                                                               |                           | 9,000      |            |         |      | 140,000    |           
|                                        |                                                                                               |                           |            |            |         |      |            |           
|                                        |                                                                                               | $                         | 16,024,000 |            |         | $    | 18,200,000 |           
|                                        |                                                                                               |                           |            |            |         |      |            |           
|LIABILITIES AND STOCKHOLDERS EQUITY    |                                                                                               |                           |            |            |         |      |            |           
|                                       
|                                       
|                                       
|                                       
|Current liabilities:                    |                                                                                               |                           |            |            |         |      |            |           
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts payable                                                                              |                           | $          | 50,000     |         |      | $          | 153,000    |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued liabilities                                                                           |                           |            |           |         |      |            | 180,000    |        
|                                       
|                                       
|                                       
|                                       
|                                        | Deferred income tax                                                                           |                           |            | 139,000    |         |      |            |           |        
|                                        |                                                                                               |                           |            |            |         |      |            |           
|                                        |                                                                                               | Total current liabilities |            |            | 189,000 |      |            |            | 333,000 | 
|                                        |                                                                                               |                           |            |            |         |      |            |           
|Commitments and contingencies           |                                                                                               |                           |            |            |         |      |            |           
|                                       
|                                       
|                                       
|                                       
|Stockholders equity:                   |                                                                                               |                           |            |            |         |      |            |           
|                                       
|                                       
|                                       
|                                       
|                                        | Preferred stock, $.01 par; 10,000,000 shares authorized;
0 shares issued and outstanding      |                           |            |           |         |      |            |           |        
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock, $.01 par; 10,000,000 shares authorized;
4,865,856 shares issued and outstanding |                           |            | 49,000     |         |      |            | 49,000     |        
|                                       
|                                       
|                                       
|                                       
|                                        | Additional paid-in capital                                                                    |                           |            | 3,324,000  |         |      |            | 3,218,000  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Retained earnings                                                                             |                           |            | 12,462,000 |         |      |            | 14,600,000 |        
|                                        |                                                                                               |                           |            |            |         |      |            |           
|                                        |                                                                                               |                           | 15,835,000 |            |         |      | 17,867,000 |           
|                                        |                                                                                               |                           |            |            |         |      |            |           
|                                        |                                                                                               | $                         | 16,024,000 |            |         | $    | 18,200,000 |           
|                                        |                                                                                               |                           |            |            |         |      |            |           

See notes to consolidated finanical statements.

F3



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED JULY 31, 2002 AND 2001

|                                                          |                                                                       |                                                                                                                                                                             |           |           |           |      |           |           |           |  
|--------------------------------------------------------- | --------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | --------- | --------- | ---- | --------- | --------- | --------- | -
|                                                          |                                                                       |                                                                                                                                                                             |           | 2002      |           | 2001
|                                                          |                                                                       |                                                                                                                                                                             |           |           |           |     
|Costs and expenses                                        |                                                                       |                                                                                                                                                                             |           |           |           |      |           |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                       | General and administrative                                                                                                                                                  |           | $         | 2,610,000 |      |           | $         | 2,358,000 |  
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                       | Corporate restructuring                                                                                                                                                     |           |           | 1,539,000 |      |           |           |          |  
|                                                          |                                                                       |                                                                                                                                                                             |           |           |           |      |           |          
|                                                          |                                                                       |                                                                                                                                                                             | 4,149,000 |           |           |      | 2,358,000 |          
|                                                         
|                                                         
|                                                         
|                                                         
|Non-operating income                                      |                                                                       |                                                                                                                                                                             |           |           |           |      |           |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                       | Income from unconsolidated investee                                                                                                                                         |           |           | 404,000   |      |           |           | 523,000   |  
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                       | Interest                                                                                                                                                                    |           |           | 255,000   |      |           |           | 616,000   |  
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                       | Gain on sale of land held for sale                                                                                                                                          |           |           |          |      |           |           | 897,000   |  
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                       | Miscellaneous                                                                                                                                                               |           |           | 10,000    |      |           |           |          |  
|                                                          |                                                                       |                                                                                                                                                                             |           |           |           |      |           |          
|Loss from continuing operations before income tax benefit |                                                                       |                                                                                                                                                                             | 3,480,000 |           |           |      | 322,000   |          
|                                                         
|                                                         
|                                                         
|                                                         
|Income tax benefit                                        |                                                                       |                                                                                                                                                                             | 1,308,000 |           |           |      | 2,000     |          
|                                                          |                                                                       |                                                                                                                                                                             |           |           |           |      |           |          
|Loss from continuing operations                           |                                                                       |                                                                                                                                                                             | 2,172,000 |           |           |      | 320,000   |          
|                                                          |                                                                       |                                                                                                                                                                             |           |           |           |      |           |          
|Discontinued operations                                   |                                                                       |                                                                                                                                                                             |           |           |           |      |           |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                       | (Income) loss from discontinued restaurant operations, net of
income tax benefit totaling $18,000 and $35,000, respectively                                                 |           |           | (34,000   | )    |           |           | 69,000    |  
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                       | Loss from discontinued recruitment operations, net of
minority interest totaling $88,000, write-off of goodwill
totaling $250,000 and income tax benefits totaling $187,000 |           |           |          |      |           |           | 362,000   |  
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                       | Loss on disposal of discontinued recruitment operation,
net of income tax benefit totaling $132,000                                                                         |           |           |          |      |           |           | 256,000   |  
|                                                          |                                                                       |                                                                                                                                                                             |           |           |           |      |           |          
|                                                          |                                                                       |                                                                                                                                                                             | (34,000   | )         |           |      | 687,000   |          
|                                                          |                                                                       |                                                                                                                                                                             |           |           |           |      |           |          
|Net loss                                                  |                                                                       | $                                                                                                                                                                           | 2,138,000 |           |           | $    | 1,007,000 |          
|                                                          |                                                                       |                                                                                                                                                                             |           |           |           |      |           |          
|Income (loss) per common share  basic and diluted        |                                                                       |                                                                                                                                                                             |           |           |           |      |           |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                       | Continuing operations                                                                                                                                                       |           | $         | (0.45     | )    |           | $         | (0.07     | )
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                       | Discontinued operations                                                                                                                                                     |           |           | 0.01      |      |           |           | (0.14     | )
|                                                          |                                                                       |                                                                                                                                                                             |           |           |           |      |           |          
|                                                          |                                                                       | Net loss                                                                                                                                                                    |           | $         | (0.44     | )    |           | $         | (0.21     | )
|                                                          |                                                                       |                                                                                                                                                                             |           |           |           |      |           |          
|                                                          | Weighted average number of common shares and
common share equivalents |                                                                                                                                                                             |           | 4,866,000 |           |      |           | 4,866,000 |          
|                                                          |                                                                       |                                                                                                                                                                             |           |           |           |      |           |          

