**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**





(Mark
      One)




**x**
            **QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**




For
      the
      quarterly period ended September 30, 2007




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




For
      the
      transition period
      from  
      to




COMMISSION
      FILE NUMBER 000-27915




**GENIUS
      PRODUCTS, INC.**


**(Exact
      name of registrant as specified in its charter)**





**DELAWARE**
            **33-0852923****(State
                or other jurisdiction**
              **of
                incorporation or organization)**
            **(IRS
                Employer**
              **Identification
                No.)**




**2230
      BROADWAY**


**SANTA
      MONICA, CA 90404**


**(Address
      of principal executive offices)**




**(310)
      453-1222**


**(Registrant's
      telephone number)**





**(Former
      name, former address and former fiscal year,**


**if
      changed since last report)**




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Exchange Act during the preceding 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. Yes ý    No  
 ̈




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act.




Large
      accelerated filer   o                    
an accelerated
      filer   o                    or
      a non-accelerated filer x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act.): Yes  o    No
x




There
      were 67,673,344 shares outstanding of the issuer's Common Stock as of October
      31, 2007.











**GENIUS
      PRODUCTS, INC. AND SUBSIDIARIES**




**INDEX**






**PAGE****PART I**
            **FINANCIAL
                INFORMATION**Item 1
            Financial
                Statements
            4Condensed
                Consolidated Balance Sheets at September 30, 2007 (unaudited) and
                December
                31, 2006 (audited)
            4Condensed
                Consolidated Statements of Operations for the Three and Nine Months
                Ended
                September 30, 2007 (unaudited) and 2006 (unaudited)
            5Condensed
                Consolidated Statements of Cash Flow for the Nine Months Ended September
                30, 2007 (unaudited) and 2006 (unaudited)
            6Notes
                to Condensed Consolidated Financial Statements (unaudited)
            7Item 2
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            16Item 3
            Quantitative
                and Qualitative Disclosures About Market Risk
            19Item 4
            Controls
                and Procedures
            19**PART II**
            **OTHER
                INFORMATION**Item 1
            Legal
                Proceedings
            21Item 1A
            Risk
                Factors
            21Item 2
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            21Item 3
            Defaults
                Upon Senior Securities
            21Item 4
            Submission
                of Matters to a Vote of Security Holders
            21Item 5
            Other
                Information
            21Item 6
            Exhibits
            22**SIGNATURES**
            23




2


**NOTICE
      ABOUT FORWARD-LOOKING
      STATEMENTS**




This
      Quarterly Report on Form 10-Q includes “forward-looking statements”. To the
      extent that the information presented in this Quarterly Report discusses
      financial projections, information or expectations about our business plans,
      results of operations, products or markets, or otherwise makes statements about
      future events, such statements are forward-looking. Such forward-looking
      statements can be identified by the use of words such as “intends”,
“anticipates”, “believes”, “estimates”, “projects”, “forecasts”, “expects”,
“plans” and “proposes”.





Although
      we believe that the expectations reflected in these forward-looking statements
      are based on reasonable assumptions, there are a number of risks and
      uncertainties that could cause actual results to differ materially from such
      forward-looking statements. These include, among others, the cautionary
      statements in the “Risk Factors” and “Management’s Discussion and Analysis of
      Financial Condition and Results of Operations” sections of this Quarterly
      Report. These cautionary statements identify important factors that could cause
      actual results to differ materially from those described in the forward-looking
      statements.





When
      considering forward-looking statements in this Quarterly Report, you should
      keep
      in mind the cautionary statements in the “Risk Factors” and “Management’s
      Discussion and Analysis of Financial Condition and Results of Operations”
sections, and other sections of this Quarterly Report. Except as required by
      law, we do not intend to update our forward-looking statements, whether written
      or oral, to reflect events or circumstances after the date of this Quarterly
      Report.




3


**PART
      I - FINANCIAL INFORMATION**





**ITEM 1.**
            **FINANCIAL
                STATEMENTS**




**GENIUS
                PRODUCTS, INC. AND SUBSIDIARIES****CONDENSED
                CONSOLIDATED BALANCE SHEETS****(IN
                THOUSANDS, EXCEPT SHARE AND PAR VALUE
                INFORMATION)**






September
                30,
            
            
            December
                31,2007
            
            
            2006(Unaudited)
            
            
            (Note
                1)**ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            3,162
            
            
            $
            3,745Prepaid
                expenses and other current assets
            
            
            201
            
            
            
            110Amounts
                receivable from affiliate
            
            
            882
            
            
            
            777Notes
                receivable from affiliate
            
            
            6,000
            
            
            
            -Total
                current assets
            
            
            10,245
            
            
            
            4,632Investment
                in Distributor
            
            
            79,391
            
            
            
            84,796Total
                assets
            
            $
            89,636
            
            
            $
            89,428**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilities:Accounts
                payable
            
            $
            -
            
            
            $
            59Accrued
                expenses
            
            
            1,022
            
            
            
            865Total
                current liabilities
            
            
            1,022
            
            
            
            924Deferred
                tax liability
            
            
            12,964
            
            
            
            13,021Total
                liabilities
            
            
            13,986
            
            
            
            13,945Commitments
                and contingenciesStockholders'
                equity:Preferred
                stock, $.0001 par value; 10,000,000 shares authorized; no shares
                outstanding
            
            
            -
            
            
            
            -Series
                W preferred stock, $.0001 par value; 100 shares authorized and
                outstanding
            
            
            -
            
            
            
            -Common
                stock, $.0001 par value; 300,000,000 shares authorized;67,488,344
                and 63,305,195 shares outstanding, respectively
            
            
            7
            
            
            
            6Additional
                paid-in capital
            
            
            113,101
            
            
            
            105,375Accumulated
                deficit
            
            
            (37,458
            )
            
            
            (29,898
            )Total
                stockholders' equity
            
            
            75,650
            
            
            
            75,483Total
                liabilities and stockholders' equity
            
            $
            89,636
            
            
            $
            89,428See
                accompanying notes to condensed unaudited interim financial
                statements.




4





**GENIUS
                PRODUCTS, INC. AND
                SUBSIDIARIES****CONDENSED
                CONSOLIDATED STATEMENTS OF OPERATIONS****(IN
                THOUSANDS, EXCEPT PER SHARE INFORMATION)****(UNAUDITED)**






Three
                Months Ended September 30,
            
            
            Nine
                Months Ended September 30,2007
            
            
            2006
            
            
            2007
            
            
            2006Revenues,
                net of sales returns, discounts andallowances
                of $3,937 and $40,882 for the threeand
                nine months ended September 30, 2006
            
            $
            -
            
            
            $
            15,015
            
            
            $
            -
            
            
            $
            119,011Total
                costs of revenues
            
            
            -
            
            
            
            15,318
            
            
            
            
            
            
            
            130,870Gross
                loss
            
            
            -
            
            
            
            (303
            )
            
            
            -
            
            
            
            (11,859
            )Operating
                expenses (income):Selling,
                general and administrative
            
            
            448
            
            
            
            4,166
            
            
            
            1,559
            
            
            
            18,621Gain
                on sale, related party
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (63
            )Equity
                in net loss from Distributor
            
            
            3,010
            
            
            
            63
            
            
            
            6,259
            
            
            
            63Total
                operating expenses
            
            
            3,458
            
            
            
            4,229
            
            
            
            7,818
            
            
            
            18,621Loss
                from operations
            
            
            (3,458
            )
            
            
            (4,531
            )
            
            
            (7,818
            )
            
            
            (30,480
            )Interest
                and other income, net
            
            
            86
            
            
            
            78
            
            
            
            202
            
            
            
            113Loss
                before provision (benefit) for income taxes andextraordinary
                item
            
            
            (3,372
            )
            
            
            (4,453
            )
            
            
            (7,616
            )
            
            
            (30,367
            )Provision
                (benefit) for income taxes
            
            
            104
            
            
            
            8,053
            
            
            
            (57
            )
            
            
            6,780Loss
                before extraordinary item
            
            
            (3,476
            )
            
            
            (12,506
            )
            
            
            (7,559
            )
            
            
            (37,147
            )Extraordinary
                gain
            
            
            -
            
            
            
            53,760
            
            
            
            -
            
            
            
            53,760Net
                income (loss)
            
            $
            (3,476
            )
            
            $
            41,254
            
            
            $
            (7,559
            )
            
            $
            16,613**Basic
                and Diluted EPS**Loss
                per share before extraordinary item
            
            $
            (0.05
            )
            
            $
            (0.20
            )
            
            $
            (0.11
            )
            
            $
            (0.61
            )Extraordinary
                gain per share
            
            
            -
            
            
            $
            0.88
            
            
            
            -
            
            
            $
            0.88Net
                income (loss) per share
            
            $
            (0.05
            )
            
            $
            0.68
            
            
            $
            (0.11
            )
            
            $
            0.27Basic
                and fully diluted average weighted shares
            
            
            66,951,924
            
            
            
            61,370,448
            
            
            
            65,738,041
            
            
            
            60,888,488See
                accompanying notes to condensed unaudited interim financial
                statements.




