##### Table of Contents



---

---

UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, 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, 2001

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

For the transition period from      to

Commission File Number 0-10061



---



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

|                                         |  |                    
|---------------------------------------- |  | -------------------
|Nevada                                   |  | 04-2709807         
|                                        
|                                        
|                                        
|                                        
|(State or other jurisdiction             |  | (I.R.S. Employer   
|                                        
|                                        
|                                        
|                                        
|of incorporation or organization)        |  | Identification No.)
|                                        
|                                        
|                                        
|                                        
|                                         |  |                    
|                                        
|                                        
|                                        
|                                        
|6787 West Tropicana, Suite 200,          |  | 89103              
|                                        
|                                        
|                                        
|                                        
|Las Vegas, Nevada                        |  | (zip code)         
|                                        
|                                        
|                                        
|                                        
|(Address of principal executive offices) | 

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.

checkbox YES   box NO

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is 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. box

State issuers revenues for its most recent fiscal year. $0

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 $1.45 for the Companys Common Stock, as reported by NASDAQ on October
24, 2001 was approximately $6,377,380 (assuming for purposes of such calculation
that all officers and directors of the Issuer are affiliates).

The number of shares outstanding of the Issuers Common Stock at October
24, 2001 was 4,865,856.

Transitional Small Business Disclosure Format (check one):YES box   NO
checkbox



---

---





---

TABLE OF CONTENTS



|                                                                                                              |                                                                                                                          |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------ |  |  |  |  |  |  | 
|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                                                                                         
|OPTION GRANTS IN LAST FISCAL YEAR [Individual Grants]                                                        
|AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES TABLE                      
|                                                                                                              | 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                                                                                                   
|AMERICAN VANTAGE COMPANIES YEARS ENDED JULY 31, 2001 AND 2000                                                
|CONTENTS                                                                                                     
|INDEPENDENT AUDITORS REPORT                                                                                 
|AMERICAN VANTAGE COMPANIES CONSOLIDATED BALANCE SHEETS JULY 31, 2001 AND 2000                                
|AMERICAN VANTAGE COMPANIES CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED JULY 31, 2001 AND 2000          
|AMERICAN VANTAGE COMPANIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY YEARS ENDED JULY 31, 2001 AND 2000
|AMERICAN VANTAGE COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED JULY 31, 2001 AND 2000          
|AMERICAN VANTAGE COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED JULY 31, 2001 AND 2000     
|EX-21.1                                                                                                      
|EX-23.1                                                                                                      



---



##### Table of Contents






PART I




Item 1. Description of Business

Development of Business

American Vantage Companies (the Company) is currently
reviewing opportunities in order to maximize its resources. The Company sold its 20 acre parcel of land in Fiscal 2001, as described
below, and intends to sell certain of its other principal assets in order to provide cash resources sufficient to acquire, merge into or make
an investment in an existing business or businesses.

The Company had been engaged in providing gaming consulting services to
Table Mountain Casino & Bingo, a tribal gaming enterprise on a Federal Indian
Rancheria in Friant, California (the 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 Nitro Grill), a
themed restaurant, in the Excalibur Hotel and Casino (the Excalibur) in Las
Vegas, Nevada. The Company closed the Nitro Grill in September 2000. See Item
1. Description of Business  WCW Nitro Grill.

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), a restaurant located in the Mandalay Bay Hotel and Casino in
Las Vegas, Nevada. The Border Grill opened in June 1999.

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, 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 a purchase price of $2,246,000 (net). The Company acquired the 20
acre parcel in February 1998 for $1,350,000.

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.

All references herein to the Company refer to the Company and its
subsidiaries unless the context otherwise requires. The Companys principal
executive offices are located at 6787 West Tropicana, Suite 200, Las Vegas,
Nevada 89103, 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 which terminated the
Companys 1993 consulting agreement (the 1993 Agreement) and simultaneously
entered 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

1



---



##### Table of Contents



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, expired 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 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 has
appealed the order of the District Court to the Ninth Circuit Court of
Appeals, which has yet to rule.

On December 8, 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, which has
not yet ruled.

The Company continues to actively pursue its legal claims against the
Table Mountain Tribe.

WCW Nitro Grill

On November 12, 1998, Sitka entered into a license agreement (the License
Agreement) with World Championship Wrestling, 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.

The License Agreement commenced on May 1, 1999 and was to remain in effect
so long as Sitka continued to open a minimum number of restaurants or, in the
alternative, met certain minimum royalties. The License Agreement provided for
Sitka to make certain minimum guaranteed payments upon the opening of each
restaurant and annually thereafter to WCW against royalties payable to WCW
based on gross sales of food and beverages, merchandise and fee-based
attractions and/or promotions. The License Agreement was terminable by either
party upon 120 days written notice to the other party.

On November 19, 1998, Sitka entered into a ten-year lease for restaurant
space (the Lease) with New Castle Corp. (New Castle), doing business as the
Excalibur Hotel and Casino, for the location of the first Nitro Grill. The
Lease was terminable by either party upon 120 days written notice to the other
party. On May 17, 1999,

2



---



##### Table of Contents



the first WCW Nitro Grill opened in the Excalibur. On September 28, 2000,
the Company announced its closing of the Nitro Grill effective September 30,
2000 due to historical operating results. In connection with the discontinued
operations of the Nitro Grill, the Company recorded, for the fiscal year ended
July 31, 2001, an operating loss of $69,000 net of income tax benefits of
$35,000, and for the fiscal year ended July 31, 2000, a loss from operations
of $968,000, net of income tax benefits of $498,000 and a loss on
Discontinuation of the Operation of $1,119,000, net of income tax benefits of
$577,000. See Consolidated Financial Statements and Notes to Consolidated
Financial Statements  4. Discontinued Operations  Nitro Grill Restaurant.

Border Grill

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. The Operating Agreement provides that Vantage Bay, in
exchange for a 49% interest in the 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 has been contributed by
the Company through the year ended 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 agreed to guarantee all payments due
from Vantage Bay to TT&T. The Border Grill opened in the Mandalay Bay Hotel
and Casino in Las Vegas, Nevada on June 17, 1999. Since inception, the Company received a return
of capital in the amount of $700,000, all of which was received in Fiscal 2001.

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
for $1 million in cash and up to an additional $2 million in cash based on
certain benchmarks and future earnings, to be used for Placements general
corporate purposes. Located in New York, New York, Placement is a privately
held recruiting company for IT professionals and companies.

On February 6, 2001, the Company completed a transaction pursuant to which
it transferred its 80% ownership interest in Placement to Michael Woloshin,
effective January 31, 2001. Mr. Woloshin was a founder of Placement.
In connection with the transaction, the Company paid Placement and Mr.
Woloshin, jointly, $125,000 and released them from any claims that the Company
may have had against them. Mr. Woloshin agreed to a termination of all of his
options to purchase the Companys capital stock, and Mr. Woloshin and Placement
each released the Company from any claims that they had against the Company and
indemnified the Company against any claims against the Company arising from
their acts or omissions. Mr. Woloshin also agreed to instruct the Companys
escrow agent to release $500,000 plus accrued interest to the Company in
connection with the Companys original acquisition of the Placement securities.
As a part of the transaction, the Company, Mr. Woloshin and Placement parties
exchanged general releases with certain stockholders of Placement and certain
agents of Placement.

Competition

The Border Grill is subject to vigorous competition relating to restaurant
location and service, as well as quality, variety and value perception of the
food products offered. The Border Grill is in competition with other food
service operations, with locally-owned operations, as well as national or
regional chains that offer the same type of products or services as the
restaurant.

Government Regulation

The Border Grill is subject to inspection and regulation by public health
authorities. Most leasehold improvements made to the Border Grill are subject
to local and state building code requirements. The Border Grill is subject to
the Fair Labor Standards Act which governs such matters as minimum wage
requirements, overtime and other working conditions. The Company believes that
its conduct of business is in substantial compliance with these

3



---



##### Table of Contents



and other applicable government regulations. However, the Company is unable to
predict the scope or effect, if any, of any future government regulation or
legislation affecting the restaurant.

A majority of the employees of the Border Grill are paid at levels based
on the federal minimum wage level. Accordingly, changes in such minimum wage
levels affect the Border Grills labor costs. Some of the Border Grill
employees are not covered by health insurance. The Company is unable to
predict the scope or effect, if any, of future government regulation or
legislation affecting employee health care benefits.

Employees

As
of October 24, 2001, the Company employed six persons including a Chief
Executive Officer, an Executive Vice President and a Vice President  Chief
Financial Officer.

The Border Grill employs 11 managerial employees and 108 hourly employees.
The employees of the Border Grill are not covered by collective bargaining
agreements or represented by a union. The Company considers its relationship
with the Border Grill employees to be good.




Item 2. Description of Property

The Companys executive offices are located in approximately 5,116 square
feet of leased office space at 6787 West Tropicana, Suite 200, Las Vegas,
Nevada 89103. The monthly rent is $8,724. The lease agreement commenced on
June 1, 1996 and expired on June 1, 2001, and has been automatically renewed on
a month-to-month basis for up to an additional two years until June 1, 2003.

The Border Grill is located in leased restaurant space in the Mandalay Bay
Hotel and Casino in Las Vegas, Nevada. The monthly rent is $6,250, plus a
percentage on gross sales of food and beverages. The lease agreement commenced
on May 15, 1998 and expires on May 15, 2008.

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 the 40 acre parcel of land.




Item 3. Legal Proceedings

Neither the Company nor any of its subsidiaries is a party to any material
legal proceeding, nor to the knowledge of Management is any litigation
threatened against the Company or its subsidiaries, except as described
hereinafter.

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




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

An Annual Meeting of Stockholders of the Company was held on July 25, 2001
to consider and act upon the following matters: (i) to elect Ronald J.
Tassinari and Audrey K. Tassinari as Class A 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, 2001.

The holders of 4,865,856 shares of Common Stock of the Company were
entitled to vote at the meeting, of which 4,436,666 shares of common stock were
represented in person or by proxy. The stockholders voted as follows with
respect to the election of Class A Directors to terms expiring in 2004:

|                    |  |     |           |                    |  |  |         | 
|------------------- |  | --- | --------- | ------------------ |  |  | ------- | 
|Name                |  | For |           | Withheld Authority
|                    |  |     |           |                   
|Ronald J. Tassinari |  |     | 4,224,094 |                    |  |  | 212,572 | 
|                   
|                   
|                   
|                   
|Audrey K. Tassinari |  |     | 4,197,798 |                    |  |  | 238,868 | 

4



---



##### Table of Contents



The Board of Directors consists of seven persons and is divided into three
classes. Jeanne Hood and Steven G. Barringer are Class C directors, whose
terms expire in 2002, and James W. Davis, Gregory J. Woodland and Boyad Tanner
are Class B directors, whose terms expire in 2003.

The stockholders voted 4,280,123 shares in favor, and 131,484 shares
against the resolution ratifying the appointment of Bradshaw, Smith & Co., LLP,
as the Companys independent auditors for its fiscal year ended July 31, 2001
(25,059 shares abstained).




PART II




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

The Companys common stock is traded in the over-the-counter market and
quoted through the Nasdaq 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. 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 2000 |                                                      |          |   |         |  |  |   |     
|           
|           
|           
|           
|            |                                                      |          |   |         |  |  |   |     
|           
|           
|           
|           
|            | First Quarter (August 1, 1999 - October 31, 1999)    |          | $ | 2.81    |  |  | $ | 1.50 | 
|            | Second Quarter (November 1, 1999 - January 31, 2000) |          | $ | 2.50    |  |  | $ | 1.16 | 
|            | Third Quarter (February 1, 2000 - April 30, 2000)    |          | $ | 2.63    |  |  | $ | 1.00 | 
|            | Fourth Quarter (May 1, 2000 - July 31, 2000)         |          | $ | 1.88    |  |  | $ | 0.91 | 

On
October 24, 2001, the closing sale price per share for the Companys
common stock was $1.45.

On
October 24, 2001, there were 850 holders of record of the 4,865,856
shares of the Companys common stock outstanding.

Dividend Policy

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 June 26, 2001, the Company granted to four directors of the Company, as
members of a special committee, non-qualified stock options to purchase an
aggregate of 32,500 shares of common stock at an exercise price of $1.65 per
share. The options became exercisable on the date of grant and expire ten
years from the date of grant. The grant of options were exempt from the
registration requirements under Section 4(2) of the Securities Act of 1933, as
amended.

5



---



##### Table of Contents






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

Included in this Item 6, and in the Notes to the Consolidated Financial
Statements are certain forward-looking statements reflecting the Companys
current expectations. 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.

Overview  Factors That May Affect Future Results

Until May 1999, the Company derived all of its revenue from consulting services
provided to the Table Mountain Casino. In May 1999, the Table Mountain Tribe
voted to prematurely terminate the contracts it had with the Company and since
May 1999 has not honored the consulting and termination contracts. As a
result, the Companys primary source of revenue was eliminated which had a
significant negative impact on the operations of the Company and its source of
funds (see Note 13  Litigation with the Table Mountain Tribe of Notes to
Consolidated Financial Statements). The Company has begun a corporate
restructuring to divest itself of its non-core assets. Although the
restructuring has not been finalized, it will involve the sale of its 40 acre
parcel of land held for sale and the disposition of other existing
operations/investments and may include the acquisition of new subsidiaries or a
merger transaction. Until such time as, and if, these efforts are successful,
the Company will utilize accumulated cash reserves to provide working capital
for corporate operating expenses. The discontinuance of the WCW Nitro Grill
and the divestiture of the Placement 2000.Com, Inc. operation eliminated the
negative cash flows these operations experienced.

Results of Operations

Year Ended July 31, 2001 Compared With The Year Ended July 31, 2000

Revenues

As a result of the closure of the Nitro Grill restaurant and the divestiture of
Placement, the Company does not have any source of revenue from operations.
Revenues from these operations, net of expenses, are reported in the Companys
Consolidated Financial Statements as Discontinued Operations in the
Consolidated Statements of Operations.

For
impact on the Companys revenues, see Item 3  Legal Proceedings and Note
13  Litigation with the Table Mountain Tribe, included in the Notes to the
Companys Consolidated Financial Statements, for information concerning the
prematurely terminated contracts the Company had with the Table Mountain Tribe
to provide consulting services to the Table Mountain Casino.

Costs and Expenses

Casino consulting expenses in Fiscal 2001 decreased to $209,000, from $485,000
in Fiscal 2000, a decrease of

6



---



##### Table of Contents



$276,000 or 56.9%. This decrease is attributed to a decrease in legal expenses
related to the litigation with the Table Mountain Tribe.

The Company incurred $33,000 in death care operating expenses in Fiscal 2001 as
compared to $301,000 in Fiscal 2000. In December 1999 the Board of Directors
decided to cancel its plans to develop the cemetery and funeral home project on
the 40-acre parcel and consider opportunities for the most advantageous
disposition of that land. If the 40-acre parcel is sold, the proceeds from the
sale will be allocated toward development of the Companys new corporate growth
plans. As a result of this decision, approximately $211,000 of capitalized
costs related to development of the cemetery/funeral home project were written
off as death care operations expense in the second quarter of Fiscal 2000.

General and administrative expenses in Fiscal 2001 decreased by $13,000 or 0.6%
from Fiscal 2000. The net decrease was principally comprised of increased
employee compensation ($55,000), consultants fees ($38,000) and decreased
legal fees, related to corporate matters ($109,000). Legal fees in Fiscal 2000
included the value of stock options granted for legal services. No options
were granted for legal services in Fiscal 2001.

Amortization and depreciation was $26,000 and $32,000 in Fiscal 2001 and 2000,
respectively.

The income/loss of the Companys unconsolidated restaurant subsidiary, Border
Grill, represents 100% of the income/loss from its operations. In the future,
if Border Grill continues to have net income, the Company will recognize all
such income until prior losses have been offset and thereafter, net income will
be split proportionate to ownership interests.

Other Items

Interest income from time deposits with financial institutions totaled $616,000
and $940,000 in Fiscal 2001 and Fiscal 2000, respectively. The decrease is
attributed mainly to lower interest rates being paid on time deposits in Fiscal
2001.

Deferred state income tax expense was $0 and $49,000 in Fiscal 2001 and 2000,
respectively.

Deferred federal income tax expense totaled $733,000 and $96,000 for Fiscal
2001 and 2000, respectively. Current federal income tax benefits totaled
$735,000 and $793,000 in Fiscal 2001 and 2000, respectively.