See notes to consolidated finanical statements.

F4



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

YEARS ENDED JULY 31, 2002 AND 2001

|                                            |  |              |           |           |  |         |        |          |  |            |           |          |  |   |            |  
|------------------------------------------- |  | ------------ | --------- | --------- |  | ------- | ------ | -------- |  | ---------- | --------- | -------- |  | - | ---------- | -
|                                            |  | Common stock |           |           |  |         |        |          |  |           
|                                            |  |              |           |           |  |         |        |          |  |           
|                                            |  |              |           |           |  |         |        |          |  | Additional |           |          |  |  
|                                            |  |              |           |           |  |         |        |          |  | Paid-in    |           | Retained
|                                            |  | Shares       |           | Par Value |  | Capital |        | Earnings
|                                            |  |              |           |           |  |         |        |         
|Balance, July 31, 2000                      |  |              | 4,858,256 |           |  | $       | 49,000 |          |  | $          | 3,219,000 |          |  | $ | 15,607,000 |  
|                                           
|                                           
|                                           
|                                           
|Common stock shares issued                  |  |              | 22,333    |           |  |         |       |          |  |            | 25,000    |          |  |   |           |  
|                                           
|                                           
|                                           
|                                           
|Common stock shares repurchased and retired |  |              | (14,733   | )         |  |         |       |          |  |            | (26,000   | )        |  |   |           |  
|                                           
|                                           
|                                           
|                                           
|Net loss                                    |  |              |          |           |  |         |       |          |  |            |          |          |  |   | (1,007,000 | )
|                                            |  |              |           |           |  |         |        |          |  |            |           |          |  |   |            |  
|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 |  
|                                            |  |              |           |           |  |         |        |          |  |            |           |          |  |   |            |  

See notes to consolidated finanical statements.

F5



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##### Table of Contents



AMERICAN VANTAGE COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED JULY 31, 2002 AND 2001