5





**GENIUS
                PRODUCTS, INC. AND
                SUBSIDIARIES****CONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOWS****(IN
                THOUSANDS, EXCEPT WARRANT INFORMATION)****(UNAUDITED)**






Nine
                Months Ended September 30,2007
            
            
            2006Cash
                flows from operating activities:Net
                income (loss)
            
            $
            (7,559
            )
            
            $
            16,613Adjustments to reconcile net income (loss) to net cash provided by
                (used
                in) operating activities:Depreciation
                and amortization
            
            
            -
            
            
            
            116Equity
                in net loss (income) from Distributor
            
            
            6,259
            
            
            
            (36
            )Amortization
                and impairment of film library
            
            
            -
            
            
            
            12,508Change
                in allowance for doubtful accounts and provision for
                returns
            
            
            -
            
            
            
            17,423Operating
                expenses paid by related party
            
            
            884
            
            
            
            181Change
                in provision for obsolete inventory
            
            
            -
            
            
            
            3,922Extraordinary
                gain
            
            
            -
            
            
            
            (60,046
            )Stock
                compensation expense
            
            
            654
            
            
            
            6,447Deferred
                tax liability
            
            
            (57
            )
            
            
            13,065Changes
                in assets and liabilities:Increase
                in accounts receivable
            
            
            -
            
            
            
            (65,331
            )Increase
                in inventories
            
            
            -
            
            
            
            (12,360
            )(Increase)
                decrease in prepaid expenses, notes receivable and
                deposits
            
            
            (91
            )
            
            
            279Increase
                in royalty advances
            
            
            -
            
            
            
            (2,416
            )Increase
                in film library
            
            
            -
            
            
            
            (1,456
            )Decrease
                in accounts payable
            
            
            (59
            )
            
            
            (3,827
            )Increase
                in accrued expenses and other
            
            
            157
            
            
            
            17,470Increase
                in deferred revenue
            
            
            -
            
            
            
            2,494Increase
                in remittance to licensors
            
            
            -
            
            
            
            50,992Net
                cash provided by (used in) operating activities
            
            
            188
            
            
            
            (3,962
            )Cash
                flows from investing activities:Investment
                in Distributor
            
            
            -
            
            
            
            (20,329
            )Short-term
                note receivable from affiliate
            
            
            (6,000
            )
            
            
            -Restricted
                cash
            
            
            -
            
            
            
            (303
            )Purchase
                of property and equipment
            
            
            -
            
            
            
            (448
            )Net
                cash used in investing activities
            
            
            (6,000
            )
            
            
            (21,080
            )Cash
                flows from financing activities:Net
                payments on notes payable and debentures
            
            
            -
            
            
            
            (5,230
            )Proceeds
                from exercise of options
            
            
            1,595
            
            
            
            529Proceeds
                from exercise of warrants
            
            
            3,634
            
            
            
            217Net
                cash provided by (used in) financing activities
            
            
            5,229
            
            
            
            (4,484
            )Net
                decrease in cash and cash equivalents
            
            
            (583
            )
            
            
            (29,526
            )Cash
                and cash equivalents at beginning of period
            
            
            3,745
            
            
            
            30,597Cash
                and cash equivalents at end of period
            
            $
            3,162
            
            
            $
            1,071Supplemental
                disclosure of cash flow informationNoncash
                transactions:Noncash
                net asset exchanged for investment in Distributor
            
            $
            -
            
            
            $
            11,851Write-off
                of redeemable common stock
            
            $
            -
            
            
            $
            414Warrant
                holders cashless exercised 1,625,954 warrants, pursuant to which
                490,928
                shares were issued during the ninemonths
                ended September 30, 2007.See
                accompanying notes to condensed unaudited interim financial
                statements.




6


**GENIUS
      PRODUCTS, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS**


**(UNAUDITED)**




**NOTE
      1.  NATURE OF BUSINESS, THE WEINSTEIN COMPANY TRANSACTION, AND
      INVESTMENT IN DISTRIBUTOR**





NATURE
      OF
      BUSINESS


Genius
      Products, Inc. (OTC BB:GNPI) ("we" "our" or the "Company"), along with The
      Weinstein Company Holdings LLC (“TWC Holdings”) and its first-tier subsidiary,
      W-G Holding Corp. (“W-G Holdings”)  own Genius Products, LLC (the
      "Distributor"), a leading entertainment products company that distributes,
      licenses, acquires and produces an expanding library of feature films,
      television programming, family, lifestyle and trend entertainment on digital
      versatile discs (“DVD”), as well as Blu-Ray and HD DVD formats and all other
      hard carrier devices and on emerging digital distribution technologies,
      including mobile electronic devices and the Internet.  The Distributor
      primarily focuses on four core branded content areas: major
      theatrical/independent film, sports, lifestyle and family/faith based content.
      The Distributor handles the distribution, marketing and sales for many brands
      including The Weinstein Company®, Dimension FilmsTM, Independent Film Channel
      (IFC)®, WellspringTM, RHI EntertainmentTM, ImaginAsian Entertainment, Dragon
      DynastyTM, Peace Arch Entertainment, Laugh Factory, ESPN®, World Wrestling
      Entertainment, Inc.® (“WWE”), Animal Planet, The Learning Channel, Classic
      Media, Entertainment Rights, Sesame Workshop®, Plaza Sesamo®, Discovery KidsTM
and Impact Entertainment, among others.  We are the managing member of
      the Distributor, in which we hold a 30% equity interest.





The
      Distributor uses third-party distribution facilities located throughout the
      United States and ships and sells its products directly to retailers,
      rentailers, and wholesale distribution companies. The Distributor distributes
      to
      over 25,000 retail locations.  The Distributor sells to mass retail
      stores including Target, Wal-Mart, Kmart, Meijers, ShopKo, Costco and Sam’s
      Club; children’s toy stores including Toys R Us; electronics stores including
      Best Buy, Fry’s and Circuit City; bookstores including Borders and Barnes &
Noble; music retailers including Trans World Entertainment and Virgin; internet
      retailers including Amazon, Netflix and iTunes; rental outlets including
      Blockbuster, Movie Gallery and Hollywood Video; direct marketing companies
      including QVC and Columbia House; as well as other non-traditional
      outlets.  The Distributor also distributes to wholesale distribution
      companies including Alliance Entertainment, Ingram, VPD and Baker &
Taylor.





THE
      WEINSTEIN COMPANY (“TWC”) TRANSACTION


On
      July
      21, 2006 (the “Closing Date”), we completed a transaction (the “TWC
      Transaction”) with TWC Holdings and W-G Holdings (two subsidiaries of TWC)
      pursuant to which we launched the Distributor to exploit the exclusive U.S.
      home
      video distribution rights to feature film and direct-to-video releases owned
      or
      controlled by TWC.  On the Closing Date, the Company contributed
      substantially all of its assets (except for $1 million in cash and certain
      liabilities), its employees, and its existing businesses to the
      Distributor.





As
      a
      result, the Distributor is owned 70% by TWC Holdings and W-G Holdings and 30%
      by
      the Company.  The 70% interest in the Distributor held by TWC Holdings
      and W-G Holdings consists of Class W Units and is redeemable, at TWC Holdings’
and W-G Holdings’ option commencing at any time from July 21,
      2007  for up to 70% of the Company’s outstanding common stock, or with
      TWC Holdings’ and W-G Holdings’ approval, cash.  The Company’s 30%
      membership interest in the Distributor consists of the Distributor’s Class G
      Units (see Investment in Distributor section below).





In
      addition to granting TWC Holdings and W-G Holdings a 70% interest in the
      Distributor consisting of the Distributor’s Class W Units, the Company issued an
      aggregate of 100 shares of the Company’s Series W Preferred Stock to TWC
      Holdings and W-G Holdings to accomplish the TWC Transaction.  The
      Series W Preferred Stock provides the holders thereof with (a) the right to
      elect five of the seven directors on our Board of Directors, of which two are
      currently TWC executives, (b) majority voting power over other actions
      requiring approval of our stockholders, and (c) the right to approve
      certain specified actions.  The Series W Preferred Stock has no rights
      to receive dividends and minimal liquidation value.





On
      the
      Closing Date, we entered into a Registration Rights Agreement with TWC Holdings
      and W-G Holdings pursuant to which we agreed to register for resale the shares
      of our common stock issuable upon redemption of Class W Units in the Distributor
      currently held by TWC Holdings and W-G Holdings.  In addition, the
      Company and/or the Distributor entered into the following agreements on the
      Closing Date: (i) Amended and Restated Limited Liability Company Agreement,
      (ii)
      Video Distribution Agreement (the “TWC Distribution Agreement”), (iii) Services
      Agreement, and (iv) Assignment and Assumption Agreement.





From
      December 5, 2005 through the Closing Date, we operated under an interim
      distribution agreement with TWC and recorded the results from titles we released
      for TWC on our financial statements. After the Closing Date, substantially
      all
      of the operating activities we previously conducted, as well as the results
      from
      releasing TWC product, are reflected in the financial statements of the
      Distributor. A summary of the financial results of the Distributor is in Note
      3.


7


INVESTMENT
      IN DISTRIBUTOR


The
      accompanying condensed consolidated financial statements account for the
      Company’s investment in the Distributor (30% membership interest represented by
      the Distributor’s Class G units) using the equity method of
      accounting.  On the Company’s consolidated statement of operations
      subsequent to the Closing Date, the Company recorded its 30% share of the
      Distributor’s profit or loss as equity in net loss or profit from Distributor,
      adjusted for non-cash basis differences (see Note 3) and costs incurred by
      the
      Distributor on behalf of the Company.  Pursuant to Accounting
      Principles Board Opinion No. 18, “The Equity Method of Accounting for
      Investments in Common Stock”, the Company will periodically assess whether a
      decrease in value of the investment has occurred (which is other than temporary)
      and which should be recognized immediately, resulting in an impairment
      loss.