The loss from the discontinued Nitro Grill restaurant operation was $69,000,
net of an income tax benefit of $35,000, for Fiscal 2001, and $2,087,000, net
of an income tax benefit of $1,075,000, for Fiscal 2000.

The loss from the discontinued Placement recruitment operation was $618,000,
net of an income tax benefit of $319,000, for Fiscal 2001, and $332,000, net of
an income tax benefit of $169,000, for Fiscal 2000.
The loss from continuing operations, before discontinued operations, was
$320,000 ($0.07 basic and diluted loss per share) and $1,433,000 ($0.29 basic
and diluted loss per share) for Fiscal 2001 and 2000, respectively.

Net loss was $1,007,000 ($0.21 basic and diluted loss per share) and $3,852,000
($0.79 basic and diluted loss per share) for Fiscal 2001 and Fiscal 2000,
respectively.

Liquidity and Capital Resources

At July 31, 2001, the Company had consolidated working capital of $12,322,000,
as compared with its working capital of $10,336,000 at July 31, 2000.

Operating Activities

Operating activities used $243,000 in Fiscal 2001 as compared to operating
activities using $3,702,000 in Fiscal 2000. A substantial portion of the
change was attributed to a smaller loss from operations in Fiscal 2001 than in
the preceding year and a large increase in refundable income taxes in Fiscal
2000 followed by a decrease in refundable income taxes in Fiscal 2001.

7



---



##### Table of Contents



Investing Activities

During Fiscal 2001, investing activities provided $4,776,000 as compared to
$1,858,000 used by investing activities in Fiscal 2000.

In Fiscal 2000, the Company granted to an unrelated third party a one-year
$1,300,000 mortgage note receivable (interest at 22%), which was paid in full
in Fiscal 2001.

During Fiscal 2000, the Company invested $1,550,000 in its unconsolidated
restaurant subsidiary, Border Grill. The Company received cash distributions
from this subsidiary totaling $700,000 in Fiscal 2001.

The $1,500,000 one-year mortgage note receivable (interest at 22%) made in
Fiscal 1999 to an unrelated third party was repaid in Fiscal 2000.

$500,000 of the contingent purchase price for Placement was placed into an
escrow account (restricted cash) and was to be paid to Placement if certain
events occurred in the future. After the Company divested of its ownership of
this investment in Fiscal 2001, the funds held in escrow were transferred to
the Companys general operating cash accounts.

In Fiscal 2001, the Company sold a 20 acre parcel of land for $2,246,000 (net).

Financing Activities

In Fiscal 2001 the Company received $25,000 in proceeds from the exercise of
stock options by an employee, and repurchased and retired shares of the
Companys common stock for $26,000. In Fiscal 2000, the Company repurchased
$33,000 of the Companys common stock.

Historically, the Company has provided funds for its operations from operating
activities, financing from financial institutions and stockholders, and
issuance of common stock, and it will likely continue to use these sources of
liquidity in the future. The Table Mountain Tribes failure to honor the
Companys consulting and termination agreements had a significant negative
impact on the Companys operations and its source of funds.

During Fiscal 2000, the Company began a corporate restructuring to divest
itself of its non-core assets. Although the restructuring has not been
finalized, it will involve the sale of its 40 acre parcel of land held for sale
and the disposition of other existing operations/investments and may include
the acquisition of new subsidiaries or a merger transaction. Until such time
as, and if, these efforts are successful, the Company will utilize accumulated
cash reserves to provide working capital for corporate operating expenses. The
discontinuance of the Nitro Grill and the divestiture of the Placement
operation eliminated the negative cash flows these operations experienced. The
Company has always sought and will continue to seek new business ventures,
which the Company believes afford an opportunity to increase stockholder value.
In the event any of these opportunities come to fruition, management will
consider satisfying financing requirements from working capital, through
borrowing or capital infusion through the public or private placement of common
stock of the Company or its subsidiaries.




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.

None.

8



---



##### Table of Contents






PART III




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

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

|                    |  |     |    |          |  |                                                                
|------------------- |  | --- | -- | -------- |  | ---------------------------------------------------------------
|Name                |  | Age |    | Position
|                    |  |     |    |         
|Ronald J. Tassinari |  |     | 58 |          |  | Chief Executive Officer, President and Director                
|                   
|                   
|                   
|                   
|Audrey K. Tassinari |  |     | 62 |          |  | Executive Vice President and Director                          
|                   
|                   
|                   
|                   
|Roy K. Keefer       |  |     | 57 |          |  | Chief Financial Officer, Vice President and
Secretary/Treasurer
|                   
|                   
|                   
|                   
|Jeanne Hood         |  |     | 74 |          |  | Director                                                       
|                   
|                   
|                   
|                   
|Steven G. Barringer |  |     | 45 |          |  | Director                                                       
|                   
|                   
|                   
|                   
|Boyad Tanner        |  |     | 79 |          |  | Director                                                       
|                   
|                   
|                   
|                   
|James W. Davis      |  |     | 53 |          |  | Director                                                       
|                   
|                   
|                   
|                   
|Gregory J. Woodland |  |     | 42 |          |  | Director                                                       

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

Audrey K. Tassinari has been a Director of the Company since March 1985
and Executive Vice President since April 1986. Mrs. Tassinari is the wife of
Ronald J. Tassinari, the Companys President.

Roy K. Keefer has been Chief Financial Officer, Vice President and
Secretary/Treasurer of the Company since April 1992. Mr. Keefer was a Director
of the Company from December 1992 to May 1999.

Jeanne Hood has been a Director of the Company since February 1994, and
was a gaming consultant to the Company from February 1994 until April 2000.
See Item 12. Certain Relationships and Related Transactions. 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. Barringer has been a Director since February 1998. Mr.
Barringer is a member of the government relations firm of McClure, Gerard &
Neuenschwander, Inc. in Washington, D.C. He also maintains his own law
practice, Steven G. Barringer, P.L.L.C., in Washington, D.C. 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.

Boyad Tanner has been a Director of the Company since May 1999. Mr.
Tanner had a varied business background, including owning and operating Indian
Trading Posts in Utah and New Mexico. He owned and

9



---



##### Table of Contents



operated an automobile agency in Farmington, New Mexico, and was also a
licensed real estate agent, having his own agency. Mr. Tanner was the
Executive Director for Urban Renewal and Development both in Indio, California
as well as in North Las Vegas, Nevada. His most recent appointments in Las
Vegas include a partnership at Harrington Horsey Insurance Agency, serving on
the Board of the Clark County Planning Commission and serving on the Board of
Directors for Cumorah Credit Union. He was also the recipient of the Silver
Beaver Award for his service with the Boy Scouts of America. Mr. Tanner has
been retired for the past seven years.

James W. Davis has been a Director of the Company since June 2000. Mr.
Davis has been a Senior Partner at Key West Technologies LLC, a limited
liability company, which advises a number of firms with regard to
technology, e-commerce and the Internet, and business management, since
founding Key West Technologies LLC in January, 1999. Prior to founding Key West
Technologies LLC, Mr. Davis served as the President and Chief Executive Officer
of MRT Micro, ASA/Inc., a communications software company, from January 1997
until January 1999. From September 1996 to January 1997, Mr. Davis was a
Visiting Research Scholar at the Communications Technology Center at Florida
Atlantic University. In March 1995, Mr. Davis founded Key West Technologies,
Inc., a computer hardware and software corporation. In February 1996, Key West
Technologies, Inc. was acquired by Interaxx Television Network, Inc. Mr. Davis
served as Chief Executive Officer of Interaxx Television Network from February
1996 until January 1997. Mr. Davis has also served as Director for Intel Corps
Home Computing Laboratory, which was responsible for developing a
consumer-focused Pentium platform strategy, and as Senior Technical Staff
Member at International Business Machines Corp., where he worked for
twenty-five years.
While at IBM, he was also a member of IBMs Academy of Science and Technology
and Chief Technical Officer of the IBM PC Company Premium Brand. Mr. Davis is
currently a director of Micros-to-Mainframes, which acts as a single source
provider of advanced technology solutions.

Gregory J. Woodland has been a director of the Company since June 2000.
Mr. Woodland has been Senior Partner at Key West Technologies LLC, a limited
liability company, which advises a number of firms with regard to technology,
e-commerce and the Internet, and business management, since March 2000. Prior
to joining Key West Technologies LLC, Mr. Woodland was a Director at Salomon
Smith Barney from August 1998 to February 2000, providing investment-banking
advice. Mr. Woodland also served as Vice President Finance for MacAndrews &
Forbes Holdings, Inc. from February 1987 to August 1998.

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 greater than ten percent stockholders are required by
regulation to furnish the Company with copies of all Section 16(a) forms they
file.

Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no other reports
were required for those persons, the Company believes that, during the period
from August 1, 2000 through July 31, 2001, all filing requirements applicable
to its officers, directors, and greater than ten percent beneficial owners were
complied with, except that one report on Form 4 with respect to the disposition
of shares was filed late for each of Ronald J. Tassinari and Audrey K.
Tassinari.






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.

10



---



##### Table of Contents



|                     |  |      |      |           |  |                     |         |                 |  |                   |         |               |  |              |         |            |  |                        |     |  |  |            |        |    
|-------------------- |  | ---- | ---- | --------- |  | ------------------- | ------- | --------------- |  | ----------------- | ------- | ------------- |  | ------------ | ------- | ---------- |  | ---------------------- | --- |  |  | ---------- | ------ | ---
|                     |  |      |      |           |  |                     |         |                 |  |                   |         |               |  |              |         |            |  | Long-Term Compensation
|                     |  |      |      |           |  | Annual Compensation |         | Awards         
|                     |  |      |      |           |  |                     |         |                
|                     |  |      |      |           |  |                     |         |                 |  |                   |         |               |  |              |         |            |  |                        |     |  |  | Securities
|Name and             |  |      |      |           |  |                     |         |                 |  |                   |         |               |  | Other Annual |         | Restricted |  | Underlying Options    
|Principal Position   |  | Year |      | Salary($) |  | Bonus($)            |         | Compensation($) |  | Stock Award(s)($) |         | Options(#)(8)
|                     |  |      |      |           |  |                     |         |                 |  |                   |         |              
|                     |  |      |      |           |  |                     |         |                 |  |                   |         |               |  |              |         |            |  |                        |     |  |  |            |        |    
|                    
|                    
|                    
|                    
|Ronald J. Tassinari, |  |      | 2001 |           |  | $                   | 451,500 |                 |  |                   | -0-     |               |  | $            | 84,177  | (1,4)      |  |                        | -0- |  |  |            | -0-    |    
|Chief Executive      |  |      | 2000 |           |  | $                   | 451,500 |                 |  |                   | -0-     |               |  | $            | 69,320  | (2)        |  |                        | -0- |  |  | $          | 55,555 | (9)
|Officer and          |  |      | 1999 |           |  | $                   | 461,639 |                 |  | $                 | 270,000 |               |  | $            | 116,131 | (3,5)      |  |                        | -0- |  |  |            | -0-    |    
|President            |  |      |      |           |  |                     |         |                 |  |                   |         |               |  |              |         |            |  |                        |     |  |  |            |        |    
|                    
|                    
|                    
|                    
|                     |  |      |      |           |  |                     |         |                 |  |                   |         |               |  |              |         |            |  |                        |     |  |  |            |        |    
|                    
|                    
|                    
|                    
|Audrey K. Tassinari, |  |      | 2001 |           |  | $                   | 170,100 |                 |  |                   | -0-     |               |  | $            | 67,521  | (1)        |  |                        | -0- |  |  |            | -0-    |    
|Executive            |  |      | 2000 |           |  | $                   | 170,100 |                 |  |                   | -0-     |               |  | $            | 113,439 | (2,6)      |  |                        | -0- |  |  | $          | 27,778 | (9)
|Vice President       |  |      | 1999 |           |  | $                   | 166,549 |                 |  | $                 | 130,000 |               |  | $            | 74,095  | (3)        |  |                        | -0- |  |  |            | -0-    |    
|                    
|                    
|                    
|                    
|                     |  |      |      |           |  |                     |         |                 |  |                   |         |               |  |              |         |            |  |                        |     |  |  |            |        |    
|                    
|                    
|                    
|                    
|Roy K. Keefer        |  |      | 2001 |           |  | $                   | 147,000 |                 |  |                   | -0-     |               |  | $            | 47,126  | (1)        |  |                        | -0- |  |  |            | -0-    |    
|Chief Financial      |  |      | 2000 |           |  | $                   | 147,000 |                 |  |                   | -0-     |               |  | $            | 35,931  | (2)        |  |                        | -0- |  |  | $          | 33,334 | (9)
|Officer              |  |      | 1999 |           |  | $                   | 143,931 |                 |  | $                 | 60,000  |               |  | $            | 56,464  | (3,7)      |  |                        | -0- |  |  |            | -0-    |    



---

|(1) |  | 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.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | 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.
|   
|   
|   
|   
|(3) |  | Includes SAR/SEP retirement plan contribution made by the Company in the
amount of $24,000, $24,000 and $22,830 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 the value of an automobile in the amount of $33,062.                                                                                                                                
|   
|   
|   
|   
|(6) |  | Includes the value of an automobile in the amount of $38,853.                                                                                                                                
|   
|   
|   
|   
|(7) |  | Includes compensation in the amount of $15,000 for his service on the
Board of Directors.                                                                                                    
|   
|   
|   
|   
|(8) |  | Information is presented after giving effect to a 1 for 3 reverse stock
split on November 30, 1999.                                                                                          
|   
|   
|   
|   
|(9) |  | Represents options which were granted in February 2000 at an exercise price
of $1.125 per share.                                                                                             

11



---



##### Table of Contents






OPTION GRANTS IN LAST FISCAL YEAR [Individual Grants]

No options were granted to any of the named persons in the Summary
Compensation Table for the fiscal year ended July 31, 2001.




AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES TABLE

|                    |  |          |     |          |  |                  |     |                    |  |             |           |              |  |          |          | 
|------------------- |  | -------- | --- | -------- |  | ---------------- | --- | ------------------ |  | ----------- | --------- | ------------ |  | -------- | -------- | 
|                    |  |          |     |          |  |                  |     |                    |  |             |           |              |  | Value of
|                    |  |          |     |          |  |                  |     |                    |  | Number of   |           | Unexercised 
|                    |  |          |     |          |  |                  |     |                    |  | Unexercised |           | In-The-Money
|                    |  | Shares   |     |          |  |                  |     | Options at         |  | Options at 
|                    |  | Acquired |     |          |  |                  |     | FY-End (#)         |  | FY-End ($) 
|                    |  | on Exer- |     | Value    |  | Exercisable/     |     | Exercisable/      
|Name                |  | cise(#)  |     | Realized |  | Unexercisable(2) |     | Unexercisable(1,2)
|                    |  |          |     |          |  |                  |     |                   
|Ronald J. Tassinari |  |          | -0- |          |  |                  | -0- |                    |  |             | 353,113/0 |              |  | $        | 20,833/0 | 
|                   
|                   
|                   
|                   
|Audrey K. Tassinari |  |          | -0- |          |  |                  | -0- |                    |  |             | 201,559/0 |              |  | $        | 10,417/0 | 
|                   
|                   
|                   
|                   
|Roy K. Keefer       |  |          | -0- |          |  |                  | -0- |                    |  |             | 146,001/0 |              |  | $        | 12,500/0 | 



---

|(1) |  | The closing price for the Companys Common Shares on July 31, 2001 was
$1.50 per share.            
|--- |  | ---------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Information is presented after giving effect to a 1 for 3 reverse stock
split on November 30, 1999.

Compensation of Directors

All directors receive $15,000 per annum for meetings of the Board of
Directors. They are also compensated for expenses incurred in attending the
meetings. All of the Companys directors have received stock options from the
Company. See Item 12. Certain Relationships and Related Transactions.

The Company has agreed to pay Gregory J. Woodland, as Chairman of a
special committee, $10,000 for his services thereon, $5,000 of which has been
paid to him by the Company and $7,500 to each of Jeanne Hood, Boyad Tanner and
James W. Davis for their services on the special committee, $3,750 which has
been paid to each of them by the Company. The Company also granted to these
directors, as members of the special committee, non-qualified stock options to
purchase shares of common stock at an exercise price of $1.65 per share as
follows: (i) an option to purchase 10,000 shares was granted to Gregory J.
Woodland; and (ii) an option to purchase 7,500 shares was granted to each of
Jeanne Hood, Boyad Tanner and James W. Davis. The options became exercisable
on the date of grant and expire ten years from the date of grant.