|                                                |                                                             |   |            |            |      |   |            |            |  
|----------------------------------------------- | ----------------------------------------------------------- | - | ---------- | ---------- | ---- | - | ---------- | ---------- | -
|                                                |                                                             |   | 2002       |            | 2001
|                                                |                                                             |   |            |            |     
|Operating activities                            |                                                             |   |            |            |      |   |            |           
|                                               
|                                               
|                                               
|                                               
|                                                | Net cash used in continuing operating activities            |   | $          | (2,875,000 | )    |   | $          | (1,072,000 | )
|                                               
|                                               
|                                               
|                                               
|                                                | Net cash provided by discontinued operations                |   |            |           |      |   |            | 829,000    |  
|                                                |                                                             |   |            |            |      |   |            |           
|                                                |                                                             |   | (2,875,000 | )          |      |   | (243,000   | )         
|                                                |                                                             |   |            |            |      |   |            |           
|Investing activities                            |                                                             |   |            |            |      |   |            |           
|                                               
|                                               
|                                               
|                                               
|                                                | Purchase of furniture and equipment                         |   |            | (1,000     | )    |   |            |           |  
|                                               
|                                               
|                                               
|                                               
|                                                | Proceeds from sale of furniture and equipment               |   |            | 6,000      |      |   |            |           |  
|                                               
|                                               
|                                               
|                                               
|                                                | Restricted cash transferred to unrestricted                 |   |            |           |      |   |            | 530,000    |  
|                                               
|                                               
|                                               
|                                               
|                                                | Proceeds from sale of land                                  |   |            |           |      |   |            | 2,246,000  |  
|                                               
|                                               
|                                               
|                                               
|                                                | Proceeds from mortgage note receivable                      |   |            |           |      |   |            | 1,300,000  |  
|                                               
|                                               
|                                               
|                                               
|                                                | Purchase U.S. treasury bills and certificates of deposit    |   |            | (1,940,000 | )    |   |            | (5,845,000 | )
|                                               
|                                               
|                                               
|                                               
|                                                | Cash distribution from unconsolidated restaurant subsidiary |   |            | 650,000    |      |   |            | 700,000    |  
|                                                |                                                             |   |            |            |      |   |            |           
|                                                | Net cash used in investing activities                       |   |            | (1,285,000 | )    |   |            | (1,069,000 | )
|                                                |                                                             |   |            |            |      |   |            |           
|Financing activities                            |                                                             |   |            |            |      |   |            |           
|                                               
|                                               
|                                               
|                                               
|                                                | Repurchase of common stock                                  |   |            |           |      |   |            | (26,000    | )
|                                               
|                                               
|                                               
|                                               
|                                                | Proceeds from issuance of common stock                      |   |            |           |      |   |            | 25,000     |  
|                                                |                                                             |   |            |            |      |   |            |           
|                                                | Net cash used in financing activities                       |   |            |           |      |   |            | (1,000     | )
|                                                |                                                             |   |            |            |      |   |            |           
|Net decrease in cash and cash equivalents       |                                                             |   | (4,160,000 | )          |      |   | (1,313,000 | )         
|                                               
|                                               
|                                               
|                                               
|Cash and cash equivalents, at beginning of year |                                                             |   | 5,720,000  |            |      |   | 7,033,000  |           
|                                                |                                                             |   |            |            |      |   |            |           
|Cash and cash equivalents, at end of year       |                                                             | $ | 1,560,000  |            |      | $ | 5,720,000  |           
|                                                |                                                             |   |            |            |      |   |            |           

See notes to consolidated finanical statements.

F6



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##### Table of Contents






AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JULY 31, 2002 AND 2001

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

Nature of business.American Vantage Companies and its wholly-owned
subsidiaries (collectively, the Company) are substantially inactive. The
Company is currently reviewing 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.

Until May 1999, the Company had been engaged in providing gaming consulting
services to a tribal gaming enterprise when its contract was prematurely
terminated (Note 8  Litigation). During Fiscal year 2001, the Company also
disposed of its majority interest in an internet placement services company and
discontinued operation of its majority-owned restaurant venture.

The Company, through a wholly-owned subsidiary, also has a minority interest in
an unconsolidated investee (the 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 Investee and its
operations.

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.
The Company excludes the accounts of its Investee and instead records its
investment using the equity method of accounting (based on its equity in the
Investees net assets, which is 49%) subject to certain contractual adjustments
until the Investee attains sustained profitability. The effect of the
adjustments is that the Company has recognized 100% of the initial losses from
the Investees operations and subsequent income and will continue to do so
until the initial losses have been offset.

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 a valuation allowance for deferred
tax assets that can be subject to material revision 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 and certificates of deposit.U.S. treasury securities
at July 31, 2002 and certificates of deposit at July 31, 2001 have an original
maturity of six months and are classified as held-to-maturity.

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. The Company may
sell, develop or enter into a joint venture agreement related to the 40-acre
parcel of land.

F7



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##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JULY 31, 2002 AND 2001

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 452,000 and 25,000 shares of
common stock in 2002 and 944,000 and 0 in 2001 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.

Stock-based compensation.The Company accounts for stock-based employee
compensation (Note 4  Stockholders equity) using the intrinsic value method
in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees.

Reclassifications.Certain amounts as previously reported have been
reclassified to conform with the current presentation.