Under
      the
      equity method of accounting, only the Company’s investment in and amounts due to
      and from the Distributor has been included as an asset in its condensed
      consolidated balance sheet.  The TWC Transaction represented a
      non-monetary exchange of a business controlled by the Company for a
      non-controlling interest in the Distributor. Accordingly, the amount recorded
      for the Company’s investment in the Distributor was partially based on the
      Company’s fair value as determined by reference to the quoted market prices of
      the Company’s shares at the close of the market on the Closing Date and
      partially based on the historical basis of the net assets surrendered in the
      TWC
      Transaction.  The Distributor is treated as a partnership for U.S.
      federal income tax purposes.




**NOTE
      2.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**




The
      following accounting policies are applicable to the Company and to the
      Distributor, where noted.





BASIS
      OF
      PRESENTATION


The
      accompanying unaudited condensed consolidated financial statements of the
      Company have been prepared in accordance with United States generally accepted
      accounting principles for interim financial statements and with the instructions
      to Form 10-Q and Article 10 of Regulation S-X, promulgated by the Securities
      and
      Exchange Commission (the “SEC”). Accordingly, they do not include all of the
      information and disclosures required by United States generally accepted
      accounting principles for complete financial statements. In the opinion of
      management, all adjustments (consisting of normal recurring adjustments)
      considered necessary for a fair presentation have been included.  The
      results of operations for interim periods are not necessarily indicative of
      the
      results that may be expected for the fiscal year.  The condensed
      consolidated financial statements should be read in conjunction with the
      Company’s December 31, 2006 consolidated financial statements and accompanying
      notes included in the Company’s Annual Report on Form 10-K (the “Annual
      Report”).  All terms used but not defined elsewhere herein have the
      meanings ascribed to them in the Annual Report.





The
      condensed consolidated balance sheet at December 31, 2006 has been derived
      from
      the audited financial statements at that date but does not include all the
      information and footnotes required by United States generally accepted
      accounting principles for complete financial statements.





PRINCIPLES
      OF CONSOLIDATION


The
      condensed financial statements include the accounts of Genius Products,
      Inc.  The Distributor’s consolidated financial statements include (i)
      the Distributor’s wholly owned subsidiary American Vantage Media, LLC (“AVM”),
      (ii) Wellspring Media, LLC (“Wellspring Media”), a wholly owned subsidiary of
      AVM and (iii) Castalian DC, LLC, Castalian Music L.L.C., The Thirteen-Thirty-One
      LLC, Abacus Media L.L.C. and Marathon Media, LLC, subsidiaries of the
      Distributor (collectively, “Castalian”). AVM and Wellspring Media were acquired
      on March 21, 2005 and Castalian was acquired on April 1,
      2007.  In addition, Sanuk Corporation, American Vantage/Hypnotic, Inc.
      and Wellspring Productions, LLC are all inactive.





ALLOWANCE
      FOR SALES RETURNS AND DOUBTFUL ACCOUNTS


The
      Distributor’s allowance for doubtful accounts and provision for sales returns
      include management's estimate of the amount expected to be uncollectible or
      returned on specific accounts and losses or returns on other accounts as yet
      to
      be identified included in accounts receivable. The Distributor provides for
      future returns of home video product at the time the products are sold. The
      Distributor calculates an estimate of future returns of product by analyzing
      a
      combination of historical returns, current economic trends, projections of
      consumer demand for its product and point-of-sale data available from certain
      retailers. Based on this information, a percentage of each sale is reserved.
      The
      Distributor also analyzes other factors, including historical experience with
      similar types of sales, information the Distributor receives from retailers
      and
      its assessment of the product's appeal based on domestic box office success
      and
      other research. Actual returns are charged against the reserve.  The
      amounts the Distributor will ultimately realize could differ materially in
      the
      near term from the amounts estimated in arriving at the allowance for doubtful
      accounts and provision for sales returns in the accompanying financial
      statements.





INVENTORIES


The
      Distributor’s inventories consist of raw materials and finished goods and are
      valued at the lower of cost or market. Cost is determined on a
      first-in-first-out method of valuation. Shipping and handling costs are recorded
      as expenses in the period in which they are incurred. The Distributor regularly
      monitors inventory for excess or obsolete items and makes any valuation
      corrections when such adjustments are needed.


8


ROYALTY
      AND DISTRIBUTION FEE ADVANCES


The
      Distributor’s royalty and distribution fee advances represent fixed minimum
      payments made to program suppliers for exclusive content distribution rights.
      A
      program supplier’s share of exclusive program distribution revenues is retained
      by the Distributor until the share equals the advance(s) paid to the
      program supplier. Thereafter, any excess is paid to the program supplier in
      accordance with contractual terms.  The Distributor records as a cost
      of sales an amount equal to the program supplier’s share of the net distribution
      revenues. Revenue and cost forecasts are continually reviewed by management
      and
      revised when warranted by changing conditions. When estimates of total revenues
      and costs indicate that exploitation of specific program rights will result
      in
      an ultimate loss, an impairment charge is recognized to the extent that
      capitalized advance royalties exceed estimated fair value, based on projected
      cash flows.




FILM
      COSTS


The
      Distributor capitalizes the costs of production and acquisition of film
      libraries. Costs of production include costs of film and tape conversion to
      digital linear tape (“DLT”) master format, menu design, authoring and
      compression. These costs are amortized to cost of revenues in accordance with
      Statement of Position (“SOP”) 00-2, “Accounting by Producers or Distributors of
      Films”, using the individual film forecast method over a period of ten years or
      less. Costs are stated at the lower of unamortized film costs or estimated
      fair
      value. For acquired film libraries, ultimate revenue includes estimates over
      a
      period not to exceed ten years. Management regularly reviews and revises when
      necessary its ultimate revenue and cost estimates, which may result in a change
      in the rate of amortization of film costs and/or a write-down of all or a
      portion of unamortized film costs or library to estimated fair
      value.




STOCK-BASED
      COMPENSATION


Under
      Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based
      Payment”, which was adopted by the Company beginning on January 1, 2006,
      share-based compensation cost is measured at the grant date based on the
      estimated fair value of the award and is recognized as expense over the
      employee's requisite service period using a modified prospective application.
      The valuation provisions apply to new awards and to awards that were outstanding
      on the effective date and subsequently modified or cancelled. Share-based
      compensation expense relates to share-based awards granted subsequent to January
      1, 2006 and share-based awards granted prior to, but not yet vested as of
      January 1, 2006, are based on the grant date fair value.





Subsequent
      to the Closing Date of the TWC Transaction, the Company’s stock-based
      compensation expense consists of expense associated with stock options held
      by
      and subsequently granted to independent members of the Company’s Board of
      Directors.





The
      Distributor records stock-based compensation expense associated with Company
      stock options held by and subsequently granted to the Distributor’s employees
      (the former employees of the Company before the TWC Transaction) in accordance
      with Emerging Issues Task Force (‘EITF’) Issue No. 00-12, “Accounting by an
      Investor for Stock-Based Compensation Granted to Employees of an Equity Method
      Investee”, (“EITF 00-12”).  EITF 00-12 requires that the Distributor
      recognize the costs of stock-based compensation incurred by an investor on
      its
      behalf.





INCOME
      TAXES


The
      Company files a consolidated corporate tax return and accounts for income taxes
      under SFAS No. 109, “Accounting for Income Taxes” (“SFAS No. 109”). This
      statement requires the recognition of deferred tax assets and liabilities for
      the future consequences of events that have been recognized in the Company’s
      consolidated financial statements or tax returns. The measurement of the
      deferred items is based on enacted tax laws. In the event the future
      consequences of differences between financial reporting bases and the tax bases
      of the Company’s assets and liabilities result in a deferred tax asset, SFAS
      No. 109 requires an evaluation of the probability of being able to realize
      the future benefits indicated by such asset. A valuation allowance related
      to a
      deferred tax asset is recorded when some portion or the entire deferred tax
      asset will not be realized on a more likely than not basis.  Based on
      the Company’s assessment of all available evidence, the Company has concluded
      that its deferred tax assets are not more likely than not to be realized. This
      conclusion is based primarily on our history of net operating losses, annual
      net
      operating loss limitations under Internal Revenue Code (“IRC”) Section 382,
      and the need to generate significant amounts of taxable income in future periods
      on a consistent and prolonged basis in order to utilize the deferred tax
      assets.  Accordingly, the Company has recorded a full valuation
      allowance on its deferred tax assets and has recorded a net deferred tax
      liability related to its investment in the Distributor.  The deferred
      tax liability related to the Distributor is not offset against the deferred
      tax
      assets as the reversal period for this amount is not considered to be
      determinable on a more likely than not basis.





We
      adopted the provisions of FASB Interpretation No. 48, “Accounting for
      Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109”
(“FIN 48”), on January 1, 2007. FIN 48 clarifies the accounting for
      uncertainty in income taxes recognized in an enterprise’s financial statements
      in accordance with FASB Statement 109, “Accounting for Income Taxes”, and
      prescribes a recognition threshold and measurement process for financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a tax return. FIN 48 also provides guidance on derecognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure and transition.  We have no material unrecognized tax
      benefits at January 1, 2007 or at September 30, 2007.