Employment Agreements

On July 20, 1995, the Company entered into substantially similar
employment 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 (collectively, the Employees). The employment agreements
provide for a term which concludes on March 31, 2002. The agreements provide
for annual salaries of $300,000, $98,000 and $108,000, respectively, for Mr.
Tassinari, Mrs. Tassinari and Mr. Keefer. The agreements further provide that
the Employees are entitled to receive minimum annual increases in their
salaries every December equal to the greater of (i) the annual increase
provided to the Companys other salaried executives or (ii) the increase in the
Annual Average All Items Index of the U.S. City Average Consumer Price Index
for All Urban Consumers. In accordance with the terms of the agreements, Mr.
Tassinari, Mrs. Tassinari and Mr. Keefer currently receive annual salaries of
$451,500, $170,100, and $147,000, respectively. 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 compensation 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, Mrs. 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
provide the Employees with an automobile allowance or, in lieu thereof, will
pay them an equal monthly stipend. In the event that the Company requires the
Employee to relocate from Las Vegas, Nevada, the Company has agreed to pay
their relocation expenses and to provide second mortgages on their new
permanent residences of up to $100,000. The employment agreements also provide
for indemnification of the Employees in connection with their service to the
Company.

12



---



##### Table of Contents



If the employment of any of the Employees is terminated by reason of
death, the Company shall pay to the estate of the deceased Employee, an amount
equal to the product of the sum of the Employees base salary at the rate then
in effect plus the incentive compensation most recently paid to the Employee
prior to his or her death, multiplied by the number of years and/or partial
year remaining in the term of the Employees employment. If the employment of
any of the Employees is terminated by reason of disability, the Employee shall
be entitled to one year of severance pay at full salary and then severance pay
at half salary for the remainder of the term. 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
without cause, or if any of the Employees terminate their own employment
following: (a) a change in control (as defined below); (b) a significant change
in the Employees duties under the agreements; (c) a removal of the Employee
from the positions or offices set forth in the agreements; (d) a reduction in
the Employees total compensation or a material reduction in the Employees
fringe benefits or any other material failure by the Company to comply with the
compensation provisions provided for in the agreements unless comparable
reductions are made with respect to benefits made available to substantially
all of the Companys senior executives; (e) a breach by the Company of the
relocation provisions set forth in the agreements; (f) the refusal of a
successor to the Company to assume the Companys obligations under the
agreements; (g) a relocation of the Companys executive offices without the
Employees consent; (h) a failure by the Company to provide a salary review
with respect to the annual increase in Employees salary and benefit increases
as provided to the to other salaried executives of the Company; or (i) the
Employee remains employed following a change in control, but then resigns
within two years, then the Company shall pay as liquidated damages, or
severance pay, or both to the Employee on the fifth day following the
termination date, a lump sum equal to the product of (1) an amount equal to the
sum of the annual base salary in effect as of the termination date plus any
incentive compensation most recently paid or payable to the Employee,
multiplied by (2) two and ninety-nine one hundredths (2.99), (iii) plus any and
all accrued salary, accrued vacation pay and accrued bonus in addition to any
other consideration due under the agreements. In addition, the agreements
provide for each Employee that in the event of the termination of the
Employees employment with the Company, for any reason or no reason, the
Employee has an option to require the Company to purchase any and all
outstanding options granted to the Employee pursuant to the Companys stock
option plans adopted or to be adopted by the Company, whether or not such
options are then immediately exercisable, provided that such options have not
expired, and the Employee shall receive a cash payment from the Company in the
amount equal to the difference between (x) the market price of the shares
covered by the option as quoted on Nasdaq as the closing price on the day the
option is put to the Company and (y) the exercise price of the option.

For purposes of the employment agreements, a change in control of the
Company shall be deemed to have occurred if (i) a third person becomes the
beneficial owner (as such term is defined in Rule 13d-3 promulgated pursuant to
the Securities Exchange Act of 1934) of the securities of the Company having
twenty percent (20%) or more of the combined voting power of all classes of the
Companys securities entitled to vote in an election of Directors of the
Company; (ii) there occurs a tender offer or exchange offer by, a merger or
other business combination with, or a sale of substantially all of the assets
of the Company to any third person; (iii) a stockholder or stockholders holding
five percent (5%) or more of the outstanding common stock of the Company
proposes a reconstitution of additions to or deletions from the Board and as a
result, obtains a majority thereof; or (iv) during any period of two (2)
consecutive years during the term of the agreements, individuals who at the
beginning of such period constitute the Board cease for any reason other than
death or disability to constitute at least a majority thereof.




Item 11. Security Ownership of Certain Beneficial Owners and Management

The
following table sets forth, as of October 24, 2001, 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 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, 6787
West Tropicana, Suite 200, Las Vegas, Nevada 89103.

13



---



##### Table of Contents



|                                                     |  |                         |           |              |  |  |       |   | 
|---------------------------------------------------- |  | ----------------------- | --------- | ------------ |  |  | ----- | - | 
|Name and Address of                                  |  | Amount and Nature of    |           | Percentage  
|Beneficial Owner                                     |  | Beneficial
Ownership(1) |           | of
Class (2)
|                                                     |  |                         |           |             
|                                                     |  |                         |           |              |  |  |       |  
|                                                    
|                                                    
|                                                    
|                                                    
|Ronald J. Tassinari                                  |  |                         | 800,109   | (3)          |  |  | 15.33 | %
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                         |           |              |  |  |       |  
|                                                    
|                                                    
|                                                    
|                                                    
|Audrey K. Tassinari                                  |  |                         | 644,852   | (4)          |  |  | 12.73 | %
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                         |           |              |  |  |       |  
|                                                    
|                                                    
|                                                    
|                                                    
|Roy K. Keefer                                        |  |                         | 150,001   | (5)          |  |  | 2.99  | %
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                         |           |              |  |  |       |  
|                                                    
|                                                    
|                                                    
|                                                    
|Jeanne Hood                                          |  |                         | 57,501    | (6)          |  |  | 1.17  | %
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                         |           |              |  |  |       |  
|                                                    
|                                                    
|                                                    
|                                                    
|Steven G. Barringer                                  |  |                         | 25,000    | (7)          |  |  | *     |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                         |           |              |  |  |       |  
|                                                    
|                                                    
|                                                    
|                                                    
|Boyad Tanner                                         |  |                         | 32,500    | (8)          |  |  | *     |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                         |           |              |  |  |       |  
|                                                    
|                                                    
|                                                    
|                                                    
|James W. Davis                                       |  |                         | 25,000    | (9)          |  |  | *     |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                         |           |              |  |  |       |  
|                                                    
|                                                    
|                                                    
|                                                    
|Gregory J. Woodland                                  |  |                         | 27,500    | (10)         |  |  | *     |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                         |           |              |  |  |       |  
|                                                    
|                                                    
|                                                    
|                                                    
|All officers and directors                           |  |                         | 1,319,170 | (11)         |  |  | 23.07 | %
|as a group (8 persons)                               |  |                         |           |              |  |  |       |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                         |           |              |  |  |       |  
|                                                    
|                                                    
|                                                    
|                                                    
|Jay H. Brown                                         |  |                         | 350,711   | (12)         |  |  | 7.21  | %
|520 South Fourth Street
Las Vegas, NV 89107          |  |                         |           |              |  |  |       |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                         |           |              |  |  |       |  
|                                                    
|                                                    
|                                                    
|                                                    
|Engex, Inc.                                          |  |                         | 474,500   | (13)         |  |  | 9.75  | %
|44 Wall Street
New York, NY 10005                    |  |                         |           |              |  |  |       |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  |                         |           |              |  |  |       |  
|                                                    
|                                                    
|                                                    
|                                                    
|Kinder Investments, L.P.                             |  |                         | 261,900   | (14)         |  |  | 5.38  | %
|c/o Laidlaw & Co.
100 Park Avenue
New York, NY 10017 |  |                         |           |              |  |  |       |  



---

|*   |  | 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 24, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|   
|   
|   
|(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 beneficiaries (the
Tassinari Family Trust), and 353,113 shares issuable upon exercise of
currently exercisable stock options. Such shares exclude the following
shares as to which Mr. Tassinari disclaims beneficial ownership: 201,559
option shares beneficially owned by Audrey K. Tassinari, Mr. Tassinaris
wife. If such excluded shares were included, Mr. Tassinari would be deemed
to own 18.48% of the Common Stock.
|   
|   
|   
|   
|(4) |  | Includes 443,293 shares owned by the Tassinari Family Trust and an
aggregate of 201,559 shares issuable upon exercise of currently
exercisable stock options. Such shares exclude the following shares as to
which Mrs. Tassinari disclaims beneficial ownership: 353,118 shares
(includes 353,113 option shares) beneficially owned by Ronald J.
Tassinari, Mrs. Tassinaris husband. If such excluded shares were
included, Mrs. Tassinari would be deemed to own 18.41% of the Common
Stock.                                                                                                                                        
|   
|   
|   
|   
|(5) |  | Includes 146,001 shares issuable on the exercise of currently
exercisable stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|   
|   
|   
|(6) |  | Includes 40,834 shares issuable on the exercise of currently
exercisable stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|   
|   
|   
|(7) |  | Represents 25,000 shares issuable on the exercise of currently
exercisable stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

14



---



##### Table of Contents



|(8)  |  | Represents 32,500 shares issuable on the exercise of currently
exercisable stock options.                                                                                                                                                                                                                                                                                                                                 
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|    
|    
|    
|(9)  |  | Represents 25,000 shares issuable on the exercise of currently
exercisable stock options. Does not include 7,500 shares issuable upon
the exercise of stock options that become exercisable on June 1, 2002.                                                                                                                                                                                                              
|    
|    
|    
|    
|(10) |  | Represents 27,500 shares issuable on the exercise of currently
exercisable stock options. Does not include 7,500 shares issuable upon
the exercise of stock options that become exercisable on June 1, 2002.                                                                                                                                                                                                              
|    
|    
|    
|    
|(11) |  | Includes 851,507 shares issuable on the exercise of currently
exercisable stock options.                                                                                                                                                                                                                                                                                                                                  
|    
|    
|    
|    
|(12) |  | All shares are held with his wife, Sharon Brown, as
Tenants-in-Common.                                                                                                                                                                                                                                                                                                                                                    
|    
|    
|    
|    
|(13) |  | Pursuant to Schedule 13-G/A filed by Engex, Inc. on February 13,
2001.                                                                                                                                                                                                                                                                                                                                                    
|    
|    
|    
|    
|(14) |  | Pursuant to Schedule 13G filed jointly filed by Kinder Investments,
L.P., Nesher, LLC and Dov Perlysky on July 2, 2001. Kinder Investments,
L.P. directly owns 261,900 shares of the Companys Common Stock. Nesher,
LLC is the general partner of Kinder Investments, L.P. Dov Perlysky is
the managing member of Nesher, LLC and has sole voting and dispositive
control of the shares owned by Kinder Investments, L.P.




Item 12. Certain Relationships and Related Transactions

On February 4, 2000, the Board of Directors granted options to purchase
shares of common stock to the following officers of the Company pursuant to the
Companys Officers and/or Employee Plans: 55,555 options to Ronald J.
Tassinari, 27,778 options to Audrey K. Tassinari and 33,334 options to Roy K.
Keefer. The options are exercisable at $1.125 per share commencing on February
4, 2000 and expiring on February 3, 2010.

In addition, on February 4, 2000, non-qualified stock options were granted
to the following individuals for services rendered or to be rendered to the
Company: 33,334 options to Jeanne Hood, and 25,000 options to Boyad Tanner,
each of whom is a Director of the Company. The options are exercisable at
$1.125 per share commencing on February 4, 2000 and expiring on February 3,
2010.

Jeanne Hood, a director of the Company, has provided consulting services
to the Company since February 1994. She has been compensated at the rate of
$6,000 per month for such services. Jeanne Hood ceased to receive consulting
fees effective April 16, 2000. In the Fiscal year ended July 31, 2001, Ms.
Hood received consulting fees from September 2000 through February 2001
aggregating $17,500.

On June 2, 2000, non-qualified stock options were granted to the following
individuals for services rendered or to be rendered to the Company: 25,000
options to James W. Davis and 25,000 options to Gregory J. Woodland, each of
whom is a Director of the Company. The options for each of Mr. Davis and Mr.
Woodland are exercisable at $1.094 per share as follows: (i) 10,000 options
exercisable on June 2, 2000, (ii) 7,500 options exercisable on June 1, 2001 and
(iii) 7,500 options exercisable on June 1, 2002. The options granted to each
of Mr. Davis and Mr. Woodland as set forth above expire on June 1, 2010.

Jay
H. Brown, a beneficial owner of more than five percent of the
Companys common stock, received $119,163 in Fiscal 2001 and $138,996
in Fiscal 2000, in consideration for consulting and legal
services.

See Item 5. Recent Sale of Unregistered Securities for the grant of
stock options to directors of the Company for the fiscal year ended July 31,
2001.

See Item 10. Executive Compensation for the terms of certain stock
options and Employment Agreements between the Company and Ronald J. Tassinari,
Audrey K. Tassinari and Roy K. Keefer, each a director or former director and
officer of the Company and Item 11. Security Ownership of Certain Beneficial
Owners and Management for the terms of certain stock options of the Companys
officers and directors.

15



---



##### Table of Contents






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



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

|      |  |                                                                                                                                                                                                                                                                                           
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1   |  | Articles of Incorporation.(1)                                                                                                                                                                                                                                                             
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|3.2   |  | By Laws.(1)                                                                                                                                                                                                                                                                               
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|3.3   |  | Certificate of Amendment to Articles of Incorporation.(4)                                                                                                                                                                                                                                 
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|3.4   |  | Certificate of Amendment to Articles of Incorporation.(5)                                                                                                                                                                                                                                 
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|10.1  |  | American Casino Enterprises, Inc. 1991 Officers Stock Option Plan, as
amended.(3)                                                                                                                                                                                                         
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|10.2  |  | American Casino Enterprises, Inc. 1992 Employee Stock Option Plan.(3)                                                                                                                                                                                                                     
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|10.3  |  | American Casino Enterprises, Inc. 1996 Stock Option Plan.(3)                                                                                                                                                                                                                              
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|10.4  |  | Management Consultant Contract, dated March 27, 1993, between
the Company and the Table Mountain Band of Indians.(5)                                                                                                                                                                      
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|10.5  |  | Employment Agreement, dated July 20, 1995, between the
Company and Ronald J. Tassinari.(5)                                                                                                                                                                                                
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|10.6  |  | Employment Agreement, dated July 20, 1995, between the
Company and Audrey K. Tassinari.(5)                                                                                                                                                                                                
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|10.7  |  | Employment Agreement, dated July 20, 1995, between the
Company and Roy K. Keefer.(5)                                                                                                                                                                                                      
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|10.8  |  | Letter Agreement, dated September 11, 1995, between the
Company and Table Mountain Rancheria.(5)                                                                                                                                                                                          
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|10.9  |  | Settlement Agreement, dated February 1, 1996, between the
Company and the National Indian Gaming Commission.(6)                                                                                                                                                                           
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|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.(6)
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|10.11 |  | Consulting Agreement, dated February 1, 1996, between the
Company and Table Mountain Rancheria.(6)                                                                                                                                                                                        
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|10.12 |  | Amendment to Consulting Agreement, dated June 26, 1997,
between the Company and Table Mountain Rancheria.(7)                                                                                                                                                                              
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|10.13 |  | Joint Venture Agreement, dated as of February 1, 1996,
between the Company and the Table Mountain Rancheria.(8)                                                                                                                                                                           
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|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).(8)                                               
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|10.15 |  | Lease, dated March 14, 1996, between the Company and
Tropicana Trail Limited Partnership.(8)                                                                                                                                                                                              
|     
|     
|     
|     
|      |  |                                                                                                                                                                                                                                                                                           
|     
|     
|     
|     
|10.16 |  | Agreement to Terminate Funding and Loan Agreement, dated
March 10, 1998, between Table Mountain/ACES Joint Venture and United
Auburn Indian Community.(9)                                                                                                                                 