Note 2  Investment in unconsolidated restaurant

The following summarizes the condensed balance sheet and statement of income
for the Investee at July 31, 2002 and for the year then ended:

|                       |  |   |           | 
|---------------------- |  | - | --------- | 
|Assets                 |  | $ | 1,994,000 | 
|                      
|                      
|                      
|                      
|Liabilities            |  |   | 387,000   | 
|                       |  |   |           | 
|Members capital       |  | $ | 1,607,000 | 
|                       |  |   |           | 
|Revenues               |  | $ | 4,640,000 | 
|                      
|                      
|                      
|                      
|Expenses               |  |   | 4,236,000 | 
|                       |  |   |           | 
|Income from operations |  | $ | 404,000   | 
|                       |  |   |           | 

Note 3  Related party transactions

In 1999, the Company acquired an 80% interest in an internet placement services
provider. In Fiscal 2001, the Company sold / transferred its interest back to
the prior owner (then a key employee of the Companys majority-owned
subsidiary) and exchanged general releases and indemnifications. The
transaction resulted in the write-off during 2001 of $250,000 of goodwill
associated with the acquisition of the Companys interest.

In consideration for legal and consulting services, the Company paid a minority
shareholder approximately $93,000 and $119,000 during Fiscal 2002 and 2001.

F8



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##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JULY 31, 2002 AND 2001

Note 4  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. However, the Board of Directors of
the Company has no present intention to issue any such shares.

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 2002 and 14,733 shares ($26,000)
in 2001 and has purchased a total of 387,027 shares ($415,000) through July 31,
2002.

Stock options.Under three separate stock option plans adopted for directors,
officers, and employees, 2,166,668 common shares were reserved for issuance,
500,000 shares to officers of the Company, 833,334 shares to key employees,
including officers, and 833,334 shares to employees, officers and directors of
the Company and others who are involved in the continuing development and
success of the Company or its subsidiaries. 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
three plans:

|                                                                             |                            |         |          |         |               |         |                      |      |  |  |     |          |   |   |              |      |  |  |            |         |   |   |              |      | 
|---------------------------------------------------------------------------- | -------------------------- | ------- | -------- | ------- | ------------- | ------- | -------------------- | ---- |  |  | --- | -------- | - | - | ------------ | ---- |  |  | ---------- | ------- | - | - | ------------ | ---- | 
|                                                                             |                            |         |          |         |               |         |                      |      |  |  |     |          |   |   |              |      |  |  | Employees,
|                                                                             |                            |         | Officers |         | Key Employees |         | Officers / Directors
|                                                                             |                            |         |          |         |               |         |                     
|Common shares reserved for issuance                                          |                            | 500,000 |          | 833,334 |               | 833,334
|                                                                             |                            |         |          |         |               |         |                     
|Shares / weighted average exercise price                                     |                            |         |          |         |               |         |                      |      |  |  |     |          |   |   |              |      |  |  |            |         |   |   |              |     
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             | Outstanding, July 31, 2000 |         |          | 93,756  |               |         | $                    | 1.95 |  |  |     | 712,913  |   |   | $            | 2.55 |  |  |            | 139,004 |   |   | $            | 3.12 | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             | Granted                    |         |          |        |               |         |                      |     |  |  |     | 8,333    |   |   |              | 1.63 |  |  |            |        |   |   |              |     | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             | Exercised                  |         |          |        |               |         |                      |     |  |  |     |          |   |   |              |      |  |  |            | (22,333 | ) |   |              | 1.13 | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             | Canceled / expired         |         |          | (41,030 | )             |         |                      | 2.07 |  |  |     | (134,303 | ) |   |              | 2.07 |  |  |            |        |   |   |              |     | 
|                                                                             |                            |         |          |         |               |         |                      |      |  |  |     |          |   |   |              |      |  |  |            |         |   |   |              |      | 
|                                                                             | Outstanding, July 31, 2001 |         |          | 52,726  |               |         |                      | 1.86 |  |  |     | 586,943  |   |   |              | 2.65 |  |  |            | 116,671 |   |   |              | 3.51 | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             | Granted                    |         |          |        |               |         |                      |     |  |  |     |         |   |   |              |     |  |  |            |        |   |   |              |     | 
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|                                                                             | Canceled / expired         |         |          | (41,030 | )             |         |                      | 2.07 |  |  |     | (410,971 | ) |   |              | 3.06 |  |  |            |        |   |   |              |     | 
|                                                                             |                            |         |          |         |               |         |                      |      |  |  |     |          |   |   |              |      |  |  |            |         |   |   |              |      | 
|                                                                             | Outstanding, July 31, 2002 |         |          | 11,696  |               |         | $                    | 1.13 |  |  |     | 175,972  |   |   | $            | 1.48 |  |  |            | 116,671 |   |   | $            | 3.51 | 
|                                                                             |                            |         |          |         |               |         |                      |      |  |  |     |          |   |   |              |      |  |  |            |         |   |   |              |      | 
|Weighted average remaining
contractual life (years)/range of
exercise prices |                            |         | 7.5      |         |               | $       | 1.13                 |      |  |  | 6.1 |          |   | $ | 1.13 - $2.07 |      |  |  | 2.9        |         |   | $ | 3.48 - $3.57 |     
|                                                                             |                            |         |          |         |               |         |                      |      |  |  |     |          |   |   |              |      |  |  |            |         |   |   |              |      | 