9


RELATED
      PARTY TRANSACTIONS


The
      Company accounts for all related party transactions under SFAS No. 57, “Related
      Party Disclosures”. The statement provides guidance on disclosures of
      transactions between related parties, including transactions between affiliates
      and principal owners. Disclosures must include (a) the nature of the
      relationship involved (b) a description of the transaction (c) the dollar amount
      of the transaction and (d) amounts due to and from related parties. The
      statement also requires an assessment of the transaction to ensure that they
      have been carried out on an arms-length basis.




REVENUE
      RECOGNITION


Revenue
      from the sale or licensing of films is recognized by the Distributor upon
      meeting all recognition requirements of SOP 00-2 and Staff Accounting Bulletin
      (“SAB”) No. 104, “Revenue Recognition”, which requires that there is a
      contract with the buyer, delivery or “Street Date” (when it is available for
      sale by the Distributor’s customer) has occurred, the price is determinable, and
      collectability is reasonably assured.  The Distributor records revenue
      upon the receipt of goods by the customer.  Under revenue sharing
      arrangements, rental revenue is recognized on or after the Street Date and
      when
      the Distributor is entitled to receipts and such receipts are determinable.
      Costs of sales and an allowance for returns are recorded at the time of revenue
      recognition. Revenues from royalties are recognized when received. Revenues
      from
      licensing are recognized when the title is available to the licensee and all
      other SOP 00-2 requirements are met.  Direct sales to consumers are
      recognized when consumers’ credit cards are charged and CDs and/or DVDs are
      shipped.  Cash payments received are recorded as deferred revenue
      until all the conditions of revenue recognition have been met.




RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS





In
      September 2006, FASB Statement No. 157, *Fair Value Measurements*
      (“FAS 157”), was released. FAS 157 establishes a framework for measuring fair
      value, clarifies the definition of fair value and expands disclosures about
      the
      use of fair value measurements. FAS 157 applies under other accounting
      pronouncements that require or permit fair value measurements and does not
      require any new fair value measurements. FAS 157 will be effective for the
      Company beginning January 1, 2008. The Company is currently assessing the
      potential effect of FAS 157 on the financial statements.





In
      February 2007, FASB issued Statement No. 159, *The Fair Value Option for
      Financial Assets and Liabilities* (“FAS 159”). FAS 159 provides companies
      with an option to report selected financial assets and liabilities at fair
      value
      and establishes presentation and disclosure requirements designed to facilitate
      comparisons between companies that choose different measurement attributes
      for
      similar types of assets and liabilities. FAS 159 will be effective for the
      Company beginning January 1, 2008. The Company is currently assessing the
      potential effect of FAS 159 on the financial statements.





**NOTE
      3.  INVESTMENT IN DISTRIBUTOR (GENIUS PRODUCTS,
      LLC)**





Summaries
      of the statements of operations, balance sheet and the computations of the
      Company’s equity in net loss of the Distributor are shown below.





**GENIUS
                PRODUCTS, LLC****CONDENSED
                CONSOLIDATED STATEMENTS OF OPERATIONS****FOR
                THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,
                2007****(IN
                THOUSANDS)**





Three
                Months
              Ended
              September
                30,
              2007
            
            
            Nine
                Months
              Ended
              September
                30,
              2007Revenues,
                net of sales returns, discounts and allowances of $42,081 and
                $106,163
            
            $
            93,413
            
            
            $
            289,183Total
                costs of revenues
            
            
            86,601
            
            
            
            262,647Gross
                profit
            
            
            6,812
            
            
            
            26,536Total
                operating expenses
            
            
            10,765
            
            
            
            30,248Loss
                from operations
            
            
            (3,953
            )
            
            
            (3,712
            )Interest,
                net
            
            
            (1,226
            )
            
            
            (1,753
            )Net
                loss
            
            $
            (5,179
            )
            
            $
            (5,465
            )




10




**GENIUS
                PRODUCTS, LLC****CONDENSED
                CONSOLIDATED BALANCE SHEET****AS
                OF SEPTEMBER 30, 2007****(IN
                THOUSANDS)**






ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            4,792Restricted
                cash
            
            
            5,361Accounts
                receivable, net of allowance for doubtful accounts and sales returns
                of
                $51,182
            
            
            143,075Inventories,
                net of reserves for obsolescence of $11,941
            
            
            21,139Prepaid
                expenses and other current assets
            
            
            971Total
                current assets
            
            
            175,338Restricted
                cash
            
            
            3,318Property
                and equipment, net of accumulated depreciation of $355
            
            
            953Royalty
                advances
            
            
            37,064Film
                library, net of accumulated amortization of $1,400
            
            
            16,261Goodwill
            
            
            87,209Other
                intangible assets, net of accumulated amortization of
                $6,484
            
            
            14,787Deposits
                and other
            
            
            228Deferred
                financing fees
            
            
            1,399Total
                assets
            
            $
            336,557LIABILITIES
                AND MEMBERS' EQUITYCurrent
                liabilities:Accounts
                payable
            
            $
            38,895Notes
                payable
            
            
            30,000Notes
                payable to affiliate
            
            
            6,007Accrued
                royalties for TWC
            
            
            66,144Accrued
                advertising and marketing
            
            
            8,588Accrued
                royalties
            
            
            21,665Other
                accrued expenses
            
            
            15,597Deferred
                revenue
            
            
            56,669Deferred
                royalty income
            
            
            2,000Total
                current liabilities
            
            
            245,565Total
                members' equity
            
            
            90,992Total
                liabilities and members' equity
            
            $
            336,557




11


Our equity
      in net loss of the Distributor is adjusted each period for non-cash basis
      differences between the investment and the underlying equity in the Distributor
      and for the impact of certain costs incurred by the Distributor on behalf of
      the
      Company.





For
                the nine months ended September 30, 2007Genius
                Products, Inc. 30% share of net loss from the
                Distributor
            
            $
            1,639Adjustments
                for basis differences
            
            
            3,330Charge
                for stock compensation for Distributor's employees
            
            
            1,290Equity
                in net loss from Distributor
            
            $
            6,259





**NOTE
      4.  COMMITMENTS AND CONTINGENCIES**





On
      August
      10, 2007, the Distributor entered into a three-year, senior secured revolving
      credit facility (the “Credit Agreement”) with Société Générale (‘‘Soc Gen’’), as
      agent. The Credit Agreement provides for an initial commitment of $30 million
      and up to a total of $70 million.  See also Note 9 – Subsequent
      Events.  Borrowings under the Credit Agreement are based upon a
      borrowing base that includes certain of the Distributor’s accounts receivable
      from licensors other than TWC and certain of the Distributor’s film rights. The
      Credit Agreement terminates on June 30, 2010, and may be extended to August
      10,
      2010, under satisfaction of certain conditions. Voluntary prepayments and
      commitment reductions are permitted at any time upon proper
      notice.  Borrowings under the Credit Agreement are based on LIBOR or
      the higher of Soc Gen’s prime rate or the Federal Funds Rate plus 0.50% and vary
      depending on the percentage of loans outstanding. The interest rate varies
      from
      2.5% to 3.0% above LIBOR for Eurocurrency loans and 1.5% to 2.5% above the
      prime
      rate or Federal Funds Rate plus 0.50% for base rate loans. Quarterly commitment
      fees of 0.50% are due on the unused portion of the commitment.  The
      Credit Agreement contains operating covenants customary for facilities of this
      type, including, among other things, (i) limitations on indebtedness, liens,
      sales of assets, mergers, investments, dividends and redemptions, and (ii)
      minimum liquidity and borrowing base coverage requirements. In the event of
      a
      default, the interest rate on all borrowings will be increased and payment
      of
      all borrowings may be accelerated and/or the commitments may be terminated.
      Upon
      the occurrence of certain events of default, all amounts payable under the
      Credit Agreement automatically become immediately due and payable and the
      lenders’ commitments will automatically terminate.  Borrowings
      outstanding under the Credit Agreement were $30.0
      million****at September 30, 2007. The obligations of the
      Distributor under the Credit Agreement are guaranteed by the Company and the
      direct and indirect subsidiaries of the Distributor.  Soc Gen holds a
      security interest in substantially all personal property of the Company, the
      Distributor, and its direct and indirect subsidiaries, other than TWC accounts
      receivable. TWC continues to have a first priority security interest in accounts
      receivable attributable to TWC content.





As
      of
      September 30, 2007, we did not have any future minimum annual rental commitments
      under existing non-cancelable operating leases since at the Closing Date of
      the
      TWC Transaction we transferred all of our lease obligations to the
      Distributor.





We
      are
      not a party to any legal or administrative proceedings, other than routine
      litigation incidental to our business that we do not believe, individually
      or in
      the aggregate, would likely have a material adverse effect on our
      financial condition or results of operations.


12


**NOTE
      5.  RELATED PARTY TRANSACTIONS**





On
      August
      10, 2007, in connection with the Credit Agreement, the Distributor entered
      into
      a letter agreement  with TWC (the “TWC Letter”) under which the
      Distributor and TWC agreed to schedule payments owing to TWC by the
      Distributor under the Distribution Agreement.  In the TWC Letter, TWC
      also agreed to waive any remedies it may have attributable to past non-timely
      payments and reporting under the Distribution Agreement on or prior to August
      10, 2007.