16



---



##### Table of Contents



|      |  |                                                                                                                                                   
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|     
|     
|     
|     
|10.17 |  | Promissory Note, dated March 10, 1998, between Table
Mountain/ACES Joint Venture and United Auburn Indian Community.(9)                           
|     
|     
|     
|     
|      |  |                                                                                                                                                   
|     
|     
|     
|     
|10.18 |  | Promissory Notes, each dated August 24, 1998, between the
Company and the Table Mountain Band of Indians of the Table Mountain
Rancheria.(9)      
|     
|     
|     
|     
|      |  |                                                                                                                                                   
|     
|     
|     
|     
|10.19 |  | License Agreement, dated as of November 12, 1998, by and
among Sitka Restaurant Group, Inc. and World Championship Wrestling,
Inc.(10)            
|     
|     
|     
|     
|      |  |                                                                                                                                                   
|     
|     
|     
|     
|10.20 |  | Lease for Restaurant Space, dated as of November 19, 1998,
by and between New Castle Corp. and Sitka Restaurant Group, Inc.(10)                   
|     
|     
|     
|     
|      |  |                                                                                                                                                   
|     
|     
|     
|     
|10.21 |  | Operating Agreement for Border Grill Las Vegas, LLC, dated
November 12, 1998, by and between TT&T, LLC and Vantage Bay Group,
Inc.(10)            
|     
|     
|     
|     
|      |  |                                                                                                                                                   
|     
|     
|     
|     
|10.22 |  | Lease for Restaurant Space, dated November 12, 1998, by and
between Mandalay Corp. and Border Grill Las Vegas, LLC.(10)                           
|     
|     
|     
|     
|      |  |                                                                                                                                                   
|     
|     
|     
|     
|10.23 |  | Stock Purchase Agreement, dated as of December 1, 1999, by
and among the Company, Placement 2000.com, Inc. and Michael
Woloshin.(11)              
|     
|     
|     
|     
|      |  |                                                                                                                                                   
|     
|     
|     
|     
|10.24 |  | Employment Agreement, dated as of December 1, 1999, between
the Michael Woloshin and Placement 2000.com, Inc.(11)                                 
|     
|     
|     
|     
|      |  |                                                                                                                                                   
|     
|     
|     
|     
|10.25 |  | Non-Qualified Stock Option Agreement, dated as of December
1, 1999, between the Company and Michael Woloshin.(11)                                 
|     
|     
|     
|     
|      |  |                                                                                                                                                   
|     
|     
|     
|     
|10.26 |  | Settlement Agreement, dated as of January 31, 2001, by and
among the Company, Placement 2000.com, Inc. and Michael Woloshin.(12)                  
|     
|     
|     
|     
|      |  |                                                                                                                                                   
|     
|     
|     
|     
|10.27 |  | 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.(13)
|     
|     
|     
|     
|      |  |                                                                                                                                                   
|     
|     
|     
|     
|21.1  |  | Subsidiaries of the Registrant.                                                                                                                   
|     
|     
|     
|     
|      |  |                                                                                                                                                   
|     
|     
|     
|     
|23.1  |  | Consent of Bradshaw, Smith & Co., LLP.                                                                                                            



---

|(1) |  | Incorporated by reference to the Companys Annual Report on Form 10-K for
July 31, 1981.                                                   
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Incorporated by reference to the Companys Annual Report on Form 10-K for
July 31, 1991.                                                   
|   
|   
|   
|   
|(3) |  | Incorporated by reference to the Companys Registration Statement on Form
S-8 (File No. 333-00905) declared effective on February 13, 1996.
|   
|   
|   
|   
|(4) |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1994.                                  
|   
|   
|   
|   
|(5) |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1995.                                  
|   
|   
|   
|   
|(6) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on February 2, 1996.                                         
|   
|   
|   
|   
|(7) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on July 2, 1996.                                             

17



---



##### Table of Contents



|(8)  |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1996.
|---- |  | ---------------------------------------------------------------------------------------------------------
|    
|    
|    
|    
|(9)  |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1998.
|    
|    
|    
|    
|(10) |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1999.
|    
|    
|    
|    
|(11) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on January 27, 2000.       
|    
|    
|    
|    
|(12) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on February 20, 2001.      
|    
|    
|    
|    
|(13) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on June 26, 2001.          



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

On June 26, 2001, the Registrant filed a Report on Form 8-K under Item 5,
reporting the sale of approximately 20 acres of undeveloped real property.



18






---



##### 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, 2001



| | 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. TassinariRonald J. Tassinari |  | President and Director
(Principal Executive Officer)                                                         |  | October 25, 2001
|                                          
|                                           |  |                                                                                                              |  |                 
|                                          
|/s/ Audrey K. TassinariAudrey K. Tassinari |  | Executive Vice
President and Director                                                                        |  | October 25, 2001
|                                          
|                                           |  |                                                                                                              |  |                 
|                                          
|/s/ Roy K. KeeferRoy K. Keefer             |  | Chief Financial
Officer, Vice President and
Secretary/Treasurer
(Principal Financial and
Accounting Officer) |  | October 25, 2001
|                                          
|                                           |  |                                                                                                              |  |                 
|                                          
|/s/ Jeanne HoodJeanne Hood                 |  | Director                                                                                                     |  | October 25, 2001
|                                          
|                                           |  |                                                                                                              |  |                 
|                                          
|/s/ Steven G. BarringerSteven G. Barringer |  | Director                                                                                                     |  | October 25, 2001
|                                          
|                                           |  |                                                                                                              |  |                 
|                                          
|/s/ Boyad TannerBoyad Tanner               |  | Director                                                                                                     |  | October 25, 2001
|                                          
|                                           |  |                                                                                                              |  |                 
|                                          
|/s/ James W. DavisJames W. Davis           |  | Director                                                                                                     |  | October 25, 2001
|                                          
|                                           |  |                                                                                                              |  |                 
|                                          
|/s/ Gregory J. WoodlandGregory J. Woodland |  | Director                                                                                                     |  | October 25, 2001



19






---



##### Table of Contents





AMERICAN VANTAGE COMPANIES

YEARS ENDED JULY 31, 2001 AND 2000







---



##### Table of Contents






AMERICAN VANTAGE COMPANIES

YEARS ENDED JULY 31, 2001 AND 2000




CONTENTS

|                             |                                                 |  |      |        | 
|---------------------------- | ----------------------------------------------- |  | ---- | ------ | 
|                             |                                                 |  | PAGE
|                             |                                                 |  |     
|Independent auditors report |                                                 |  | F-1  |       
|                            
|                            
|                            
|                            
|Financial statements:        |                                                 |  |      |       
|                            
|                            
|                            
|                            
|                             | Consolidated balance sheets                     |  |      | F-2    | 
|                            
|                            
|                            
|                            
|                             | Consolidated statements of operations           |  |      | F-3-4  | 
|                            
|                            
|                            
|                            
|                             | Consolidated statements of stockholders equity |  |      | F-5    | 
|                            
|                            
|                            
|                            
|                             | Consolidated statements of cash flows           |  |      | F-6-7  | 
|                            
|                            
|                            
|                            
|                             | Notes to consolidated financial statements      |  |      | F-8-20 | 





---



##### 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, 2001 and 2000, and the related consolidated
statements of operations, changes in stockholders equity and cash flows for
the years 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 audits.

We conducted our audits 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 audits provide 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 2000, and the results of its
operations and cash flows for the years 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



F-1






---



##### Table of Contents



AMERICAN VANTAGE COMPANIES




CONSOLIDATED BALANCE SHEETS

JULY 31, 2001 AND 2000

|                                                   |                                                                                                             |                           |            |            |            |   |            |            |            | 
|-------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | ------------------------- | ---------- | ---------- | ---------- | - | ---------- | ---------- | ---------- | 
|ASSETS                                             |                                                                                                             | 2001                      |            | 2000      
|                                                   |                                                                                                             |                           |            |           
|                                                   |                                                                                                             |                           |            |            |            |   |            |           
|Current assets:                                    |                                                                                                             |                           |            |            |            |   |            |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Cash and cash equivalents                                                                                   |                           | $          | 11,565,000 |            |   | $          | 7,033,000  |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Accrued interest                                                                                            |                           |            | 23,000     |            |   |            | 189,000    |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Mortgage note receivable                                                                                    |                           |            |           |            |   |            | 1,300,000  |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Refundable income taxes                                                                                     |                           |            | 1,024,000  |            |   |            | 1,708,000  |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Deferred income tax asset                                                                                   |                           |            |           |            |   |            | 641,000    |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Prepaid expenses                                                                                            |                           |            | 43,000     |            |   |            | 60,000     |           
|                                                   |                                                                                                             |                           |            |            |            |   |            |           
|                                                   |                                                                                                             | Total current assets      |            |            | 12,655,000 |   |            |            | 10,931,000 | 
|                                                  
|                                                  
|                                                  
|                                                  
|Property and equipment, net                        |                                                                                                             |                           | 125,000    |            |            |   | 148,000    |           
|                                                  
|                                                  
|                                                  
|                                                  
|Land held for sale                                 |                                                                                                             |                           | 3,544,000  |            |            |   | 4,894,000  |           
|                                                  
|                                                  
|                                                  
|                                                  
|Investment in unconsolidated restaurant subsidiary |                                                                                                             |                           | 1,861,000  |            |            |   | 2,038,000  |           
|                                                  
|                                                  
|                                                  
|                                                  
|Deferred income tax asset                          |                                                                                                             |                           |           |            |            |   | 92,000     |           
|                                                  
|                                                  
|                                                  
|                                                  
|Net assets of discontinued restaurant operation    |                                                                                                             |                           |           |            |            |   | 232,000    |           
|                                                  
|                                                  
|                                                  
|                                                  
|Net assets of discontinued recruitment operation   |                                                                                                             |                           |           |            |            |   | 597,000    |           
|                                                  
|                                                  
|                                                  
|                                                  
|Other assets  principally restricted cash in 2000 |                                                                                                             |                           | 15,000     |            |            |   | 538,000    |           
|                                                   |                                                                                                             |                           |            |            |            |   |            |           
|                                                   |                                                                                                             | $                         | 18,200,000 |            |            | $ | 19,470,000 |           
|                                                   |                                                                                                             |                           |            |            |            |   |            |           
|                                                   |                                                                                                             |                           |            |            |            |   |            |           
|LIABILITIES AND STOCKHOLDERS EQUITY               |                                                                                                             |                           |            |            |            |   |            |           
|                                                   |                                                                                                             |                           |            |            |            |   |            |           
|Current liabilities:                               |                                                                                                             |                           |            |            |            |   |            |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Accounts payable                                                                                            |                           | $          | 153,000    |            |   | $          | 295,000    |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Accrued expenses                                                                                            |                           |            | 180,000    |            |   |            | 300,000    |           
|                                                   |                                                                                                             |                           |            |            |            |   |            |           
|                                                   |                                                                                                             | Total current liabilities |            |            | 333,000    |   |            |            | 595,000    | 
|                                                   |                                                                                                             |                           |            |            |            |   |            |           
|                                                   |                                                                                                             |                           |            |            |            |   |            |           
|Commitments and contingencies                      |                                                                                                             |                           |           |            |            |   |           |           
|                                                   |                                                                                                             |                           |            |            |            |   |            |           
|Stockholders equity:                              |                                                                                                             |                           |            |            |            |   |            |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Common stock, $.01 par; 30,000,000 shares
authorized; 4,865,856 and 4,858,256 shares issued
and outstanding |                           |            | 49,000     |            |   |            | 49,000     |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Preferred stock, $.01 par; 10,000,000 shares
authorized; shares issued and outstanding  none               |                           |            |           |            |   |            |           |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Capital in excess of par                                                                                    |                           |            | 2,940,000  |            |   |            | 2,941,000  |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Capital in excess of par  stock options                                                                    |                           |            | 278,000    |            |   |            | 278,000    |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Retained earnings                                                                                           |                           |            | 14,600,000 |            |   |            | 15,607,000 |           
|                                                   |                                                                                                             |                           |            |            |            |   |            |           
|                                                   |                                                                                                             |                           | 17,867,000 |            |            |   | 18,875,000 |           
|                                                   |                                                                                                             |                           |            |            |            |   |            |           
|                                                   |                                                                                                             | $                         | 18,200,000 |            |            | $ | 19,470,000 |           
|                                                   |                                                                                                             |                           |            |            |            |   |            |           

See Notes to Consolidated Financial Statements.

F-2



---



##### Table of Contents






AMERICAN VANTAGE COMPANIES

COMPANIES CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED JULY 31, 2001 AND 2000

|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |      |            |            |         |  
|------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | ---------- | --------- | -------- | ---- | ---------- | ---------- | ------- | -
|                                                                                |                                                                                                                                                                                                                  |         |            | 2001      |          | 2000
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |     
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |     
|Revenues:                                                                       |                                                                                                                                                                                                                  | $       |           |           |          | $    |           |           
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |      |            |           
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |     
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |     
|Costs and expenses:                                                             |                                                                                                                                                                                                                  |         |            |           |          |      |            |           
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |     
|                                                                                | Casino consulting                                                                                                                                                                                                |         |            | 209,000   |          |      |            | 485,000    |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Death care operations                                                                                                                                                                                            |         |            | 33,000    |          |      |            | 301,000    |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | General and administrative                                                                                                                                                                                       |         |            | 2,090,000 |          |      |            | 2,103,000  |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Amortization and depreciation                                                                                                                                                                                    |         |            | 26,000    |          |      |            | 32,000     |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | (Income) loss of unconsolidated restaurant subsidiary                                                                                                                                                            |         |            | (523,000  | )        |      |            | 103,000    |        
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |      |            |           
|                                                                                |                                                                                                                                                                                                                  |         | 1,835,000  |           |          |      | 3,024,000  |           
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |      |            |           
|Loss from continuing operations                                                 |                                                                                                                                                                                                                  |         | (1,835,000 | )         |          |      | (3,024,000 | )         
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |      |            |           
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |     
|Other income:                                                                   |                                                                                                                                                                                                                  |         |            |           |          |      |            |           
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Interest income                                                                                                                                                                                                  |         |            | 616,000   |          |      |            | 940,000    |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Gain on sale of land held for sale                                                                                                                                                                               |         |            | 897,000   |          |      |            |           |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Miscellaneous                                                                                                                                                                                                    |         |            |          |          |      |            | 3,000      |        
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |      |            |           
|                                                                                |                                                                                                                                                                                                                  |         | 1,513,000  |           |          |      | 943,000    |           
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |      |            |           
|Loss from continuing operations before income taxes and
discontinued operations |                                                                                                                                                                                                                  |         | (322,000   | )         |          |      | (2,081,000 | )         
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |      |            |           
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |     
|Income tax benefit (expense):                                                   |                                                                                                                                                                                                                  |         |            |           |          |      |            |           
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |     
|                                                                                | Current:                                                                                                                                                                                                         |         |            |           |          |      |            |            |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                                                                                                                                                                                                                  | Federal |            |           | 735,000  |      |            |            | 793,000 |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Deferred:                                                                                                                                                                                                        |         |            |           |          |      |            |            |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                                                                                                                                                                                                                  | State   |            |           |         |      |            |            | (49,000 | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                                                                                                                                                                                                                  | Federal |            |           | (733,000 | )    |            |            | (96,000 | )
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |      |            |           
|                                                                                |                                                                                                                                                                                                                  |         | 2,000      |           |          |      | 648,000    |           
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |      |            |           
|Loss from continuing operations before discontinued operations                  |                                                                                                                                                                                                                  |         | (320,000   | )         |          |      | (1,433,000 | )         
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |     
|Discontinued operations:                                                        |                                                                                                                                                                                                                  |         |            |           |          |      |            |           
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |     
|                                                                                | Loss from operations of discontinued restaurant operation, net of income
tax benefits ($0-2001; $498,000-2000)                                                                                                   |         |            |          |          |      |            | (968,000   | )      
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |     
|                                                                                | Loss on discontinuation of restaurant operation, including
provision in 2000 of $101,000 for operating losses during
the phase-out period, less applicable income tax benefits
($35,000-2001; $577,000-2000)     |         |            | (69,000   | )        |      |            | (1,119,000 | )      
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |     
|                                                                                | Loss from operations of discontinued recruitment operation,
net of minority interest ($88,000-2001; $118,000-2000),
write off of goodwill ($250,000-2001) and income tax
benefits ($187,000-2001; $169,000-2000) |         |            | (362,000  | )        |      |            | (332,000   | )      
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |     
|                                                                                | Loss on disposal of discontinued recruitment operation, net
of income tax benefit of $132,000                                                                                                                    |         |            | (256,000  | )        |      |            |           |        
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |      |            |           
|Net loss                                                                        |                                                                                                                                                                                                                  | $       | (1,007,000 | )         |          | $    | (3,852,000 | )         
|                                                                                |                                                                                                                                                                                                                  |         |            |           |          |      |            |           

See Notes to Consolidated Financial Statements.