F9



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##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JULY 31, 2002 AND 2001

Other options were granted to members of the Board of Directors and to legal
counsel for services at the market value of the Companys common stock at the
date of grant and are summarized as follows:

|                                                    |                  |   |              |          |                |   |                  |      | 
|--------------------------------------------------- | ---------------- | - | ------------ | -------- | -------------- | - | ---------------- | ---- | 
|                                                    |                  |   |              |          |                |   | Weighted Average
|                                                    |                  |   | Shares       |          | Exercise Price
|                                                    |                  |   |              |          |               
|Balance, July 31, 2000                              |                  |   | 829,076      |          |                | $ | 1.77             |     
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Granted          |   |              | 32,500   |                |   |                  | 1.65 | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Canceled/expired |   |              | (674,075 | )              |   |                  | 1.81 | 
|                                                    |                  |   |              |          |                |   |                  |     
|Balance, July 31, 2001                              |                  |   | 187,501      |          |                |   | 1.54             |     
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Granted          |   |              | 65,000   |                |   |                  | 1.53 | 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Canceled/expired |   |              | (105,000 | )              |   |                  | 1.26 | 
|                                                    |                  |   |              |          |                |   |                  |     
|Balance, July 31, 2002                              |                  |   | 147,501      |          |                | $ | 1.85             |     
|                                                    |                  |   |              |          |                |   |                  |     
|Weighted average remaining contractual life (years) |                  |   | 8.3          |          |                |   |                  |     
|                                                    |                  |   |              |          |                |   |                  |     
|Range of exercise prices                            |                  | $ | 1.13 - $3.57 |          |                |   |                  |     
|                                                    |                  |   |              |          |                |   |                  |     

In addition, on July 12, 2002, the Company agreed to compensate with common
stock options a director of the Company and the Companys corporate legal
counsel who participate in a special advisory group to identify, review and
perform initial due diligence services of consummated mergers and acquisitions
that occur during the term of the group. The contingent commitment provides
for the purchase of 175,000 (the director) and 87,500 (corporate legal counsel)
common shares of the Company, with a ten year exercise term and a exercise
price equal to the closing price of the common stock on July 12, 2002.

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, 2002 and 2001 would have been as follows:

|                                                 |  |      |           |      |  |   |           | 
|------------------------------------------------ |  | ---- | --------- | ---- |  | - | --------- | 
|                                                 |  | 2002 |           | 2001
|                                                 |  |      |           |     
|Pro forma net loss                               |  | $    | 2,138,000 |      |  | $ | 1,066,000 | 
|                                                
|                                                
|                                                
|                                                
|Pro forma net loss per share  basic and diluted |  | $    | 0.44      |      |  | $ | 0.22      | 

The weighted-average grant-date fair value of the options and warrants granted
was $1.57 and $1.47 per option for 2002 and 2001, respectively.

Warrants.In 2002, the Company granted to an investment banking firm a warrant
to purchase 25,000 shares of the Companys 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:

F10



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##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JULY 31, 2002 AND 2001

|                                |  |              |   |              |  |  |   | 
|------------------------------- |  | ------------ | - | ------------ |  |  | - | 
|                                |  | 2002         |   | 2001        
|                                |  |              |   |             
|Expected stock price volatility |  | 131% to 132% |   | 265% to 308%
|                               
|                               
|                               
|                               
|Expected option lives (years)   |  |              | 3 |              |  |  | 5 | 
|                               
|                               
|                               
|                               
|Expected dividend yield         |  |              | 0 |              |  |  | 0 | 
|                               
|                               
|                               
|                               
|Risk-free interest rates        |  | 3.9% to 4.0% |   | 5.0% to 5.8%

Note 5  Income taxes

Income tax benefit (expense) is comprised as follows:

|         |  |      |           |      |  |   |          |  
|-------- |  | ---- | --------- | ---- |  | - | -------- | -
|         |  | 2002 |           | 2001
|         |  |      |           |     
|Current  |  | $    | 1,447,000 |      |  | $ | 735,000  |  
|        
|        
|        
|        
|Deferred |  |      | (139,000  | )    |  |   | (733,000 | )
|         |  |      |           |      |  |   |          |  
|         |  | $    | 1,308,000 |      |  | $ | 2,000    |  
|         |  |      |           |      |  |   |          |  