On
      September 27, 2007, the Distributor borrowed $6 million from the Company and
      issued a promissory note (the “Note”) in favor of the Company. The Note bears
      interest at LIBOR plus 5% until paid.  The principal and accrued
      interest under the Note are due and payable on demand at any time after March
      31, 2008.  In the event payment of principal or interest due under the
      Note is not made when due, the outstanding principal balance will bear interest
      at the rate of 2% above the interest rate which is otherwise provided under
      the
      Note for so long as such event of default continues.




In
      addition, the Board of Directors of the Company authorized up to $2 million
      in
      additional loans from the Company to the Distributor, which was drawn after
      September 30, 2007. See also Note 9, Subsequent Events.





**NOTE
      6.  STOCKHOLDERS' EQUITY**




COMMON
      STOCK


During
      the nine months ended September 30, 2007, we issued 3,189,320 common shares
      related to the exercise of warrants (some of which were cashless exercises)
      for
      proceeds of $3.6 million.  Additionally, during the nine months ended
      September 30, 2007, we issued 993,829 common shares related to the exercise
      of
      options for proceeds of $1.6 million.





During
      the nine months ended September 30, 2006, we issued 348,703 common shares
      related to the exercise of warrants for proceeds of $0.2
      million.  Additionally, during the nine months ended September 30,
      2006, we issued 737,500 common shares related to the exercise of options for
      proceeds of $0.6 million.




During
      the nine months ended September 30, 2006, we issued 10,000 common shares for
      services rendered.





SERIES
      W
      PREFERRED STOCK


In
      connection with the closing of the TWC Transaction, we issued 100 shares of
      Series W Preferred Stock to TWC Holdings and its first-tier subsidiary, W-G
      Holdings (collectively, the “TWC Holders”). The Series W Preferred Stock
      provides the holders with significant rights, preferences and powers as
      described in Note 1.




NON-EMPLOYEE
      WARRANTS


We
      did
      not issue any warrants during the nine months ended September 30,
      2007.





A
      summary
      of warrant activity follows:





WeightedAverage
            
            
            AggregateWarrants
            
            
            Exercise
            
            
            IntrinsicOutstanding
            
            
            Price
            
            
            ValueDecember
                31, 2006
            
            
            14,786,054
            
            
            $
            2.21
            
            
            $
            32,663,180Exercised
            
            
            (4,324,346
            )
            
            $
            1.63
            
            
            
            5,761,978September
                30, 2007
            
            
            10,461,708
            
            
            $
            2.45
            
            
            $
            25,631,681Warrants
                exercisable, September 30, 2007
            
            
            10,461,708
            
            
            $
            2.45
            
            
            $
            25,631,681




13


The
      following information applies to warrants outstanding at September 30,
      2007:





Weighted
            
            
            
            
            
            Weightedaverage
            
            
            
            
            
            averageAverage
            
            
            exercise
                price of
            
            
            
            
            
            exercise
                price ofWarrants
            
            
            remaining
                life
            
            
            warrants
            
            
            Warrants
            
            
            warrantsoutstanding
            
            
            (in
                years)
            
            
            outstanding
            
            
            exercisable
            
            
            exercisableUnder
                $1.50
            
            
            
            979,507
            
            
            
            0.73
            
            
            $
            1.40
            
            
            
            979,507
            
            
            $
            1.40$1.50
              - $1.99
            
            
            
            170,723
            
            
            
            3.01
            
            
            $
            1.88
            
            
            
            170,723
            
            
            $
            1.88$2.00
              - $2.99
            
            
            
            7,664,478
            
            
            
            2.85
            
            
            $
            2.48
            
            
            
            7,664,478
            
            
            $
            2.48$3.00
              - $3.99
            
            
            
            1,647,000
            
            
            
            1.50
            
            
            $
            3.00
            
            
            
            1,647,000
            
            
            $
            3.0010,461,708
            
            
            
            2.44
            
            
            $
            2.45
            
            
            
            10,461,708
            
            
            $
            2.45




**NOTE
      7.  STOCK-BASED COMPENSATION**





We
      have
      adopted several stock option plans, all of which have been approved by our
      stockholders that authorize the granting of options to purchase our common
      shares subject to certain conditions. At September 30, 2007, we had reserved
      27
      million of our common shares for issuance of share-based compensation awards
      under our stock option plans. At September 30, 2007, we had also reserved
      7,394,213 of our common shares for issuance of share-based compensation awards
      granted outside of our stock option plans. Options are granted at the fair
      value
      of the shares underlying the options at the date of the grant and generally
      become exercisable over periods ranging from three to five years and expire
      in
      ten years.




Total
      share-based compensation expense recognized for the three and nine months ended
      September 30, 2007 was $0.1 million and $0.7 million,
      respectively.  No income tax benefit was recognized in the statement
      of operations for share-based compensation arrangements for the
      Company.





A
      total
      of  $0.5 million and $1.8 million of share-based compensation expense
      related to options issued by the Company to employees of the Distributor was
      recorded as compensation expense in the statement of operations for the
      Distributor for the three and nine months ended September 30, 2007,
      respectively.




We
      did
      not grant options during the nine months ended
      September 30, 2007.  We estimated share-based compensation
      expense for options issued during the three and nine months ended September
      30,
      2006 using the Black-Scholes model with the following weighted average
      assumptions:





Three
                Months Ended September 30,
            
            Nine
                Months Ended September 30,2007
            
            2006
            
            2007
            
            2006Expected
                life (in years)
            none
                issued
            
            
            5.7
            
            none
                issued
            
            
            5.8Expected
                volatility
            none
                issued
            
            
            54.8%
            
            none
                issued
            
            
            58.1%Expected
                dividend yield
            none
                issued
            
            
            -
            
            none
                issued
            
            
            -Risk
                free interest rate
            none
                issued
            
            
            4.7%
            
            none
                issued
            
            
            4.9%





A
      summary
      of option activity follows:





Weightedaverage
            
            
            AggregateOptions
            
            
            exercise
            
            
            intrinsicoutstanding
            
            
            price
            
            
            valueDecember
                31, 2006
            
            
            19,310,588
            
            
            $
            1.84
            
            
            $
            35,574,789Exercised
            
            
            (993,828
            )
            
            $
            1.60
            
            
            
            1,305,736Canceled
            
            
            (336,385
            )
            
            $
            3.37
            
            
            
            1,131,971September
                30, 2007
            
            
            17,980,375
            
            
            $
            1.83
            
            
            $
            32,847,857Options
                exercisable, September 30, 2007
            
            
            14,194,112
            
            
            $
            1.79
            
            
            $
            25,354,719




14


The
      following information applies to options outstanding at September 30, 2007:




Weighted
            
            
            
            
            
            Weightedaverage
            
            
            
            
            
            averageAverage
            
            
            exercise
                price of
            
            
            
            
            
            exercise
                price ofOptions
            
            
            remaining
                life
            
            
            options
            
            
            Options
            
            
            optionsoutstanding
            
            
            (in
                years)
            
            
            outstanding
            
            
            exercisable
            
            
            exercisableUnder
                $1.50
            
            
            
            1,952,752
            
            
            
            4.35
            
            
            $
            0.67
            
            
            
            1,952,752
            
            
            $
            0.67$1.50
              - $1.99
            
            
            
            10,880,373
            
            
            
            7.24
            
            
            $
            1.72
            
            
            
            8,197,110
            
            
            $
            1.67$2.00
              - $2.99
            
            
            
            3,992,500
            
            
            
            7.29
            
            
            $
            2.16
            
            
            
            2,889,500
            
            
            $
            2.11$3.00
              - $3.99
            
            
            
            793,750
            
            
            
            6.33
            
            
            $
            3.00
            
            
            
            793,750
            
            
            $
            3.00$4.00
                + over
            
            
            
            361,000
            
            
            
            4.83
            
            
            $
            5.07
            
            
            
            361,000
            
            
            $
            5.0717,980,375
            
            
            
            6.85
            
            
            $
            1.83
            
            
            
            14,194,112
            
            
            $
            1.79




**NOTE
      8.********INCOME
      TAXES**





The
      Company recorded a federal and state tax benefit of $57,000 for the nine months
      ended September 30, 2007.  The tax benefit resulted from the net
      decrease in the deferred tax liability related to our investment in the
      Distributor.  As noted above, the Company currently has a full
      valuation allowance on its deferred tax assets and has recorded a net deferred
      tax liability relating to its investment in Distributor.




**NOTE
      9.  SUBSEQUENT EVENTS**





On
      November 1, 2007, the Distributor entered into an Amended and Restated Credit
      Agreement (the “Amended Credit Agreement”) with Soc Gen, as administrative and
      collateral agent and lead arranger, and Alliance & Leicester Commercial
      Finance plc, as managing lead arranger. The Amended Credit Agreement amends
      and
      restates the original Credit Agreement between the Distributor and Soc Gen,
      increases the total commitment of the credit facility from $30 million to $50
      million, and provides for a commitment of up to a total of $100 million based
      upon expected incremental commitments to be provided by a consortium of banks
      including Soc Gen.  The Amended Credit Agreement will terminate on
      June 30, 2010, which termination date may be extended to September 30, 2010,
      upon the satisfaction of certain conditions, and is otherwise on terms
      materially consistent with the terms of the original Credit Agreement, as
      described in Note 4.





On
      November 1, 2007, the Distributor borrowed an additional $2 million from the
      Company, as previously authorized by the Board of Directors (See Note
      5).  The note bears interest at LIBOR plus 5% until
      paid.  The principal and accrued interest under the Note are due and
      payable on demand at any time after March 31, 2008.