F-3



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

YEARS ENDED JULY 31, 2001 AND 2000

|                                                                       |                                 |  |      |           |      |  |   |           |  
|---------------------------------------------------------------------- | ------------------------------- |  | ---- | --------- | ---- |  | - | --------- | -
|                                                                       |                                 |  | 2001 |           | 2000
|                                                                       |                                 |  |      |           |     
|Loss per common share  basic:                                         |                                 |  |      |           |      |  |   |          
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Loss from continuing operations |  | $    | (0.07     | )    |  | $ | (0.29     | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Discontinued operation          |  |      | (0.14     | )    |  |   | (0.50     | )
|                                                                       |                                 |  |      |           |      |  |   |          
|                                                                       | Net loss                        |  |      | (0.21     | )    |  |   | (0.79     | )
|                                                                       |                                 |  |      |           |      |  |   |          
|Loss per common share  diluted:                                       |                                 |  |      |           |      |  |   |          
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Loss from continuing operations |  | $    | (0.07     | )    |  | $ | (0.29     | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Discontinued operation          |  |      | (0.14     | )    |  |   | (0.50     | )
|                                                                       |                                 |  |      |           |      |  |   |          
|                                                                       | Net loss                        |  | $    | (0.21     | )    |  | $ | (0.79     | )
|                                                                       |                                 |  |      |           |      |  |   |          
|Weighted average number of common shares
and common share equivalents: |                                 |  |      |           |      |  |   |          
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Basic                           |  |      | 4,866,000 |      |  |   | 4,880,000 |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Stock options and warrants      |  |      |          |      |  |   |          |  
|                                                                       |                                 |  |      |           |      |  |   |          
|                                                                       | Diluted                         |  |      | 4,866,000 |      |  |   | 4,880,000 |  
|                                                                       |                                 |  |      |           |      |  |   |          

See Notes to Consolidated Financial Statements.

F-4



---



##### Table of Contents






AMERICAN VANTAGE COMPANIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

YEARS ENDED JULY 31, 2001 AND 2000

|                       |                                                                             |  |              |         |        |   |        |   |           |   |           |         |          |   |          |         |  |   |            |            |  
|---------------------- | --------------------------------------------------------------------------- |  | ------------ | ------- | ------ | - | ------ | - | --------- | - | --------- | ------- | -------- | - | -------- | ------- |  | - | ---------- | ---------- | -
|                       |                                                                             |  | Common stock |         |        |   |        |   | Capital   |   |           |         |         
|                       |                                                                             |  |              |         |        |   |        |   | in excess |   |           |         |         
|                       |                                                                             |  |              |         |        |   |        |   |           |   | Capital   |         | of par - |   |          |         | 
|                       |                                                                             |  |              |         |        |   |        |   |           |   | in excess |         | stock    |   | Retained
|                       |                                                                             |  | Shares       |         | Amount |   | of par |   | options   |   | earnings 
|                       |                                                                             |  |              |         |        |   |        |   |           |   |          
|Balance, July 31, 1999 |                                                                             |  | 4,887,000    |         |        | $ | 49,000 |   |           | $ | 2,974,000 |         |          | $ |         |         |  | $ | 19,459,000 |           
|                      
|                      
|                      
|                      
|                       | Issuance of common stock options for
services                               |  |              |        |        |   |        |  |           |   |           |        |          |   |          | 179,000 |  |   |            |           |  
|                      
|                      
|                      
|                      
|                       | Issuance of common stock options in
acquisition of Placement 2000.Com,
Inc. |  |              |        |        |   |        |  |           |   |           |        |          |   |          | 99,000  |  |   |            |           |  
|                      
|                      
|                      
|                      
|                       | Shares repurchased and retired                                              |  |              | (28,744 | )      |   |        |  |           |   |           | (33,000 | )        |   |          |        |  |   |            |           |  
|                      
|                      
|                      
|                      
|                       | Net loss for the year                                                       |  |              |        |        |   |        |  |           |   |           |        |          |   |          |        |  |   |            | (3,852,000 | )
|                       |                                                                             |  |              |         |        |   |        |   |           |   |           |         |          |   |          |         |  |   |            |           
|Balance, July 31, 2000 |                                                                             |  | 4,858,256    |         |        |   | 49,000 |   |           |   | 2,941,000 |         |          |   | 278,000  |         |  |   | 15,607,000 |           
|                      
|                      
|                      
|                      
|                       | Shares issued                                                               |  |              | 22,333  |        |   |        |  |           |   |           | 25,000  |          |   |          |        |  |   |            |           |  
|                      
|                      
|                      
|                      
|                       | Shares repurchased and retired                                              |  |              | (14,733 | )      |   |        |  |           |   |           | (26,000 | )        |   |          |        |  |   |            |           |  
|                      
|                      
|                      
|                      
|                       | Net loss for the year                                                       |  |              |        |        |   |        |  |           |   |           |        |          |   |          |        |  |   |            | (1,007,000 | )
|                       |                                                                             |  |              |         |        |   |        |   |           |   |           |         |          |   |          |         |  |   |            |           
|Balance, July 31, 2001 |                                                                             |  | 4,865,856    |         |        | $ | 49,000 |   |           | $ | 2,940,000 |         |          | $ | 278,000  |         |  | $ | 14,600,000 |           
|                       |                                                                             |  |              |         |        |   |        |   |           |   |           |         |          |   |          |         |  |   |            |           

See Notes to Consolidated Financial Statements.

F-5



---



##### Table of Contents






AMERICAN VANTAGE COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED JULY 31, 2001 AND 2000

|                                                                            |                                                                                           |   |            |            |   |      |            |            |   | 
|--------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | - | ---------- | ---------- | - | ---- | ---------- | ---------- | - | 
|                                                                            |                                                                                           |   |            | 2001       |   | 2000
|                                                                            |                                                                                           |   |            |            |   |     
|Cash flows from operating activities:                                       |                                                                                           |   |            |            |   |      |            |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Net loss                                                                                  |   | $          | (1,007,000 | ) |      | $          | (3,852,000 | )
|                                                                            |                                                                                           |   |            |            |   |      |            |           
|Adjustments to reconcile net loss to net cash used by operating
activities: |                                                                                           |   |            |            |   |      |            |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Provision for loss on disposal of non-current assets of discontinued restaurant operation |   |            |           |   |      |            | 1,799,000  |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Gain on disposition of land held for sale                                                 |   |            | (897,000   | ) |      |            |           |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | (Income) loss of unconsolidated restaurant subsidiary                                     |   |            | (523,000   | ) |      |            | 103,000    |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Amortization and depreciation                                                             |   |            | 26,000     |   |      |            | 32,000     |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Write off of improvements to land held for investment or development                      |   |            |           |   |      |            | 211,000    |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Stock options issued for services                                                         |   |            |           |   |      |            | 179,000    |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Deferred income tax benefit                                                               |   |            | 733,000    |   |      |            | (407,000   | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Changes in other assets and liabilities, net                                              |   |            | 596,000    |   |      |            | (1,651,000 | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Changes in net assets of discontinued restaurant operation                                |   |            | 232,000    |   |      |            | 404,000    |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Changes in net assets of discontinued recruitment operation                               |   |            | 597,000    |   |      |            | (520,000   | )
|                                                                            |                                                                                           |   |            |            |   |      |            |           
|                                                                            |                                                                                           |   | 764,000    |            |   |      | 150,000    |           
|                                                                            |                                                                                           |   |            |            |   |      |            |           
|Net cash used by operating activities                                       |                                                                                           |   | (243,000   | )          |   |      | (3,702,000 | )         
|                                                                            |                                                                                           |   |            |            |   |      |            |           
|Cash flows from investing activities:                                       |                                                                                           |   |            |            |   |      |            |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Cash  restricted as to use                                                               |   |            |           |   |      |            | (516,000   | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Restricted cash transfer to unrestricted                                                  |   |            | 530,000    |   |      |            |           |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Options issued in purchase of discontinued recruitment operation                          |   |            |           |   |      |            | 22,000     |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Disposition of land held for sale                                                         |   |            | 2,246,000  |   |      |            |           |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Mortgage note receivable                                                                  |   |            |           |   |      |            | (1,300,000 | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Repayment of mortgage note receivable                                                     |   |            | 1,300,000  |   |      |            | 1,500,000  |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Investment in unconsolidated subsidiary                                                   |   |            |           |   |      |            | (1,550,000 | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Cash distribution from unconsolidated restaurant subsidiary                               |   |            | 700,000    |   |      |            |           |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Purchase of property and equipment, net                                                   |   |            |           |   |      |            | (14,000    | )
|                                                                            |                                                                                           |   |            |            |   |      |            |           
|Net cash provided (used) by investing activities                            |                                                                                           |   | 4,776,000  |            |   |      | (1,858,000 | )         
|                                                                            |                                                                                           |   |            |            |   |      |            |           
|Cash flows from financing activities:                                       |                                                                                           |   |            |            |   |      |            |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Repurchase of common stock                                                                |   |            | (26,000    | ) |      |            | (33,000    | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Proceeds from issuance of common stock                                                    |   |            | 25,000     |   |      |            |           |  
|                                                                            |                                                                                           |   |            |            |   |      |            |           
|Net cash used by financing activities                                       |                                                                                           |   | (1,000     | )          |   |      | (33,000    | )         
|                                                                            |                                                                                           |   |            |            |   |      |            |           
|Net increase (decrease) in cash and cash equivalents                        |                                                                                           |   | 4,532,000  |            |   |      | (5,593,000 | )         
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Cash and cash equivalents, at beginning of year                             |                                                                                           |   | 7,033,000  |            |   |      | 12,626,000 |           
|                                                                            |                                                                                           |   |            |            |   |      |            |           
|Cash and cash equivalents, at end of year                                   |                                                                                           | $ | 11,565,000 |            |   | $    | 7,033,000  |           
|                                                                            |                                                                                           |   |            |            |   |      |            |           

See Notes to Consolidated Financial Statements.

F-6



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEARS ENDED JULY 31, 2001 AND 2000

|                                                  |                                                               |                                                       |         |          |          |      |            |            |            |  
|------------------------------------------------- | ------------------------------------------------------------- | ----------------------------------------------------- | ------- | -------- | -------- | ---- | ---------- | ---------- | ---------- | -
|                                                  |                                                               |                                                       |         | 2001     |          | 2000
|                                                  |                                                               |                                                       |         |          |          |     
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |                                                               |                                                       |         |          |          |      |            |           
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Non-cash investing and financing activities:                  |                                                       |         |          |          |      |            |            |           
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Acquisition of Placement 2000.Com, Inc.:                      |                                                       |         |          |          |      |            |            |           
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Fair value of tangible assets                         |         | $        |         |      |            | $          | (116,000   | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Goodwill                                              |         |          |         |      |            |            | (276,000   | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Liabilities assumed                                   |         |          |         |      |            |            | 109,000    |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Minority interest                                     |         |          |         |      |            |            | 206,000    |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Stock options issued                                  |         |          |         |      |            |            | 99,000     |  
|                                                  |                                                               |                                                       |         |          |          |      |            |           
|                                                  | Net                                                           |                                                       | $       |         |          |      | $          | 22,000     |           
|                                                  |                                                               |                                                       |         |          |          |      |            |           
|                                                  |                                                               |                                                       |         |          |          |      |            |           
|                                                  | Non-cash activities:                                          |                                                       |         |          |          |      |            |            |           
|                                                  |                                                               |                                                       |         |          |          |      |            |           
|                                                  | Common stock options issued for service                       |                                                       | $       |         |          |      | $          | 179,000    |           
|                                                  |                                                               |                                                       |         |          |          |      |            |           
|                                                  | Common stock options issued in purchase of                    |                                                       |         |          |          |      |            |            |           
|                                                  |                                                               | Placement 2000.com., Inc                              |         | $        |         |      |            | $          | 99,000     |  
|                                                  |                                                               |                                                       |         |          |          |      |            |           
|                                                  |                                                               |                                                       |         |          |          |      |            |           
|DETAIL OF CHANGES IN OTHER ASSETS AND LIABILITIES |                                                               |                                                       |         |          |          |      |            |           
|                                                  |                                                               |                                                       |         |          |          |      |            |           
|                                                  | Decrease (increase) in accrued interest                       |                                                       | $       | 167,000  |          |      | $          | (189,000   | )         
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Decrease in accounts receivable                               |                                                       |         |         |          |      |            | 175,000    |           
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Decrease (increase) in refundable income taxes                |                                                       |         | 684,000  |          |      |            | (1,489,000 | )         
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Decrease (increase) in inventories                            |                                                       |         |         |          |      |            |           |           
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Decrease (increase) in prepaid expenses                       |                                                       |         | 17,000   |          |      |            | (19,000    | )         
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Increase in other assets                                      |                                                       |         | (10,000  | )        |      |            |           |           
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Decrease in accounts payable                                  |                                                       |         | (143,000 | )        |      |            | (264,000   | )         
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Increase (decrease) in accrued expenses                       |                                                       |         | (119,000 | )        |      |            | 34,000     |           
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Increase in accrued loss of discontinued restaurant operation |                                                       |         |         |          |      |            | 101,000    |           
|                                                  |                                                               |                                                       |         |          |          |      |            |           
|                                                  |                                                               | $                                                     | 596,000 |          |          | $    | (1,651,000 | )         
|                                                  |                                                               |                                                       |         |          |          |      |            |           
|                                                  | Changes in net assets of discontinued restaurant operation:   |                                                       |         |          |          |      |            |            |           
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Decrease in accounts receivable                       |         | $        | 13,000   |      |            | $          | 3,000      |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Decrease in inventories                               |         |          | 77,000   |      |            |            | 77,000     |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Decrease in prepaid expenses                          |         |          | 8,000    |      |            |            | 326,000    |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Decrease in other assets                              |         |          |         |      |            |            | 66,000     |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Decrease in equipment                                 |         |          | 134,000  |      |            |            | 1,731,000  |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Provisions for loss on disposal of non-current assets |         |          |         |      |            |            | (1,799,000 | )
|                                                  |                                                               |                                                       |         |          |          |      |            |           
|                                                  |                                                               | $                                                     | 232,000 |          |          | $    | 404,000    |           
|                                                  |                                                               |                                                       |         |          |          |      |            |           
|                                                  | Changes in net assets of discontinued recruitment operation:  |                                                       |         |          |          |      |            |            |           
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Decrease (increase) in cash                           |         | $        | 274,000  |      |            | $          | (274,000   | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Decrease in goodwill                                  |         |          | 250,000  |      |            |            | 26,000     |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Decrease (increase) in accounts receivable            |         |          | 280,000  |      |            |            | (164,000   | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Decrease (increase) in prepaid expenses               |         |          | 15,000   |      |            |            | (15,000    | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Decrease (increase) in equipment                      |         |          | 93,000   |      |            |            | (93,000    | )
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                                               | Decrease in accounts payable and other liabilities    |         |          | (315,000 | )    |            |            |           |  
|                                                  |                                                               |                                                       |         |          |          |      |            |           
|                                                  |                                                               | $                                                     | 597,000 |          |          | $    | (520,000   | )         
|                                                  |                                                               |                                                       |         |          |          |      |            |           

See Notes to Consolidated Financial Statements.

F-7



---



##### Table of Contents






AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JULY 31, 2001 AND 2000

1.      Nature of business and summary of significant accounting policies:

Nature of business:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company, until May 1999, was principally engaged in providing
consulting services to a gaming
facility in central California. The Company was involved with two
restaurant operations in Southern Nevada. The Company operated one of the
restaurants until September 2000, when it was closed, and is a minority
investor in the other restaurant. The Company owns a 40 acre parcel of
land in North Las Vegas, Nevada which is being held for sale.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In December 1999, the Company acquired a majority interest in
Placement 2000.com, Inc. (Placement) which was involved in
traditional recruitment of information technology professionals and
providing internet online services to them. The subsidiary was
located in New York, New York and provided services principally to the
surrounding tri-state area. The Company sold its interest in this
subsidiary in February 2001.

Principles of consolidation:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The consolidated financial statements include the accounts of
American Vantage Companies and its wholly and majority-owned
subsidiaries (the Company). A 49% owned restaurant subsidiary is
reported in the consolidated balance sheets at the Companys equity in
net assets of the subsidiary. The Company has reported all of the
income/loss of the unconsolidated subsidiary in the accompanying
statements of operations. All significant intercompany accounts and
transactions have been eliminated.