The income tax benefit (expense) for the years ending 2002 and 2001 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:

|                           |  |      |           |   |  |      |    |   |  |   |          |   |  |  |     |  
|-------------------------- |  | ---- | --------- | - |  | ---- | -- | - |  | - | -------- | - |  |  | --- | -
|                           |  | 2002 |           | % |  | 2001 |    | %
|                           |  |      |           | - |  |      |    | -
|Statutory federal tax rate |  | $    | 1,183,000 |   |  |      | 34 |   |  | $ | 109,000  |   |  |  | 34  |  
|                          
|                          
|                          
|                          
|Stock options and warrants |  |      | (36,000   | ) |  |      | (1 | ) |  |   |         |   |  |  |    |  
|                          
|                          
|                          
|                          
|Employment tax credits     |  |      | 37,000    |   |  |      | 1  |   |  |   |         |   |  |  |     |  
|                          
|                          
|                          
|                          
|Valuation allowances       |  |      | 114,000   |   |  |      | 3  |   |  |   | (114,000 | ) |  |  | (35 | )
|                          
|                          
|                          
|                          
|Other                      |  |      | 10,000    |   |  |      | 1  |   |  |   | 7,000    |   |  |  | 2   |  
|                           |  |      |           |   |  |      |    |   |  |   |          |   |  |  |     |  
|Effective tax benefit      |  | $    | 1,308,000 |   |  |      | 38 |   |  | $ | 2,000    |   |  |  | 1   |  
|                           |  |      |           |   |  |      |    |   |  |   |          |   |  |  |     |  

The components of deferred tax assets and liabilities at July 31, 2002 and 2001
are comprised of:

|                                   |                                           |   |          |          |      |   |   |          |  
|---------------------------------- | ----------------------------------------- | - | -------- | -------- | ---- | - | - | -------- | -
|                                   |                                           |   | 2002     |          | 2001
|                                   |                                           |   |          |          |     
|Deferred tax assets (liabilities): |                                           |   |          |          |      |   |   |         
|                                  
|                                  
|                                  
|                                  
|                                   | Operations of unconsolidated investee     |   | $        | (222,000 | )    |   | $ | (23,000  | )
|                                  
|                                  
|                                  
|                                  
|                                   | Tax attributes of unconsolidated investee |   |          | 71,000   |      |   |   |          |  
|                                  
|                                  
|                                  
|                                  
|                                   | Vacation payable                          |   |          |         |      |   |   | (35,000  | )
|                                  
|                                  
|                                  
|                                  
|                                   | Discontinued operations                   |   |          | 12,000   |      |   |   | 172,000  |  
|                                  
|                                  
|                                  
|                                  
|                                   | Valuation allowance                       |   |          |         |      |   |   | (114,000 | )
|                                   |                                           |   |          |          |      |   |   |         
|Total deferred tax liabilities     |                                           | $ | (139,000 | )        |      | $ |  |         
|                                   |                                           |   |          |          |      |   |   |         

F11



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##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JULY 31, 2002 AND 2001

Note 6  Commitments and contingencies

Office space.During 2002, the Company terminated its month-to-month lease for
its corporate office. Upon termination, the Company moved into approximately
1,000 square feet of office space which it shares with a law firm. Currently,
the Company does not pay a monthly rent on the shared space nor is there an
agreement between the parties for any future monthly rental. The fair value of
the Companys current arrangement is not material. However, as business
circumstances change, the Company may be required to make other arrangements.

Rental expense totaled $93,000 and $120,000 for the years ended July 31, 2002
and 2001, respectively.

Concentrations of credit risk.The Companys cash and cash equivalents are on
deposit with two financial institutions which are FDIC insured on amounts up to
$100,000. In aggregate, such insured limits are exceeded by approximately
$1,400,000 at July 31, 2002.

Note 7  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 $207,000 and $93,000 for the years ended July
31, 2002 and 2001, respectively.

Note 8  Litigation

In connection with the prematurely termination of the Companys contracts to
provide consulting services to an Indian gaming enterprise, the Company brought
a civil action against 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 won its appeal reversing a California Superior
Court order dismissing the case for lack of jurisdiction. Provided that the
decision becomes final without material change, the Company will be able to
pursue its claim against the Tribe in California Superior Court. A
counterclaim by the Tribe that was previously dismissed may be asserted. The
counterclaim asserted that the contracts were invalid and sought restitution of
fees paid relating to the contract.

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.