15


**ITEM 2.**                       **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**




The
      following discussion of our financial condition and results of operations should
      be read in conjunction with the financial statements and notes thereto contained
      in this report. The discussion contains forward-looking statements that relate
      to future events or our future financial performance that involve known and
      unknown risks, uncertainties and other factors that may cause our actual
      results, levels of activity, performance or achievements to be materially
      different from those expressed or implied by the forward-looking statements.
      For
      additional information concerning these factors, see the information under
      the
      caption “Risk Factors” in our Annual Report on Form 10-K for the year ended
      December 31, 2006.





**NATURE
      OF BUSINESS**





The
      Company, along with TWC Holdings and its first-tier subsidiary, W-G Holdings,
      own the Distributor, a leading entertainment products company that distributes,
      licenses, acquires and produces an expanding library of feature films,
      television programming, family, lifestyle and trend entertainment on digital
      distribution technologies and on videogram, which encompasses videocassettes,
      videodiscs, videotapes, DVDs, other emerging platforms such as Blu-Ray and
      HD
      DVD formats, Universal Media Disc, CD-ROM, DVD-ROM and all other hard carrier
      devices.





The
      Distributor primarily focuses on the following four core branded content areas,
      which we frequently refer to as “Content Verticals”:





·
            Theatrical/Independent
                Films  (includes Independent Film Channel (IFC)®, RHI
                EntertainmentTM (Hallmark library), The Weinstein Company® and
                WellspringTM)




·
            Sports 
                (includes ESPN® and World Wrestling Entertainment®
                (“WWE”))




·
            Lifestyle 
                (includes Animal Planet, The Learning Channel (TLCTM) and
                WellspringTM)




·
            Family/Faith 
                (includes Classic Media, Discovery KidsTM, Entertainment Rights and Sesame
                Workshop®)





The
      Distributor’s agreements with TWC, ESPN®, Classic Media, Sesame Workshop®, World
      Wrestling Entertainment, Inc. ® and Discovery Communications, in combination
      with our acquisition of the Wellspring library in 2005, gives the Distributor
      a
      substantial library of high quality content comprising approximately 3,500
      feature films and documentaries and 4,000****hours of
      television programming. We believe that the Distributor’s catalog of titles is
      integral to a well-balanced content portfolio that can generate substantial
      revenues with a diverse group of retailers and wholesalers.





The
      Distributor’s business strategy is to leverage its growing market share and
      retail sales volumes from its relationships with key content providers to add
      additional content partners, engage producing and licensing of new content,
      and
      expand into related businesses such as interactive software (video games),
      mobile devices and licensing of our proprietary brands and content. The
      Distributor intends to continue to acquire rights to film and television
      libraries and enter into distribution agreements with new branded content
      suppliers.





The
      Distributor currently has the exclusive U.S. home video distribution rights
      to
      feature film and direct-to-video releases owned or controlled by TWC, a film
      company created by Robert and Harvey Weinstein. The Distributor has released
      over 75 TWC titles on DVD, including the following recent or forthcoming
      titles:





·
            *The
                Nanny Diaries*, starring Scarlett Johansson and Laura
                Linney;





·
            *1408*,
                based on a short story by Steven King and starring John Cusack and
                Samuel
                L. Jackson;·
            *Sicko,*
                starring Michael Moore, director of Fahrenheit 9/11;·
            *Halloween,*directed by Rob Zombie;·
            *Death
                Proof,* directed by Quentin Tarantino and starring Kurt Russell,
                Rosario Dawson and Rose McGowan;·
            *Planet
                Terror,* directed by Robert Rodriguez;·
            *The
                Ex,* directed by Jesse Peretz; and·
            *DOA,*
                directed by Corey Yuen.·
            *Arthur
                and the Invisibles*, starring Freddie
                Highmore;





·
            *Hannibal
                Rising*, starring Gong Li and Dominic
                West;





·
            *Factory
                Girl*, starring Sienna Miller and Jimmy
                Fallon;





·
            *Miss
                Potter,*starring Renee Zellweger and Ewan McGregor;
                and·
            *Bobby*,
                starring Anthony Hopkins, Sharon Stone, Lawrence Fishburne, Demi
                Moore,
                William H. Macy, Lindsay Lohan, and Elijah
                Wood.




16


The
      Distributor maintains in perpetuity distribution rights for TWC content released
      during the term of the TWC Distribution Agreement, subject to certain buy-back
      rights of the TWC content by TWC.





Under
      the
      TWC Distribution Agreement, TWC granted a license to the Distributor to
      manufacture, promote and sell in the U.S. and its territories and possessions,
      through December 31, 2010 (or December 31, 2013 if TWC extends the term), DVDs,
      videocassettes and other forms of pre-recorded home video of feature films
      and
      direct-to-video releases which TWC has the right to distribute on home video.
      These releases include films produced by TWC as well as films which TWC acquires
      or obtains the right to distribute on home video. The TWC Distribution Agreement
      provides that the Distributor will earn a fee on sales of these home video
      products, depending on the level of these sales compared to theatrical box
      office revenues for the same films. The Distributor collects the proceeds from
      sales of home video products and remits these proceeds to TWC, minus the
      Distributor’s distribution fee, cost of goods sold (including manufacturing
      expenses) and certain marketing expenses.





The
      TWC
      Distribution Agreement contains complex provisions relating to payments,
      permitted expenses and other adjustments, and the foregoing discussion is
      intended only as a summary. For further information, the full text of the TWC
      Distribution Agreement is included as an exhibit to the Company’s Annual Report
      on Form 10-K.





**RESULTS
      OF OPERATIONS OF GENIUS PRODUCTS, INC.**





All
      of
      the operations of the Company relate to the activity of the
      Distributor.  We account for our investment in the Distributor using
      the equity method of accounting.  On our consolidated statement of
      operations subsequent to the Closing Date of the TWC Transaction, we recorded
      our 30% share of the Distributor’s profit or loss as equity in net earnings
      (loss) from Distributor, adjusted for basis differences and costs incurred
      by
      the Distributor on behalf of the Company.  Pursuant to Accounting
      Principles Board Opinion No. 18, “The Equity Method of Accounting for
      Investments in Common Stock”, we will periodically assess whether a decrease in
      value of the investment has occurred which is other than temporary and which
      should be recognized immediately resulting in an impairment
      loss.  Under the equity method of accounting, only our investment in
      and amounts due to and from the Distributor have been included as an asset
      in
      our consolidated balance sheet.





We
      did
      not compare the results of operations for the three months ended September
      30,
      2007 and 2006 due to the fact that the results of operations would not be
      comparable.  The discussion below includes a description of the
      results of the Company and the Distributor for the quarter and nine months
      ended
      September 30, 2007.





*Revenues*





The
      Company had no revenue for the three and nine months ended September 30,
      2007.  All of the revenue is reflected in the results of operations of
      the Distributor.





The
      Distributor generated revenue of $93 million and $289 million, net of sales
      returns, discounts and allowances of $42 million and $106 million for the three
      and nine months ended September 30, 2007, respectively.  Revenue for
      the three months ended September 30, 2007 were primarily composed of sales
      of
      TWC titles,*Death Proof, The Ex, DOA, Hannibal Rising*
      and*Factory Girl*******and sales of branded
      content including titles under our agreement with Classic Media, Sesame Street,
      ESPN, WWE and Redline.





Consistent
      with other retail product distributors, the Company has experienced some degree
      of sales seasonality. However, subsequent to the July 21, 2006 completion of
      the
      TWC Transaction, sales seasonality is reflected in the revenues and operations
      of the Distributor directly, and in the Company’s results of operations
      indirectly, through its equity interest in the Distributor.  We have
      historically experienced higher sales during the last two quarters than during
      the first two quarters and expect this trend to continue with the
      Distributor.





We
      have
      also historically experienced higher returns during the first two quarters
      than
      during the last two quarters. However, historic changes in revenues may not
      be
      indicative of future trends and may not track industry seasonality
      norms.





*Costs
      and expenses*




*Costs
      of Revenues*




Costs
      of
      revenues consist primarily of the raw material and manufacturing costs of
      products sold to customers, packaging and shipping costs, advertising and
      marketing, amortization of the film library, and participations and royalties.
      Participation expenses related to TWC’s distribution agreement are accrued in
      the proportion that current year’s revenues for a title bear to management’s
      estimate of the ultimate revenue expected to be recognized for that
      title.




The
      Company had no costs of revenues for the three and nine months ended September
      30, 2007.  All of the costs of revenues are reflected in the results
      of operations of the Distributor.


17


The
      Distributor’s costs of revenues for the three months ended September 30, 2007
      include the following:





Manufacturing
      and distribution expenses were $27 million and $74 million for the three and
      nine months ended September 30, 2007, respectively.  Manufacturing and
      distribution expenses are primarily due to the video release of TWC’s titles
      during such periods.  Third quarter distribution expense include
      freight costs associated with titles that will be released during the fourth
      quarter.





Advertising
      and marketing expenses were $10 million and $31 million during the three and
      nine months ended September 30, 2007, respectively.  Advertising and
      marketing is primarily attributable to the advertising campaigns for the video
      release of TWC’s *Death Proof, The Ex, DOA, Hannibal Rising*and*Factory Girl.*Advertising and marketing expenses are recorded in
      the period in which these expenses are incurred. Third quarter advertising
      and
      marketing expenses included costs on titles which will be released during the
      fourth quarter. These titles include *1408, Planet Terror, You Kill Me*and*Reef.*Revenues associated with these titles have been deferred
      as of September 30, 2007.