Cash and cash equivalents:



| |                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company maintains cash and cash equivalents, investments with
original maturities of three months or less, with certain financial
institutions. Due to the quality of the financial institutions
involved, they present a low level of risk to the Company. The
carrying amount of cash and cash equivalents approximates their fair
value.

Allowances for doubtful accounts:



| |                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Mortgage note receivable is reported at its fair value and is, in the
opinion of management, collectible and no allowance for doubtful
accounts was necessary at July 31, 2000. Specific accounts, which in
the opinion of management, are uncollectible are written off when such
determination is made.

Inventories:



| |                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Inventories, consisting principally of retail merchandise for sale are
included in the net assets of the discontinued restaurant operation in
the accompanying consolidated July 31, 2000 balance sheet and are
stated at the lower of cost or market using the first-in, first-out
method.

Property, equipment and depreciation:



| |                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------
| | Property and equipment is stated at cost. Depreciation is calculated using
accelerated methods over the estimated useful lives of the assets.

Earnings per share:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The computations of basic earnings per common share are based on the
weighted average number of common shares outstanding. The
computations of diluted earnings per share are based on the
weighted average number of common shares and common share equivalents
outstanding. Stock purchase warrants and options outstanding and
exercisable at or below the market price are considered common share
equivalents. Common share equivalents are excluded from the computation
of diluted loss per share because the effect would be anti-dilutive.

F-8



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)

YEARS ENDED JULY 31, 2001 AND 2000

1.      Nature of business and summary of significant accounting policies
(continued):

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 amounts reported in
the financial statements and accompanying notes. Actual results could
differ from those estimates.

Fair value of financial instruments:



| |                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Cash and cash equivalents, accrued interest, mortgage note receivable,
and accounts payable are reported at amounts that approximate their
fair values because of the short maturity of those instruments.

2.      Mortgage notes receivable:



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In Fiscal 1999, the Company issued a mortgage note receivable, which
bore interest at 22% and was secured by a first mortgage on undeveloped
land in Henderson, Nevada with an appraised value of $3,100,000. The
note principal and accrued interest was due July 29, 2000, at which time
it was paid in full.



| |                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In January 2000, the Company issued a mortgage note receivable for
$1,300,000 bearing interest at 22%. The note was secured by a first
mortgage on another parcel of undeveloped land in Henderson, Nevada
with an appraised value of $2,175,000. The note principal and accrued
interest was due on January 7, 2001, at which time it was paid in
full.

3.      Investment in unconsolidated restaurant subsidiary:



| |                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company owns a 49% interest in Border Grill Las Vegas, LLC
(BGLV), which owns the Border Grill restaurant. The restaurant is
located in the Mandalay Bay Resort & Casino on the Las Vegas Strip in
Las Vegas, Nevada. The Company invested $2,750,000 in BGLV.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | All (100%) of the income/loss from the operations for the restaurant
are reported as income/loss of unconsolidated subsidiary in the
consolidated statements of operations. In Fiscal 2000, the restaurant
began to report income from its operations. In the future, if the
restaurant continues to have net income, the Company will recognize
all such income from the operation until prior losses have been offset
and thereafter net income will be split proportionate to ownership
interests.



| |                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------
| | The following summarizes the condensed balance sheet and condensed
statement of income for BGLV at July 31, 2001 and for the year then
ended.

|                       |  |   |           | 
|---------------------- |  | - | --------- | 
|Assets                 |  | $ | 2,070,000 | 
|                      
|                      
|                      
|                      
|Liabilities            |  |   | 208,000   | 
|                       |  |   |           | 
|Members capital       |  | $ | 1,862,000 | 
|                       |  |   |           | 
|Revenues               |  | $ | 4,944,000 | 
|                      
|                      
|                      
|                      
|Expenses               |  |   | 4,421,000 | 
|                       |  |   |           | 
|Income from operations |  | $ | 523,000   | 
|                       |  |   |           | 



| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | BGLV has a management agreement with an entity owned by the majority
owners requiring payments equal to 5% of the gross sales of the
restaurant.

F-9



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)

YEARS ENDED JULY 31, 2001 AND 2000

4.      Discontinued operations:

Nitro Grill Restaurant:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company owned and operated the WCW Nitro Grill restaurant in the
Excalibur Hotel and Casino on the Las Vegas Strip in Las Vegas, Nevada.
The restaurant was closed on September 30, 2000. The net assets of the
discontinued operation have been reported at their estimated net
realizable value under the caption Net assets of discontinued
restaurant operation in the accompanying consolidated July 31, 2000
balance sheet.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At July 31, 2000, the Company recorded operating losses of $67,000
(net of an income tax benefit of $34,000) expected for the period from
August 1, 2000 through September 30, 2000. Additionally, a provision
of $1,052,000 was recorded (net of an income tax benefit of $543,000)
to provide for losses, which the Company may incur in disposing of the
restaurants equipment and inventory. These items are included in the
caption Discontinued restaurant operation in the accompanying
consolidated statements of operations for the year ended July 31,
2000. During the year ended July 31, 2001, the Company incurred an
additional loss of $104,000 in wrapping up this operation.



| |                                                                                                   
| | --------------------------------------------------------------------------------------------------
| | The following summarizes the net assets of the discontinued
restaurant operation at July 31, 2000:

|                              |  |   |         | 
|----------------------------- |  | - | ------- | 
|Accounts receivable           |  | $ | 13,000  | 
|                             
|                             
|                             
|                             
|Prepaid expenses and deposits |  |   | 8,000   | 
|                             
|                             
|                             
|                             
|Inventories                   |  |   | 77,000  | 
|                             
|                             
|                             
|                             
|Equipment                     |  |   | 134,000 | 
|                              |  |   |         | 
|                              |  | $ | 232,000 | 
|                              |  |   |         | 



| |                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Net assets of the discontinued operation were liquidated, sold or
written off during the year ended July 31, 2001. The discontinued
operation had revenues of $488,000 and $3,302,000 for the years ended
July 31, 2001 and 2000, respectively.

Placement 2000.Com, Inc.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Effective December 1, 1999, the Company acquired an 80% interest in
Placement for $1 million cash plus up to an additional $2 million in
cash, contingent on future events and earnings, to be used for
Placements general corporate purposes. The Company granted options
to Placements former principal, who remained with Placement to
purchase up to 333,334 shares of the Companys common stock. A
portion of the options (266,667) was exercisable if certain
profitability goals were met. None of the options were exercised.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The $1,099,000 purchase price recorded at December 1, 1999 was
comprised of $1,000,000 in cash and the value of stock options, which
were exercisable as of the acquisition date. Additionally, $500,000
of the contingent purchase price was placed into an escrow account and
was to be paid to Placement if future events occurred. The
acquisition was accounted for as a purchase. The excess of the total
acquisition price over the fair value of the net assets acquired
(goodwill) totaled $276,000 and was being amortized on a straight
line basis over seven (7) years. In Fiscal 2001, the Company advanced
$219,000 to Placement for operating capital.
|
| | Effective January 31, 2001, the Company sold its interest to Placements
former majority owner. The Company and the subsidiary and its
principals exchanged general releases and provided indemnification to
one another.                                                                                                                                                                                                                                                                                                                                                                                                                                              

F-10



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)

YEARS ENDED JULY 31, 2001 AND 2000

4.      Discontinued operations (continued):



| |                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The net assets of the discontinued operation have been recorded under the
caption Net assets of discontinued recruitment operation in the accompanying
consolidated balance sheet. The following summarizes the net assets of the
discontinued recruitment operation at July 31, 2000:

|                                       |  |   |          |  
|-------------------------------------- |  | - | -------- | -
|Cash                                   |  | $ | 274,000  |  
|                                      
|                                      
|                                      
|                                      
|Accounts receivable                    |  |   | 280,000  |  
|                                      
|                                      
|                                      
|                                      
|Prepaid expenses                       |  |   | 15,000   |  
|                                      
|                                      
|                                      
|                                      
|Equipment                              |  |   | 93,000   |  
|                                      
|                                      
|                                      
|                                      
|Goodwill                               |  |   | 250,000  |  
|                                      
|                                      
|                                      
|                                      
|Accounts payable and other liabilities |  |   | (315,000 | )
|                                       |  |   |          |  
|Net assets                             |  | $ | 597,000  |  
|                                       |  |   |          |  



| |                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Unamortized goodwill associated with the acquisition of Placement ($250,000
at July 31, 2000) was expensed in Fiscal 2001. Net assets of the
discontinued operation were removed from the Companys consolidated
balance sheet at the time of the sale of its interest.



| |                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Operations of Placement after December 1, 1999 are included in the
Companys consolidated statement of operations. The operations of
Placement have been reported as Discontinued recruitment operation
in the accompanying consolidated statements of operations. The
discontinued operation had revenues of $586,000 and $589,000 for the
years ended July 31, 2001 and 2000, respectively.

5.      Property and equipment:

Property and equipment is comprised of:

|                                         |  |      |         |      |  |   |         | 
|---------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                                         |  | 2001 |         | 2000
|                                         |  |      |         |     
|Furniture, fixtures and office equipment |  | $    | 221,000 |      |  | $ | 221,000 | 
|                                        
|                                        
|                                        
|                                        
|Leasehold improvements                   |  |      | 115,000 |      |  |   | 115,000 | 
|                                         |  |      |         |      |  |   |         | 
|                                         |  |      | 336,000 |      |  |   | 336,000 | 
|                                        
|                                        
|                                        
|                                        
|Less accumulated depreciation            |  |      | 211,000 |      |  |   | 188,000 | 
|                                         |  |      |         |      |  |   |         | 
|                                         |  | $    | 125,000 |      |  | $ | 148,000 | 
|                                         |  |      |         |      |  |   |         | 

6.      Casino Consulting:



| |                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Until May 1999, the Company provided casino consulting services to Table
Mountain Casino & Bingo, a Tribal gaming enterprise of the Table
Mountain Band of Indians (the Table Mountain Tribe), in Friant,
California under terms of a consulting agreement which expired in June
2000.



| |                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The consulting fee schedule in the consulting agreement was adjusted,
effective February 1, 1998, and the term of the agreement was extended
to June 30, 2000.



| |                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A termination agreement signed in February 1996 provided that the
Company would receive a monthly payment of $350,000 through January
2000, subject to meeting certain thresholds.



| |                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------
| | The contracts were prematurely terminated by the tribe in May, 1999.
See Note 13  Litigation with the Table Mountain Tribe.

F-11



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)

YEARS ENDED JULY 31, 2001 AND 2000

7.      Death Care Operations:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In December 1999, the Board of Directors decided to cancel its plans
to develop the cemetery and funeral home project in North Las Vegas,
Nevada and consider opportunities for the most advantageous
disposition of that land. Proceeds from the proposed sale of the land
will be allocated toward development of the Companys new corporate
growth plans. As a result of this decision, approximately $211,000 of
capitalized costs related to development of the cemetery/funeral home
project were written off as death care operations expense in the year
ended July 31, 2000.

8.      Stockholders equity:

Common stock:



| |                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Effective December 1, 1999, the Companys Board of Directors authorized a
one for three reverse split of the Companys issued and outstanding
common stock. No fractional shares were issued in connection with the
reverse split. Stockholders received one additional share for any
fractional shares.



| |                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The amounts reported in the consolidated statements of stockholders
equity as of July 31, 1999 have been restated to adjust for the
reverse split as though it occurred in Fiscal 1999.

Preferred stock:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Board of Directors has the authority to issue the preferred
stock, the terms of which (including, without limitation, dividend
rates, conversion rights, voting rights, terms of redemption and
liquidation preferences) may be fixed by the Board at its sole
discretion. The holders of the Companys common stock will not be
entitled to vote upon such matters. No shares of preferred stock of
any series are outstanding and the Board of Directors has no present
intention to issue any such shares. Shares of preferred stock issued
in the future could have conversion rights, which may result in the
issuance of
additional shares of common stock, which could dilute the interest of the
holders of common stock. Such shares could also have voting rights and
liquidation preferences which are senior to the rights and preferences of
the common stock. Additionally, such shares could have dividend,
redemption or other restrictive provisions.

Stock repurchase program:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In Fiscal 1998, the Board of Directors authorized the expenditure of
up to $2,000,000 to repurchase the Companys common stock. When the
Company repurchases shares, it is done according to applicable
securities laws and at times and in amounts as management deems
appropriate. Shares may be purchased in the open market or 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.



| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the years ended July 31, 2001 and 2000, the Company purchased
14,733 and 28,744 shares of common stock at a cost of $26,000 and
$33,000, respectively.

Stock option plans:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Prior to 1997, the Companys stockholders approved the creation of an
Officers Stock Option Plan and an Employees Stock Option Plan.
Under the Officers Stock Option Plan, 1,500,000 shares of the
Companys common stock are reserved for issuance to Company officers.
The Employees Stock Option Plan provides for 2,500,000 shares of
common stock which may be issued to key employees, including officers.
In 1997, the Companys stockholders approved the creation of the 1996
Stock Option Plan which reserves an additional 2,500,000 shares of the
Companys common stock for issuance 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.

F-12



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)

YEARS ENDED JULY 31, 2001 AND 2000

8.      Stockholders equity (continued):

The following is a summary of activity of outstanding stock options under
the Officers Stock Option Plan:

|                           |                  |  |                     |         |                |   |          |      | 
|-------------------------- | ---------------- |  | ------------------- | ------- | -------------- | - | -------- | ---- | 
|                           |                  |  | Options Outstanding
|                           |                  |  |                    
|                           |                  |  |                     |         |                |   | Weighted
|                           |                  |  |                     |         |                |   | Average 
|                           |                  |  | Shares              |         | Exercise Price
|                           |                  |  |                     |         |               
|Balance, July 31, 1999     |                  |  | 93,756              |         |                | $ | 2.07     |     
|                          
|                          
|                          
|                          
|                           | Granted          |  |                     | 11,696  |                |   |          | 1.13 | 
|                          
|                          
|                          
|                          
|                           | Canceled/expired |  |                     | (11,696 | )              |   |          | 2.07 | 
|                           |                  |  |                     |         |                |   |          |     
|Balance, July 31, 2000     |                  |  | 93,756              |         |                |   | 1.95     |     
|                          
|                          
|                          
|                          
|                           | Granted          |  |                     |        |                |   |          |     | 
|                          
|                          
|                          
|                          
|                           | Canceled/expired |  |                     | (41,030 | )              |   |          | 2.07 | 
|                           |                  |  |                     |         |                |   |          |     
|Balance, July 31, 2001     |                  |  | 52,726              |         |                | $ | 1.86     |     
|                           |                  |  |                     |         |                |   |          |     
|Exercisable, July 31, 2001 |                  |  | 52,726              |         |                | $ | 1.86     |     
|                           |                  |  |                     |         |                |   |          |     



| |                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------
| | The following is a summary of information about the Officers Stock
Option Plan options outstanding at July 31, 2001:

|         |           |             |      |                  |        |           |  |             |          |                |          |      |      |          |  |        |        |        |   |      |      |      | 
|-------- | --------- | ----------- | ---- | ---------------- | ------ | --------- |  | ----------- | -------- | -------------- | -------- | ---- | ---- | -------- |  | ------ | ------ | ------ | - | ---- | ---- | ---- | 
|         |           |             |      |                  |        |           |  |             | Weighted |                |          |      |      |          |  |        |        |        |   |      |     
|         |           |             |      |                  |        |           |  |             | average  |                | Weighted |      |      |          |  |        |        |        |  
|Range of |           |             |      |                  |        | remaining |  | average     |          |                |          |      |      | Weighted
|exercise |           | Number      |      | contractual life |        | exercise  |  | Number      |          | average       
|prices   |           | outstanding |      | (years)          |        | price     |  | exercisable |          | exercise price
|         |           |             |      |                  |        |           |  |             |          |               
|$        |           | 1.13        |      |                  | 11,696 |           |  |             | 8.5      |                |          | $    | 1.13 |          |  |        | 11,696 |        |   | $    | 1.13 |     
|        
|        
|        
|        
|         |           |             | 2.07 |                  |        | 41,030    |  |             |          | 0.3            |          |      |      | 2.07     |  |        |        | 41,030 |   |      |      | 2.07 | 
|         |           |             |      |                  |        |           |  |             |          |                |          |      |      |          |  |        |        |        |   |     
|$        | 1.13-2.07 |             |      | 52,726           |        |           |  | 2.1         |          |                | $        | 1.86 |      |          |  | 52,726 |        |        | $ | 1.86 |     
|         |           |             |      |                  |        |           |  |             |          |                |          |      |      |          |  |        |        |        |   |     