F12



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##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JULY 31, 2002 AND 2001

Note 9  Supplemental cash flow information

|                                                                                  |                                                             |   |                         |            |      |          |          |            |   |          |  
|--------------------------------------------------------------------------------- | ----------------------------------------------------------- | - | ----------------------- | ---------- | ---- | -------- | -------- | ---------- | - | -------- | -
|                                                                                  |                                                             |   |                         |            | 2002 |          | 2001    
|                                                                                  |                                                             |   |                         |            |      |          |         
|Reconciliation of net loss to net cash provided by (used in)
operating activities |                                                             |   |                         |            |      |          |          |           
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Net loss                                                    |   | $                       | (2,138,000 | )    |          | $        | (1,007,000 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Gain on sale of land held for resale                        |   |                         |           |      |          |          | (897,000   | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Income from unconsolidated restaurant investee              |   |                         | (404,000   | )    |          |          | (523,000   | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Amortization and depreciation                               |   |                         | 23,000     |      |          |          | 26,000     |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Loss on disposal of property and equipment, net             |   |                         | 95,000     |      |          |          |           |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Expenses paid with stock options and warrants **            |   |                         | 106,000    |      |          |          |           |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Deferred income tax benefit                                 |   |                         | 139,000    |      |          |          | 733,000    |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Change in operating assets and liabilities:                 |   |                         |            |      |          |          |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                             |   | Refundable income taxes |            |      | (424,000 | )        |            |   | 684,000  |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                             |   | Other current assets    |            |      | 3,000    |          |            |   | 184,000  |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                             |   | Other assets            |            |      | 8,000    |          |            |   | (10,000  | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                             |   | Accounts payable        |            |      | (103,000 | )        |            |   | (143,000 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                             |   | Accrued liabilities     |            |      | (180,000 | )        |            |   | (119,000 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Change in net assets of discontinued restaurant operation:  |   |                         |            |      |          |          |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                             |   | Accounts receivable     |            |      |         |          |            |   | 13,000   |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                             |   | Inventory               |            |      |         |          |            |   | 77,000   |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                             |   | Prepaid expenses        |            |      |         |          |            |   | 8,000    |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                             |   | Equipment               |            |      |         |          |            |   | 134,000  |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Change in net assets of discontinued recruitment operation: |   |                         |            |      |          |          |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                             |   | Cash                    |            |      |         |          |            |   | 274,000  |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                             |   | Goodwill                |            |      |         |          |            |   | 250,000  |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                             |   | Accounts receivable     |            |      |         |          |            |   | 280,000  |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                             |   | Prepaid expenses        |            |      |         |          |            |   | 15,000   |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                             |   | Equipment               |            |      |         |          |            |   | 93,000   |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                                             |   | Accounts payable        |            |      |         |          |            |   | (315,000 | )
|                                                                                  |                                                             |   |                         |            |      |          |          |           
|                                                                                  |                                                             | $ | (2,875,000              | )          |      | $        | (243,000 | )         
|                                                                                  |                                                             |   |                         |            |      |          |          |           



---

|** |  | Denotes significant non-cash financing activity
|-- |  | -----------------------------------------------

F13



---



##### Table of Contents



CERTIFICATION

I, Ronald J. Tassinari, Chief
Executive Officer and Acting Chief Financial Officer of American
Vantage Companies, certify that:



| |                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     I have reviewed
    this Annual Report on Form 10-KSB of American Vantage Companies;                                                                                                                                                                                                                                    
|
| | 2.     Based
on my knowledge, this Annual Report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this Annual Report;
|
| | 3.     Based
on my knowledge, the financial statements, and other financial
information included in this Annual Report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this Annual Report;                   
|
| | 4.     I
am responsible for establishing and maintaining disclosure controls
and procedures (as such term is defined in paragraph (c) of this
section) for the registrant and have:                                                                                                                                            



| |                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | i.     Designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to them by others within those entities, particularly during
    the period in which the periodic reports are being prepared;
|
| | ii.    Evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    Annual Report (Evaluation Date); and                                                                                                               
|
| | iii.   Presented
in this Annual Report my conclusions about the effectiveness of the
disclosure controls and procedures based on my evaluation as of the Evaluation Date;                                                                                                                                               
|



| |                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.     I
have disclosed, based on my most recent evaluation, to the
registrants auditors and the audit committee of the board of
directors (or persons fulfilling the equivalent function):



| |                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | i.     All significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | ii.    Any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6.     I
have indicated in this Annual Report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date
of my most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.



|                        |                                                                                
|----------------------- | -------------------------------------------------------------------------------
|                       
|Dated: October 25, 2002 |                                                                                
|                       
|                        | /s/  Ronald J. Tassinari                                                       
|                        | Ronald J. Tassinari,
Chief Executive Officer and
Acting Chief Financial Officer