Amortization
      and participation expenses were $50 million and $157 million for the three
      and
      nine months ended September 30, 2007, respectively. Amortization and
      participation expenses include amortization of film library and participation
      expenses related to TWC and other licensors.





*Operating
      Expenses*





The
      Company had general and administrative expenses of $0.4 million and $1.6 million
      for the three and nine months ended September 30, 2007,
      respectively.  The general and administrative expenses reflect an
      allocation of the public company costs borne by the Distributor on behalf of
      the
      Company.





The
      Distributors’ general and administrative expenses were $10.8 million and $30.3
      million for the three and nine months ended September 30, 2007, respectively,
      and amounted to 11.5% and 10.5% of net revenues, respectively.  The
      increase in general and administrative expenses is largely due to increased
      audit fees and consulting fees associated with Sarbanes Oxley
      requirements.




During
      the three and nine months ended September 30, 2007, the Company’s 30% equity in
      the net loss of the Distributor was $3.0 million and $6.3 million,
      respectively.





*Other
      Income and Expense*




The
      Company had interest income of $0.1 million and $0.2 million during the three
      and nine months ended September 30, 2007, respectively. Interest income relates
      to interest earned on outstanding cash balances.  The Company had
      non-cash income tax expense of $104,000 and income tax benefit of $57,000 for
      the three and nine months ended September 30, 2007, respectively.  As
      a result of the foregoing, the Company’s net loss was $3.5 million and $7.6
      million for the three and nine months ended September 30, 2007.





The
      Distributor had net interest expense of $1.2 million and $1.8 million during
      the
      three and nine months ended September 30, 2007,
      respectively.  Interest income relates to interest earned on
      outstanding cash balances. Interest expense relates to interest on outstanding
      balances due to licensors, the Company and Soc Gen. As result of the foregoing,
      the Distributor’s net loss was $5.2 million and $5.5 million for the three and
      nine months ended September 30, 2007, respectively.





**LIQUIDITY
      AND CAPITAL RESOURCES**




Net
      cash
      provided by operations during the nine months ended September 30, 2007 was
      $0.2
      million, primarily due to equity in net losses for Distributor, stock
      compensation expense, and increases in accrued expenses.





Cash
      used
      in investing activities of $6 million was attributable to a loan made to the
      Distributor.  See Note 5, Related Party Transactions.




Cash
      provided by financing activities for the nine months ended September 30, 2007
      was $5.2 million, due to proceeds from the exercise of warrants and
      options.




At
      September 30, 2007, the Company had cash balances of $3.2 million and the
      Distributor had cash and restricted cash balances of $13.5
      million.  The restricted cash balances are associated with (i)
      required minimum cash balances pursuant to the Credit Agreement, (ii) certain
      bank accounts that are subject to semi-monthly disbursements to the Distributor
      and other parties under a waterfall of funds prescribed by the Credit Agreement,
      and (iii) an office lease security.


18


The
      Distributor invested $5.5 million and $22.3 million during the three and
      nine months ended September 30, 2007, respectively in royalty and licensor
      advances. The Distributor recorded depreciation of $75,000 and $0.2 million,
      and
      intangible asset amortization (excluding film library and product amortization)
      of $0.9 million and $2.7 million for the three and nine months ended September
      30, 2007, respectively.





During
      the third quarter of 2007, the Distributor entered into the Credit Agreement,
      a
      three-year, senior secured revolving credit facility which provides for an
      initial commitment of $30 million and up to a total of $70 million based upon
      expected incremental commitments.   At September 30, 2007 the
      Distributor had $30 million outstanding under the Credit
      Agreement.  Borrowings outstanding under the credit agreement
      were $30 million at September 30, 2007.  See Note 4, Commitments and
      Contingencies. On
      November 1, 2007, the Distributor entered into the Amended Credit Facility,
      which increased the total commitment to $50 million.  See Note 9,
      Subsequent Events.





On
      November 1, 2007, the Distributor borrowed an additional $2 million from the
      Company, which is repayable on demand after March 31, 2008.





We
      may
      consider additional issuance of equity and/or debt financing to fund future
      growth opportunities. Although we believe that the Distributor’s expanded
      product line offers us the opportunity for significantly improved operating
      results in future quarters, no assurance can be given that we will operate
      on a
      profitable basis in 2007, or ever, as such performance is subject to numerous
      variables and uncertainties, many of which are out of our control. Although
      we
      own 30% of the Distributor, we only have access to the cash on the Distributor’s
      balance sheet to the extent that we agree with our partner, TWC, to make a
      distribution to us.





**ITEM 3.**                       **QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**




As
      of
      September 30, 2007, the Distributor’s cash and cash equivalents were invested
      with financial institutions with investment grade credit ratings. Due to the
      short duration of the Distributor’s investment portfolio and the high quality of
      the Distributor’s investments, an immediate 10% change in interest rates would
      not have a material effect on the fair market value of the Distributor’s
      portfolio. Therefore, we would not expect the Distributor’s operating results or
      cash flows to be affected to any significant degree by the effect of a sudden
      change in market interest rates on the Distributor’s investment
      portfolio.





Neither
      we nor the Distributor enter into hedging or derivative instrument
      arrangements.





**ITEM 4.**                       **CONTROLS
      AND PROCEDURES**





**Disclosure
      Controls and Procedures**





Disclosure
      controls and procedures (as defined in Rule 13a-15(e) under the Securities
      Exchange Act of 1934, as amended (the “Exchange Act”)) are controls and other
      procedures that are designed to provide reasonable assurance that the
      information that we are required to disclose in the reports that we file or
      submit under the Exchange Act is recorded, processed, summarized and reported
      within the time periods specified in the SEC’s rules and forms, and that such
      information is accumulated and communicated to our management, including our
      Chief Executive Officer and Chief Financial Officer, as appropriate to allow
      timely decisions regarding required disclosure.




In
      connection with the preparation of this Quarterly Report, our management, with
      the participation of our Chief Executive Officer and our Chief Financial
      Officer, carried out an evaluation of the effectiveness of the design and
      operation of our disclosure controls and procedures as of September 30,
      2007.  Based on this evaluation, our Chief Executive Officer and Chief
      Financial Officer concluded that our disclosure controls and procedures were
      effective at the reasonable assurance level as of September 30,
      2007.





In
      light
      of the material weakness described below, we performed additional analyses
      and
      other procedures to ensure that our consolidated financial statements included
      in this Quarterly Report were prepared in accordance with generally accepted
      accounting principles (“GAAP”). These measures included, among other things,
      expansion of our end-of-quarter closing procedures, including the expanded
      review and analysis of the accounting between the Company and the Distributor,
      and dedication of significant internal resources and external consultants to
      scrutinize account analyses, reserve estimates, asset valuations, proper
      accounting treatment for revenues and expenses and account reconciliations
      at a
      detailed level. As a result of these and other expanded procedures, we concluded
      that the consolidated financial statements included in this Quarterly Report
      present fairly, in all material respects, our financial position, results of
      operations and cash flows for the periods presented in conformity with
      GAAP.


19


Our
      management, under the supervision of our Chief Executive Officer and Chief
      Financial Officer, is responsible for establishing and maintaining adequate
      internal control over financial reporting. Internal control over financial
      reporting is a process designed to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial statements
      for external purposes in accordance with GAAP. Internal control over financial
      reporting includes policies and procedures that (i) pertain to the maintenance
      of records that, in reasonable detail, accurately and fairly reflect the
      transactions and dispositions of the assets of the Company, (ii) provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with GAAP, and that receipts
      and expenditures of the Company are being made only in accordance with
      authorizations of management and directors of the Company, and (iii) provide
      reasonable assurance regarding prevention or timely detection of unauthorized
      acquisition, use, or disposition of the Company’s assets that could have a
      material effect on the financial statements.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with existing policies or procedures may deteriorate. Further, because of
      changes in conditions, effectiveness of internal controls over financial
      reporting may vary over time.





A
      material weakness is a control deficiency, or combination of control
      deficiencies (within the meaning of PCAOB Auditing Standard No. 5), that results
      in there being more than a remote likelihood that a material misstatement of
      the
      annual or interim financial statements will not be prevented or detected on
      a
      timely basis by employees in the normal course of their assigned functions.
      Management identified certain material weaknesses in our internal control over
      financial reporting as of December 31, 2006 (disclosed in our Annual Report
      on
      Form 10-K for that year).




As
      of
      September 30, 2007, we continued to have ineffective controls over the following
      items: (i) timely and routine process for reconciling certain accounts to the
      general ledger including the proper oversight of such processes; (ii) proper
      application of stock compensation expense and incomplete record keeping related
      to stock option grants; (iii) proper control of sales cut-off and measurement
      at
      the end of accounting periods; and (iv) formal process over changes, access
      and
      controls and procedures related to our information technology
      systems.





While
      we
      have taken actions in the second and third quarter to remediate these items,
      there has not been sufficient time to evaluate the effectiveness of our
      remediation as of September 30, 2007.  Such continuing control
      deficiencies related primarily to the fact that our internal accounting
      personnel did not yet have sufficient depth, skills and experience to recognize
      errors and deficiencies in accounting policies and procedures required to
      properly account for the items described in the preceding
      paragraph.