F-13



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED JULY 31, 2001 AND 2000

8.      Stockholders equity (continued):

Stock option plans (continued):



| |                                                                       
| | ----------------------------------------------------------------------
| | Activity of the Employees Stock Option Plan is summarized as follows:

|                           |                  |  |                     |          |                |   |          |      | 
|-------------------------- | ---------------- |  | ------------------- | -------- | -------------- | - | -------- | ---- | 
|                           |                  |  | Options Outstanding
|                           |                  |  |                    
|                           |                  |  |                     |          |                |   | Weighted
|                           |                  |  |                     |          |                |   | Average 
|                           |                  |  | Shares              |          | Exercise Price
|                           |                  |  |                     |          |               
|Balance, July 31, 1999     |                  |  | 712,913             |          |                | $ | 2.70     |     
|                          
|                          
|                          
|                          
|                           | Granted          |  |                     | 108,971  |                |   |          | 1.13 | 
|                          
|                          
|                          
|                          
|                           | Canceled/expired |  |                     | (108,971 | )              |   |          | 2.07 | 
|                           |                  |  |                     |          |                |   |          |     
|Balance, July 31, 2000     |                  |  | 712,913             |          |                |   | 2.55     |     
|                          
|                          
|                          
|                          
|                           | Granted          |  |                     | 8,333    |                |   |          | 1.63 | 
|                          
|                          
|                          
|                          
|                           | Canceled/expired |  |                     | (134,303 | )              |   |          | 2.07 | 
|                           |                  |  |                     |          |                |   |          |     
|Balance, July 31, 2001     |                  |  | 586,943             |          |                | $ | 2.65     |     
|                           |                  |  |                     |          |                |   |          |     
|Exercisable, July 31, 2001 |                  |  | 586,943             |          |                | $ | 2.65     |     
|                           |                  |  |                     |          |                |   |          |     



| |                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------
| | The following is a summary of information about the Employees Stock
Option Plan options outstanding at July 31, 2001:

|                  |           |                    |      |         |         |                  |  |                    |                  |                |   |      |      |                  |  |         |         |         |   |      |      |      | 
|----------------- | --------- | ------------------ | ---- | ------- | ------- | ---------------- |  | ------------------ | ---------------- | -------------- | - | ---- | ---- | ---------------- |  | ------- | ------- | ------- | - | ---- | ---- | ---- | 
|                  |           |                    |      |         |         |                  |  |                    | Weighted average |                |   |      |      |                  |  |         |         |         |   |      |     
|                  |           |                    |      |         |         |                  |  |                    | remaining        |                |   |      |      |                  |  |         |         |         |   |      |     
|Range of exercise |           |                    |      |         |         | contractual life |  | Weighted average   |                  |                |   |      |      | Weighted average
|prices            |           | Number outstanding |      | (years) |         | exercise price   |  | Number exercisable |                  | exercise price
|                  |           |                    |      |         |         |                  |  |                    |                  |               
|$                 |           | 1.13               |      |         | 108,971 |                  |  |                    | 8.6              |                |   | $    | 1.13 |                  |  |         | 108,971 |         |   | $    | 1.13 |     
|                 
|                 
|                 
|                 
|                  |           |                    | 1.63 |         |         | 8,333            |  |                    |                  | 9.3            |   |      |      | 1.63             |  |         |         | 8,333   |   |      |      | 1.63 | 
|                 
|                 
|                 
|                 
|                  |           |                    | 2.07 |         |         | 202,972          |  |                    |                  | 0.6            |   |      |      | 2.07             |  |         |         | 202,972 |   |      |      | 2.07 | 
|                 
|                 
|                 
|                 
|                  |           |                    | 3.75 |         |         | 266,667          |  |                    |                  | 0.3            |   |      |      | 3.75             |  |         |         | 266,667 |   |      |      | 3.75 | 
|                  |           |                    |      |         |         |                  |  |                    |                  |                |   |      |      |                  |  |         |         |         |   |     
|$                 | 1.13-3.75 |                    |      | 586,943 |         |                  |  | 2.1                |                  |                | $ | 2.65 |      |                  |  | 586,943 |         |         | $ | 2.65 |     
|                  |           |                    |      |         |         |                  |  |                    |                  |                |   |      |      |                  |  |         |         |         |   |     

F-14



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED JULY 31, 2001 AND 2000

8. Stockholders equity (continued):

Stock option plans (continued):



| |                                                                 
| | ----------------------------------------------------------------
| | Activity of the 1996 Stock Option Plan is summarized as follows:

|                           |           |  |                     |         |                |   |          |      | 
|-------------------------- | --------- |  | ------------------- | ------- | -------------- | - | -------- | ---- | 
|                           |           |  | Options Outstanding
|                           |           |  |                    
|                           |           |  |                     |         |                |   | Weighted
|                           |           |  |                     |         |                |   | Average 
|                           |           |  | Shares              |         | Exercise Price
|                           |           |  |                     |         |               
|Balance, July 31, 1999     |           |  | 116,671             |         |                | $ | 3.51     |     
|                          
|                          
|                          
|                          
|                           | Granted   |  |                     | 22,333  |                |   |          | 1.13 | 
|                           |           |  |                     |         |                |   |          |     
|Balance, July 31, 2000     |           |  | 139,004             |         |                |   | 3.12     |     
|                          
|                          
|                          
|                          
|                           | Exercised |  |                     | (22,333 | )              |   |          | 1.13 | 
|                           |           |  |                     |         |                |   |          |     
|Balance, July 31, 2001     |           |  | 116,671             |         |                | $ | 3.51     |     
|                           |           |  |                     |         |                |   |          |     
|Exercisable, July 31, 2001 |           |  | 116,671             |         |                | $ | 3.51     |     
|                           |           |  |                     |         |                |   |          |     



| |                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------
| | The following is a summary of information about the 1996 Stock Option Plan
options outstanding at July 31, 2001:

|         |           |             |      |                  |        |                |  |             |          |                |   |      |      |          |  |         |        |        |   |      |      |      | 
|-------- | --------- | ----------- | ---- | ---------------- | ------ | -------------- |  | ----------- | -------- | -------------- | - | ---- | ---- | -------- |  | ------- | ------ | ------ | - | ---- | ---- | ---- | 
|         |           |             |      |                  |        |                |  |             | Weighted |                |   |      |      |          |  |         |        |        |   |      |     
|         |           |             |      |                  |        |                |  |             | average  |                |   |      |      |          |  |         |        |        |   |      |     
|Range of |           |             |      |                  |        | remaining      |  | Weighted    |          |                |   |      |      | Weighted
|exercise |           | Number      |      | contractual life |        | average        |  | Number      |          | average       
|prices   |           | outstanding |      | (years)          |        | exercise price |  | exercisable |          | exercise price
|         |           |             |      |                  |        |                |  |             |          |               
|$        |           | 3.48        |      |                  | 83,337 |                |  |             | 1.4      |                |   | $    | 3.48 |          |  |         | 83,337 |        |   | $    | 3.48 |     
|        
|        
|        
|        
|         |           |             | 3.57 |                  |        | 33,334         |  |             |          | 6.6            |   |      |      | 3.57     |  |         |        | 33,334 |   |      |      | 3.57 | 
|         |           |             |      |                  |        |                |  |             |          |                |   |      |      |          |  |         |        |        |   |     
|$        | 3.48-3.57 |             |      | 116,671          |        |                |  | 2.9         |          |                | $ | 3.51 |      |          |  | 116,671 |        |        | $ | 3.51 |     
|         |           |             |      |                  |        |                |  |             |          |                |   |      |      |          |  |         |        |        |   |     

F-15



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED JULY 31, 2001 AND 2000

8.      Stockholders equity (continued):

Other options granted:



| |                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Other options were granted to outside members of the Board of
Directors, the former principal of Placement, and to legal counsel for
services. The options were granted at the market value of the
Companys common stock at the date of grant. Activity of other
options granted is as follows:

|                           |                  |  |                     |          |                |   |          |      | 
|-------------------------- | ---------------- |  | ------------------- | -------- | -------------- | - | -------- | ---- | 
|                           |                  |  | Options Outstanding
|                           |                  |  |                    
|                           |                  |  |                     |          |                |   | Weighted
|                           |                  |  |                     |          |                |   | Average 
|                           |                  |  | Shares              |          | Exercise Price
|                           |                  |  |                     |          |               
|Balance, July 31, 1999     |                  |  | 100,834             |          |                | $ | 3.60     |     
|                          
|                          
|                          
|                          
|                           | Granted          |  |                     | 782,409  |                |   |          | 1.63 | 
|                          
|                          
|                          
|                          
|                           | Canceled/expired |  |                     | (54,167  | )              |   |          | 1.13 | 
|                           |                  |  |                     |          |                |   |          |     
|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     |     
|                           |                  |  |                     |          |                |   |          |     
|Exercisable, July 31, 2001 |                  |  | 172,501             |          |                | $ | 1.58     |     
|                           |                  |  |                     |          |                |   |          |     



| |                                                                                            
| | -------------------------------------------------------------------------------------------
| | The following is a summary of information about other options
outstanding at July 31, 2001:

|         |           |             |      |                  |        |                |  |             |          |                |   |      |      |          |  |         |        |        |   |      |      |      | 
|-------- | --------- | ----------- | ---- | ---------------- | ------ | -------------- |  | ----------- | -------- | -------------- | - | ---- | ---- | -------- |  | ------- | ------ | ------ | - | ---- | ---- | ---- | 
|         |           |             |      |                  |        |                |  |             | Weighted |                |   |      |      |          |  |         |        |        |   |      |     
|         |           |             |      |                  |        |                |  |             | average  |                |   |      |      |          |  |         |        |        |   |      |     
|Range of |           |             |      |                  |        | remaining      |  | Weighted    |          |                |   |      |      | Weighted
|exercise |           | Number      |      | contractual life |        | average        |  | Number      |          | average       
|prices   |           | outstanding |      | (years)          |        | exercise price |  | exercisable |          | exercise price
|         |           |             |      |                  |        |                |  |             |          |               
|$        |           | 1.09        |      |                  | 50,000 |                |  |             | 8.8      |                |   | $    | 1.09 |          |  |         | 35,000 |        |   | $    | 1.09 |     
|        
|        
|        
|        
|         |           |             | 1.13 |                  |        | 75,001         |  |             |          | 9.1            |   |      |      | 1.13     |  |         |        | 75,001 |   |      |      | 1.13 | 
|        
|        
|        
|        
|         |           |             | 1.65 |                  |        | 32,500         |  |             |          | 9.8            |   |      |      | 1.65     |  |         |        | 32,500 |   |      |      | 1.65 | 
|        
|        
|        
|        
|         |           |             | 3.57 |                  |        | 25,000         |  |             |          | 6.6            |   |      |      | 3.57     |  |         |        | 25,000 |   |      |      | 3.57 | 
|        
|        
|        
|        
|         |           |             | 3.75 |                  |        | 5,000          |  |             |          | 0.3            |   |      |      | 3.75     |  |         |        | 5,000  |   |      |      | 3.75 | 
|         |           |             |      |                  |        |                |  |             |          |                |   |      |      |          |  |         |        |        |   |     
|$        | 1.09-3.75 |             |      | 187,501          |        |                |  | 8.7         |          |                | $ | 1.54 |      |          |  | 172,501 |        |        | $ | 1.58 |     
|         |           |             |      |                  |        |                |  |             |          |                |   |      |      |          |  |         |        |        |   |     



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Statement of Financial Accounting Standards No. 123  Accounting for
Stock-Based Compensation (SFAS 123), provides that companies may
elect to account for employee stock options using a fair value-based
method or continue to apply the intrinsic value-based method
prescribed by Accounting Principals Board Opinion No. 25 (APB 25).                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Under the fair value-based method prescribed by SFAS 123, all employee
stock option grants are considered compensatory. Compensation cost is
measured at the date of grant based on the estimated fair value of the
options determined using an option pricing model. The model takes
into account the stock price at the grant date, the exercise price,
the expected life of the option, the volatility of the stock, expected
dividends on the stock and the risk-free interest rate over the
expected life of the option. Under APB 25, generally only stock
options that have intrinsic value at the date of grant are considered
compensatory. Intrinsic value represents the excess, if any, of the
market price of the stock at the grant date over the exercise price of
the options.

F-16



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED JULY 31, 2001 AND 2000

8.      Stockholders equity (continued):

Other options granted (continued):



| |                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------
| | As permitted by SFAS 123, the Company accounts for these plans under
APB 25, under which no compensation cost has been recognized.



| |                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following table discloses the Companys pro forma net loss and
net income loss per share assuming compensation cost for employee
stock options and warrants had been determined using the fair
value-based method prescribed by SFAS 123.

|                |             |             |   |            |       |      |   |            |       |  
|--------------- | ----------- | ----------- | - | ---------- | ----- | ---- | - | ---------- | ----- | -
|                |             |             |   | 2001       |       | 2000
|                |             |             |   |            |       |     
|Net loss:       |             |             |   |            |       |      |   |           
|               
|               
|               
|               
|                | As reported |             | $ | (1,007,000 | )     |      | $ | (3,852,000 | )    
|               
|               
|               
|               
|                | Pro forma   |             |   | (1,066,000 | )     |      |   | (4,021,000 | )    
|               
|               
|               
|               
|Loss per share: |             |             |   |            |       |      |   |           
|               
|               
|               
|               
|                | Basic:      |             |   |            |       |      |   |            |      
|               
|               
|               
|               
|                |             | As reported |   |            | (0.21 | )    |   |            | (0.79 | )
|               
|               
|               
|               
|                |             | Pro forma   |   |            | (0.22 | )    |   |            | (0.82 | )
|               
|               
|               
|               
|                | Diluted:    |             |   |            |       |      |   |            |      
|               
|               
|               
|               
|                |             | As reported |   |            | (0.21 | )    |   |            | (0.79 | )
|               
|               
|               
|               
|                |             | Pro forma   |   |            | (0.22 | )    |   |            | (0.82 | )



| |                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The fair value of each award under the stock option plans is
estimated on the date of grant using the Black-Scholes option pricing
model. The following range of assumptions were used to estimate the
fair value of the options for the year ended July 31, 2001:

|                                                           |  |                        |  |  
|---------------------------------------------------------- |  | ---------------------- |  | -
|                                                           |  | Employee stock option 
|                                                           |  | plan and other options
|                                                           |  |                       
|                                                           |  |                       
|Expected stock price volatility                            |  | 265% to 308%          
|                                                          
|                                                          
|                                                          
|                                                          
|Expected option lives (years)                              |  |                        |  | 5
|                                                          
|                                                          
|                                                          
|                                                          
|Expected dividend yield                                    |  |                        |  | 
|                                                          
|                                                          
|                                                          
|                                                          
|Risk-free interest rates                                   |  | 5.0% to 5.8%          
|                                                          
|                                                          
|                                                          
|                                                          
|Weighted-average fair value of options granted during year |  | $1.36 to 1.47         

9.      Income taxes:



| |                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The income tax benefit (expense) for 2001 and 2000 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:

|                           |  |      |          |   |  |      |    |   |  |   |         |   |  |  |    |  
|-------------------------- |  | ---- | -------- | - |  | ---- | -- | - |  | - | ------- | - |  |  | -- | -
|                           |  | 2001 |          | % |  | 2000 |    | %
|                           |  |      |          |   |  |      |    |  
|Statutory federal tax rate |  | $    | 109,000  |   |  |      | 34 |   |  | $ | 708,000 |   |  |  | 34 |  
|                          
|                          
|                          
|                          
|Other                      |  |      | (107,000 | ) |  |      | 33 |   |  |   | (60,000 | ) |  |  | (2 | )
|                           |  |      |          |   |  |      |    |   |  |   |         |   |  |  |    |  
|Effective tax benefit      |  | $    | 2,000    |   |  |      | 1  |   |  | $ | 648,000 |   |  |  | 32 |  
|                           |  |      |          |   |  |      |    |   |  |   |         |   |  |  |    |  