---



##### Table of Contents






EXHIBIT INDEX

| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
| |  |  | ----- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | 3.1   |  |  | Composite of
Articles of Incorporation.*                                                                                                                                                                                                                                                   
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 3.2   |  |  | Composite of By
Laws.*                                                                                                                                                                                                                                                                     
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 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.*                                                                                                                                         
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 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. (1)                                                                                                                                                                                                                              
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 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. (2)                                                                                                                                                                                          
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 10.9  |  |  | Settlement Agreement, dated February 1, 1996, between the Company and the
National Indian Gaming Commission. (3)                                                                                                                                                                           
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 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. (3)
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 10.11 |  |  | Consulting Agreement, dated February 1, 1996, between the Company and Table
Mountain Rancheria. (3)                                                                                                                                                                                        
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 10.12 |  |  | Amendment to Consulting Agreement, dated June 26, 1997, between the Company and
Table Mountain Rancheria. (4)                                                                                                                                                                              
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 10.13 |  |  | Joint Venture Agreement, dated as of February 1, 1996, between the Company and
the Table Mountain Rancheria. (5)                                                                                                                                                                           
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                                                                                                                                                            
|
|
|
|
| |  |  | 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). (5)                                               





---



##### Table of Contents



| |  |  |       |  |  |                                                                                                                                                   
| |  |  | ----- |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|
| |  |  | 10.15 |  |  | Lease, dated March 14, 1996, between the Company and Tropicana Trail Limited
Partnership. (5)                                                     
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 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. (6)            
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.17 |  |  | Settlement Agreement, dated as of January 31, 2001, by and among the Company,
Placement 2000.com, Inc. and Michael Woloshin. (7)                  
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.18 |  |  | Agreement of Purchase and Sale of Property and Escrow Instructions, dated as of
May 21, 2001, by and between the Company and P.T. Corporation. (8)
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.19 |  |  | Employment Agreement, dated as of April 1, 2002, between American Vantage
Companies and Ronald J. Tassinari.*                                     
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.20 |  |  | Employment Agreement, dated as of April 1, 2002, between American Vantage
Companies and Audrey K. Tassinari.*                                     
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.21 |  |  | Employment Agreement, dated as of April 1, 2002, between American Vantage
Companies and Roy K. Keefer.*                                           
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.22 |  |  | Settlement and General Release Agreement, dated as of July 29, 2002, between Roy
K. Keefer and American Vantage Companies.*                       
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.23 |  |  | Settlement and General Release Agreement, dated as of July 29, 2002, between
Audrey K. Tassinari and American Vantage Companies.*                 
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.24 |  |  | Employment Letter Agreement dated September 27, 2002, between Ronald J.
Tassinari and American Vantage Companies.*                                
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.25 |  |  | Letter
agreement, dated July 31, 2002, between Ronald J. Tassinari and
American Vantage Companies *                                               
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.26 |  |  | Letter
agreement, dated July 31, 2002, between Audrey K. Tassinari and
American Vantage Companies *                                               
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 10.27 |  |  | Letter
agreement, dated July 31, 2002, between Roy K. Keefer and American
Vantage Companies *                                                     
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 16.1  |  |  | Letter of Bradshaw, Smith & Co., LLP regarding change in certifying accountant,
dated September 13, 2002 (9)                                      
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 21.1  |  |  | Subsidiaries of
the Registrant.*                                                                                                                  
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 23.1  |  |  | Consent of Piercy Bowler Taylor & Kern, Certified Public Accountants and
Business Advisors, a professional corporation.*                          
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 24.1  |  |  | Consent of Bradshaw, Smith & Co., LLP, public accountants. *                                                                                      
|
|
|
|
| |  |  |       |  |  |                                                                                                                                                   
|
|
|
|
| |  |  | 99.1  |  |  | Certification of Ronald J. Tassinari pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*   



---

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





---



##### Table of Contents



|(1) |  | Incorporated by reference to the Companys Registration Statement on Form
S-8 (File No. 333-00905) declared effective on February 13, 1996.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1995.                                  
|   
|   
|   
|   
|(3) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on February 2, 1996.                                         
|   
|   
|   
|   
|(4) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on July 2, 1996.                                             
|   
|   
|   
|   
|(5) |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1996.                                  
|   
|   
|   
|   
|(6) |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1999.                                  
|   
|   
|   
|   
|(7) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on February 20, 2001.                                        
|   
|   
|   
|   
|(8) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on June 26, 2001.                                            
|   
|   
|   
|   
|(9) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on September 18, 2002.                                       



|(b) |  | Reports on Form 8-K.
|--- |  | --------------------

On July 16, 2002, the Registrant filed a current Report on Form 8-K under
Item 5, reporting on the status of the legal action against Table Mountain
Rancheria Band of Indians.

On August 28, 2002, the Registrant filed a current Report on Form 8-K
under Item 5, reporting on: 1) the formation of a special committee to seek
and evaluate acquisition opportunities; 2) the Companys corporate
restructuring which resulted in the severance of all executive and
administrative staff, with the exception of its Chief Executive Officer; and,
3) agreement by the former Chief Financial Officer to provide consulting
services for the Company in connection with the audit and preparation of its
Annual Report on Form 10-KSB with respect to the fiscal year ended July 31,
2002.

On September 18, 2002, the Registrant filed a current Report on Form 8-K
under Item 4 reporting on the Companys change in independent public
accountants.

22