As
      a
      result of the material weakness described above and the fact that sufficient
      time has not elapsed to fully evaluate the effectiveness of the actions we
      have
      taken to correct it, our management concluded that as of September 30, 2007,
      we
      did not maintain effective internal control over financial
      reporting.





The
      foregoing control deficiencies caused certain errors in our financial statement
      accounts during 2006 and required adjustments of our financial statements.
      These
      errors were discovered by senior management and Ernst & Young LLP in
      connection with work on the audit for fiscal 2006. On September 26, 2007, we
      filed amendments to our Quarterly Reports on Form 10-Q for the periods ending
      March 31, June 30 and September 30, 2006 reflecting these
      adjustments.





In
      response to the continuing identified material weakness, we have taken action
      to
      remediate the specific accounting policies and procedures which led to the
      errors requiring restatement. We have established additional policies and
      enhanced the procedures that we will follow and have addressed these items
      as
      follows: (i) the Company has hired a Chief Accounting Officer and added
      additional accounting and financial personnel with industry experience, is
      implementing a formal closing process, has employed an experienced financial
      executive to oversee internal controls and procedures implementation, and
      engaged experienced outside consultants to assist the Company in complying
      with
      the requirements of Sarbanes Oxley by December 31, 2007;  (ii) the
      Company has engaged the services of an independent stock administration firm
      to
      assist with transactions, recordkeeping and the computation of compensation
      expense related to its stock options, hired additional personnel and retained
      outside consultants to oversee the administration of stock options and performed
      a review of stock option grants to ensure accuracy of the information; (iii)
      the
      Company has hired an information technology professional to ensure formal
      processes are implemented with respect to changes, controls, access and
      standardized procedures. Additionally, the Company has engaged a major
      information technology infrastructure provider, that is SAS 70 compliant, to
      assist with hosting the Company’s financial systems; (iv) the Company has
      implemented additional procedures to control access to its information
      technology systems and; (v) the Company has implemented additional procedures
      and training of its accounting staff with respect to proper sales cut-off
      procedures at the end of accounting periods.    As a result
      of these changes, we do not expect that the aforementioned material weakness
      will recur.





We
      intend
      to further expand our internal accounting personnel, information technology
      systems and personnel and compliance capabilities by attracting additional
      talent, enhancing training and implementing system and process improvements
      in
      our accounting and record keeping. These ongoing efforts are focused on
      implementing process changes to strengthen our internal control and monitoring
      activities.


20


**Changes
      in Internal Control over Financial Reporting**





Other
      than as described above, there were no changes in our internal control over
      financial reporting during the quarter ended September 30, 2007, that materially
      affected, or are reasonably likely to affect, our internal control over
      financial reporting.








**PART
      II - OTHER INFORMATION**




**ITEM 1.**                      **LEGAL
      PROCEEDINGS**




Except
      as
      described below, neither we nor the Distributor are a party to any legal or
      administrative proceedings, other than routine litigation incidental to our
      business and that of the Distributor that we do not believe, individually or
      in
      the aggregate, would be likely to have a material adverse effect on our, or
      the
      Distributor’s, financial condition or results of operations.





**FALCON
      PICTURE GROUP MATTER**





We
      have
      disclosed in prior reports filed with the Securities and Exchange Commission
      a
      complaint filed against the Company in the Circuit Court of Cook County,
      Illinois by Falcon Picture Group, LLC (“Falcon”), and the related counterclaim
      filed by the Company against Falcon and its owner, Carl Amari.  There
      have been no material developments in these matters.  For a complete
      description of the facts and circumstances surrounding the Falcon litigation,
      please see the disclosures in our Annual Report on Form 10-K for the year ended
      December 31, 2006 under Item 3.  “Legal Proceedings”, and in our
      Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 under Part
      II,
      Item 3., “Legal Proceedings”, which are incorporated herein by
      reference.





**ENTERTAINMENT
      RESOURCE MATTER**





We
      have
      disclosed in prior reports filed with the Securities and Exchange Commission
      a
      complaint filed against the Company in the Circuit Court of Broward County,
      Florida, Case No. 06-012249 CACE 05, by Larry S. Hyman, as assignee for
      Entertainment Resource, Inc. (“ERI”).  There have been no material
      developments in this matter.  For a complete description of the facts
      and circumstances surrounding the ERI litigation, please see the disclosure
      in
      our Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 under
      Part
      II, Item 3., “Legal Proceedings”, which is incorporated herein by
      reference.




**ITEM 1A.**
            **RISK
                FACTORS**




In
      addition to the other information set forth in this Quarterly Report, you should
      carefully consider the factors discussed in Part I, Item 1A. “Risk Factors”
in our Annual Report on Form Form 10-K for our fiscal year ended December
      31, 2006.  The risks discussed in our Annual Report on Form 10-K could
      materially affect our business, financial condition and future
      results.  The risks described in our Annual Report on Form 10-K are
      not the only risks facing us.  Additional risks and uncertainties not
      currently known to us or that we currently deem to be insignificant also may
      materially and adversely affect our business, financial condition or operating
      results.




**ITEM 2.**                      **UNREGISTERED
        SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**


None.




**ITEM 3.**                     
      **DEFAULTS UPON SENIOR SECURITIES**


None.




**ITEM 4.**                    
       **SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS**


None.




**ITEM 5.**                     **OTHER
      INFORMATION**




None.


21


**ITEM 6.**
            **EXHIBITS**





10.1
            Amended
                and Restated Limited Liability Company Agreement of Genius Products,
                LLC,
                dated as of July 21, 2006 (incorporated by reference from Exhibit
                99.2 to
                the Company’s Form 8-K filed on September 19,
                2007).




31.1
            Certification
                of Chief Executive Officer pursuant to Section 302(a) of the
                Sarbanes-Oxley Act.*31.2
            Certification
                of Chief Financial Officer pursuant to Section 302(a) of the
                Sarbanes-Oxley Act.*32.1
            Certification
                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act.*32.2
            Certification
                of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act.*




99.1
            Letter
                Agreement, dated as of September 17, 2007, by and among Genius Products,
                LLC, Genius Products, Inc., The Weinstein Company Holdings LLC and
                W-G
                Holding Corp. (incorporated by reference from Exhibit 99.1 to the
                Company’s Form 8-K filed on September 19, 2007).99.2
            Credit
                Agreement, dated as of August 10, 2007, by and among Genius Products,
                LLC,
                as borrower, Societe Generale, as administrative agent, collateral
                agent
                and L/C Issuer, the lenders party thereto and SG Americas Securities,
                LLC,
                as lead arranger and sole bookrunner (incorporated by reference from
                Exhibit 99.1 to the Company’s Form 8-K filed on August 16,
                2007).99.3
            Allocation
                of Accounts Receivable and Intercreditor Agreement, dated as of August
                10,
                2007, by and among Genius Products, LLC, The Weinstein Company LLC
                and
                Societe Generale (incorporated by reference from Exhibit 99.2 to
                the
                Company’s Form 8-K filed August 16, 2007).99.4
            Guaranty
                Agreement, dated as of August 10, 2007, by Genius Products, Inc.
                and each
                of the other signatories thereto, as guarantors, in favor of Societe
                Generale (incorporated by reference from Exhibit 99.3 to the Company’s
                Form 8-K filed August 16, 2007).99.5
            Security
                Agreement, dated as of August 10, 2007, by and among Genius Products,
                LLC,
                Genius Products, Inc., each of the other signatories thereto and
                Societe
                Generale (incorporated by reference from Exhibit 99.4 to the Company’s
                Form 8-K filed August 16, 2007).99.6
            Promissory
                Note, dated as of September 27, 2007, issued by Genius Products,
                LLC in
                favor of Genius Products, Inc. (incorporated by reference from Exhibit
                99.1 to the Company’s Form 8-K filed October 3, 2007).99.7
            Amended
                and Restated Credit Agreement, dated as of November 1, 2007, by and
                among
                Genius Products, LLC, as borrower, Societe Generale, as administrative
                agent, collateral agent and L/C Issuer, the lenders party thereto,
                SG
                Americas Securities, LLC, as lead arranger and sole bookrunner, and
                Alliance & Leicester Commercial Finance plc, as managing lead arranger
                (incorporated by reference from Exhibit 99.1 to the Company’s Form 8-K
                filed November 6, 2007).99.8
            Amendment
                No. 1 to Allocation of Accounts Receivable and Intercreditor Agreement,
                dated as of November 1, 2007, by and among Genius Products, LLC,
                The
                Weinstein Company LLC and Societe Generale (incorporated by reference
                from
                Exhibit 99.2 to the Company’s Form 8-K filed November 6,
                2007).99.9
            Reaffirmation
                of Guaranty Agreement, dated as of November 1, 2007, by Genius Products,
                Inc. and each of the other signatories thereto, as guarantors, in
                favor of
                Societe Generale (incorporated by reference from Exhibit 99.3 to
                the
                Company’s Form 8-K filed November 6,
                2007).





*  Filed
                herewith.




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**SIGNATURES**




In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





GENIUS
                PRODUCTS, INC.,
              a
                Delaware CorporationDated:
                  November 14, 2007
            
            By:
            /s/
                Trevor DrinkwaterTrevor
                Drinkwater
              President
                and Chief Executive Officer
              (Principal
                Executive Officer)Dated:
                November 14, 2007
            
            By:
            /s/
                John MuellerJohn
                Mueller
              Chief
                Financial Officer
              (Principal
                Financial and Accounting Officer)






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