F-17



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED JULY 31, 2001 AND 2000

9.      Income taxes (continued):



| |                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------
| | The components of deferred tax benefits and assets at July 31, 2001
and 2000 and for the years then ended are comprised of:

|                                   |                                                |                                                   |        |          |          |      |         |          |         |  
|---------------------------------- | ---------------------------------------------- | ------------------------------------------------- | ------ | -------- | -------- | ---- | ------- | -------- | ------- | -
|                                   |                                                |                                                   |        | 2001     |          | 2000
|                                   |                                                |                                                   |        |          |          |     
|Deferred tax (expense) benefits:   |                                                |                                                   |        |          |          |      |         |         
|                                  
|                                  
|                                  
|                                  
|                                   | Start-up costs of restaurant                   |                                                   | $      | (47,000  | )        |      | $       | 33,000   |        
|                                  
|                                  
|                                  
|                                  
|                                   | Income of unconsolidated restaurant subsidiary |                                                   |        | (69,000  | )        |      |         | (221,000 | )      
|                                  
|                                  
|                                  
|                                  
|                                   | Accrued expenses                               |                                                   |        | (38,000  | )        |      |         | 43,000   |        
|                                  
|                                  
|                                  
|                                  
|                                   | Estimated loss on discontinued operations      |                                                   |        | (465,000 | )        |      |         |         |        
|                                  
|                                  
|                                  
|                                  
|                                   | Valuation reserve                              |                                                   |        | (114,000 | )        |      |         |         |        
|                                   |                                                |                                                   |        |          |          |      |         |         
|                                   | Total deferred tax expense                     |                                                   | $      | (733,000 | )        |      | $       | (145,000 | )      
|                                   |                                                |                                                   |        |          |          |      |         |         
|Deferred tax assets (liabilities): |                                                |                                                   |        |          |          |      |         |         
|                                  
|                                  
|                                  
|                                  
|                                   | Current:                                       |                                                   |        |          |          |      |         |          |        
|                                  
|                                  
|                                  
|                                  
|                                   |                                                | Start-up costs of restaurants                     |        | $        | 29,000   |      |         | $        | 28,000  |  
|                                  
|                                  
|                                  
|                                  
|                                   |                                                | (Income) loss of unconsolidated subsidiary        |        |          | (123,000 | )    |         |          | (54,000 | )
|                                  
|                                  
|                                  
|                                  
|                                   |                                                | Accrued expense                                   |        |          | 16,000   |      |         |          | 54,000  |  
|                                  
|                                  
|                                  
|                                  
|                                   |                                                | Estimated loss on disposal of discontinued assets |        |          | 148,000  |      |         |          | 613,000 |  
|                                   |                                                |                                                   |        |          |          |      |         |         
|                                   |                                                |                                                   | 70,000 |          |          |      | 641,000 |         
|                                  
|                                  
|                                  
|                                  
|                                   |                                                | Less valuation allowance                          |        |          | (70,000  | )    |         |          |        |  
|                                   |                                                |                                                   |        |          |          |      |         |         
|                                   |                                                |                                                   |       |          |          |      | 641,000 |         
|                                   |                                                |                                                   |        |          |          |      |         |         
|                                   | Long-term:                                     |                                                   |        |          |          |      |         |          |        
|                                  
|                                  
|                                  
|                                  
|                                   |                                                | Start-up costs of restaurants                     |        |          | 44,000   |      |         |          | 92,000  |  
|                                  
|                                  
|                                  
|                                  
|                                   |                                                | Valuation allowance                               |        |          | (44,000  | )    |         |          |        |  
|                                   |                                                |                                                   |        |          |          |      |         |         
|                                   |                                                |                                                   |       |          |          |      | 92,000  |         
|                                   |                                                |                                                   |        |          |          |      |         |         
|                                   | Total deferred tax assets                      |                                                   | $      |         |          |      | $       | 733,000  |        
|                                   |                                                |                                                   |        |          |          |      |         |         

10. Segment information:



| |                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Revenues, operating (loss) income (excluding amortization and depreciation
and minority interest), identifiable assets (excluding discontinued
operations), capital expenditures, and depreciation and amortization
are as follows:

|                                   |  |                   |            |      |            |      |            |   |            |  
|---------------------------------- |  | ----------------- | ---------- | ---- | ---------- | ---- | ---------- | - | ---------- | -
|                                   |  |                   |            | 2001 |            | 2000
|                                   |  |                   |            |      |            |     
|Revenues
        Casino consulting |  | $                 |           |      |            | $    |           |  
|                                   |  |                   |            |      |            |      |            |  
|                                   |  |                   |            |      |            |      |            |  
|                                  
|                                  
|                                  
|                                  
|Operating (loss) income:           |  |                   |            |      |            |      |            |  
|                                  
|                                  
|                                  
|                                  
|                                   |  | Casino consulting |            | $    | (209,000   | )    |            | $ | (485,000   | )
|                                  
|                                  
|                                  
|                                  
|                                   |  | Restaurant        |            |      | 523,000    |      |            |   | (103,000   | )
|                                  
|                                  
|                                  
|                                  
|                                   |  | Death care        |            |      | (33,000    | )    |            |   | (301,000   | )
|                                  
|                                  
|                                  
|                                  
|                                   |  | Corporate         |            |      | (2,090,000 | )    |            |   | (2,103,000 | )
|                                   |  |                   |            |      |            |      |            |  
|                                   |  | $                 | (1,809,000 | )    |            | $    | (2,992,000 | )
|                                   |  |                   |            |      |            |      |            |  

F-18



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)

YEARS ENDED JULY 31, 2001 AND 2000

10.     Segment
information (continued):

|                               |            |   |            |            |  |   |            |            | 
|------------------------------ | ---------- | - | ---------- | ---------- |  | - | ---------- | ---------- | 
|Identifiable assets:           |            |   |            |            |  |   |            |           
|                              
|                              
|                              
|                              
|                               | Restaurant |   | $          | 1,861,000  |  |   | $          | 2,038,000  | 
|                              
|                              
|                              
|                              
|                               | Corporate  |   |            | 16,339,000 |  |   |            | 16,603,000 | 
|                               |            |   |            |            |  |   |            |           
|                               |            | $ | 18,200,000 |            |  | $ | 18,641,000 |           
|                               |            |   |            |            |  |   |            |           
|Capital expenditures:          |            |   |            |            |  |   |            |           
|                              
|                              
|                              
|                              
|                               | Corporate  |   | $          |           |  |   | $          | 14,000     | 
|                               |            |   |            |            |  |   |            |           
|Depreciation and amortization: |            |   |            |            |  |   |            |           
|                              
|                              
|                              
|                              
|                               | Corporate  |   | $          | 26,000     |  |   | $          | 32,000     | 
|                               |            |   |            |            |  |   |            |           



| |                                                       
| | ------------------------------------------------------
| | There were no intersegment sales during 2001 and 2000.

11.     Commitments and contingencies:

a)     Commitments:



| |                                                                                           
| | ------------------------------------------------------------------------------------------
| | The Company leases office space and an automobile under
operating leases expiring in 2002.



| |                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | There are no minimum future rental payments under
non-cancelable operating leases having remaining terms in excess
of one year as of July 31, 2001.



| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| | Lease expense was $120,000 and $140,000 for the years ended July 31,
2001 and 2000, respectively.

b)     Concentrations of credit risk:



| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Companys cash, cash equivalents and restricted cash are on
deposit with two financial institutions which are FDIC insured on
amounts up to $100,000.

c)     Employment agreements:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In July, 1995, the Company entered into employment
agreements with certain key executives which expire in 2002. The
employment agreements provide for, among other things, annual base
compensation, participation in bonus plans and life insurance.
The agreements also contain severance provisions which provide for
payments to the executives in the event of their termination after
a change in control, as defined. The severance provisions provide
for a compensation payment equal to the sum of A) the product of
2.99 times the sum of (i) the
annual salary in effect for the executive, at the time of the change
of control, plus (ii) bonus paid or payable to the executive under
the Companys compensation policies and B) payment based on the
number of stock options which the key executives have not exercised
within three months of their termination of employment. Aggregate
annual salaries guaranteed by the agreements are $769,000. At July
31, 2001, the estimated amount that would have been payable as
severance compensation under the agreements to these executives based
on compensation and stock options was $2,342,000.

12.     Retirement plan:



| |                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | All of the Companys 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 $93,000 and $94,000 for the years ended July 31, 2001 and
2000, respectively.

F-19



---



##### Table of Contents



AMERICAN VANTAGE COMPANIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)

YEARS ENDED JULY 31, 2001 AND 2000

13.     Litigation with the Table Mountain Tribe



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Until May 1999, the Company had two contracts to provide gaming
consulting services to the Table Mountain Casino. In May 1999, the
Table Mountain Tribe voted to prematurely terminate both contracts
with the Company. The first contract, entered into in February 1996,
was a buyout of an earlier contract and required payments of $350,000
per month for 48 months through January 2000. The second contract, a
consulting contract, also entered into in February 1996 and
subsequently amended, was to expire in June, 2000. Since May 1999,
the Table Mountain Tribe has not honored the consulting and
termination contracts with the Company.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In June 1999, the Company filed a lawsuit in the United States
Court, Eastern District of California (District Court) against the
Table Mountain Tribe. The lawsuit sought to recover payments totaling
$3,150,000 due under the first (buyout) contract. And under the
consulting contract, the Company sought an award of $790,000, the base
level consulting fees provided by the contract, as well as bonus
consulting fees based on the casinos profit level that would have
been due during the remainder of the contract term.



| |                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Table Mountain Tribe had filed a counterclaim against the Company
claiming the consulting contracts were 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 with prejudice 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 has appealed
the District Courts order to the Ninth Circuit Court of Appeals,
which has yet to rule.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On December 8, 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, the Superior Court
dismissed the Companys civil action for lack of subject matter
jurisdiction, based on the 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, which has also not yet ruled.
|
| | The Company continues to actively pursue its legal claims against the
Table Mountain Tribe.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

F-20



---



##### Table of Contents



Index to Exhibits

|         |  |                                                                                                                                                                                                                                                                                           
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibits |  |                                                                                                                                                                                                                                                                                           
|         |  |                                                                                                                                                                                                                                                                                           
|3.1      |  | Articles of Incorporation.(1)                                                                                                                                                                                                                                                             
|        
|        
|        
|        
|3.2      |  | By Laws.(1)                                                                                                                                                                                                                                                                               
|        
|        
|        
|        
|3.3      |  | Certificate of Amendment to Articles of Incorporation.(4)                                                                                                                                                                                                                                 
|        
|        
|        
|        
|3.4      |  | Certificate of Amendment to Articles of Incorporation.(5)                                                                                                                                                                                                                                 
|        
|        
|        
|        
|10.1     |  | American Casino Enterprises, Inc. 1991 Officers Stock Option Plan,
as amended.(3)                                                                                                                                                                                                         
|        
|        
|        
|        
|10.2     |  | American Casino Enterprises, Inc. 1992 Employee Stock Option Plan.(3)                                                                                                                                                                                                                     
|        
|        
|        
|        
|10.3     |  | American Casino Enterprises, Inc. 1996 Stock Option Plan.(3)                                                                                                                                                                                                                              
|        
|        
|        
|        
|10.4     |  | Management Consultant Contract, dated March 27, 1993, between the
Company and the Table Mountain Band of Indians.(5)                                                                                                                                                                      
|        
|        
|        
|        
|10.5     |  | Employment Agreement, dated July 20, 1995, between the Company and
Ronald J. Tassinari.(5)                                                                                                                                                                                                
|        
|        
|        
|        
|10.6     |  | Employment Agreement, dated July 20, 1995, between the Company and
Audrey K. Tassinari.(5)                                                                                                                                                                                                
|        
|        
|        
|        
|10.7     |  | Employment Agreement, dated July 20, 1995, between the Company
and Roy K.
Keefer.(5)                                                                                                                                                                                                      
|        
|        
|        
|        
|10.8     |  | Letter Agreement, dated September 11, 1995, between the Company and
Table Mountain Rancheria.(5)                                                                                                                                                                                          
|        
|        
|        
|        
|10.9     |  | Settlement Agreement, dated February 1, 1996, between the Company
and the National Indian Gaming Commission.(6)                                                                                                                                                                           
|        
|        
|        
|        
|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.(6)
|        
|        
|        
|        
|10.11    |  | Consulting Agreement, dated February 1, 1996, between the Company
and Table Mountain Rancheria.(6)                                                                                                                                                                                        
|        
|        
|        
|        
|10.12    |  | Amendment to Consulting Agreement, dated June 26, 1997, between the
Company and Table Mountain Rancheria.(7)                                                                                                                                                                              
|        
|        
|        
|        
|10.13    |  | Joint Venture Agreement, dated as of February 1, 1996, between the
Company and the Table Mountain Rancheria.(8)                                                                                                                                                                           
|        
|        
|        
|        
|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).(8)                                               
|        
|        
|        
|        
|10.15    |  | Lease, dated March 14, 1996, between the Company and Tropicana Trail
Limited Partnership.(8)                                                                                                                                                                                              
|        
|        
|        
|        
|10.16    |  | Agreement to Terminate Funding and Loan Agreement, dated March 10,
1998, between Table Mountain/ACES Joint Venture and United Auburn
Indian Community.(9)                                                                                                                                 





---



##### Table of Contents



|         |  |                                                                                                                                                   
|-------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibits |  |                                                                                                                                                   
|         |  |                                                                                                                                                   
|        
|        
|        
|        
|10.17    |  | Promissory Note, dated March 10, 1998, between Table Mountain/ACES
Joint Venture and United Auburn Indian Community.(9)                           
|        
|        
|        
|        
|10.18    |  | Promissory Notes, each dated August 24, 1998, between the Company
and the Table Mountain Band of Indians of the Table Mountain
Rancheria.(9)      
|        
|        
|        
|        
|10.19    |  | License Agreement, dated as of November 12, 1998, by and among Sitka
Restaurant Group, Inc. and World Championship Wrestling, Inc.(10)            
|        
|        
|        
|        
|10.20    |  | Lease for Restaurant Space, dated as of November 19, 1998, by and
between New Castle Corp. and Sitka Restaurant Group, Inc.(10)                   
|        
|        
|        
|        
|10.21    |  | Operating Agreement for Border Grill Las Vegas, LLC, dated November
12, 1998, by and between TT&T, LLC and Vantage Bay Group,
Inc.(10)            
|        
|        
|        
|        
|10.22    |  | Lease for Restaurant Space, dated November 12, 1998, by and between
Mandalay Corp. and Border Grill Las Vegas, LLC.(10)                           
|        
|        
|        
|        
|10.23    |  | Stock Purchase Agreement, dated as of December 1, 1999, by and among
the Company, Placement 2000.com, Inc. and Michael Woloshin.(11)              
|        
|        
|        
|        
|10.24    |  | Employment Agreement, dated as of December 1, 1999, between the
Michael Woloshin and Placement 2000.com, Inc.(11)                                 
|        
|        
|        
|        
|10.25    |  | Non-Qualified Stock Option Agreement, dated as of December 1, 1999,
between the Company and Michael Woloshin.(11)                                 
|        
|        
|        
|        
|10.26    |  | Settlement Agreement, dated as of January 31, 2001, by and among the
Company, Placement 2000.com, Inc. and Michael Woloshin.(12)                  
|        
|        
|        
|        
|10.27    |  | 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.(13)
|        
|        
|        
|        
|21.1     |  | Subsidiaries of the Registrant.                                                                                                                   
|        
|        
|        
|        
|23.1     |  | Consent of Bradshaw, Smith & Co., LLP.                                                                                                            



---

|(1) |  | Incorporated by reference to the Companys Annual Report on Form 10-K
for July 31, 1981.                                                   
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Incorporated by reference to the Companys Annual Report on Form 10-K
for July 31, 1991.                                                   
|   
|   
|   
|   
|(3) |  | Incorporated by reference to the Companys Registration Statement on
Form S-8 (File No. 333-00905) declared effective on February 13, 1996.
|   
|   
|   
|   
|(4) |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1994.                                  
|   
|   
|   
|   
|(5) |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1995.                                  
|   
|   
|   
|   
|(6) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on February 2, 1996.                                         
|   
|   
|   
|   
|(7) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on July 2, 1996.                                             





---



##### Table of Contents



|(8)  |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1996.
|---- |  | ---------------------------------------------------------------------------------------------------------
|    
|    
|    
|    
|(9)  |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1998.
|    
|    
|    
|    
|(10) |  | Incorporated by reference to the Companys Annual Report on Form 10-KSB
for the year ended July 31, 1999.
|    
|    
|    
|    
|(11) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on January 27, 2000.       
|    
|    
|    
|    
|(12) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on February 20, 2001.      
|    
|    
|    
|    
|(13) |  | Incorporated by reference from the Companys Current Report on Form 8-K
filed on June 26, 2001.          



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

On June 26, 2001, the Registrant filed a Report on Form 8-K under Item 5, reporting the sale of approximately 20 acres of undeveloped real property.