UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
FORM 10-QSB
--------------------------------
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended June 30, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _______________ to _______________
Commission file number 000-27915
GENIUS PRODUCTS, INC.
---------------------
(Name of small business issuer as specified in its charter)
NEVADA 33-0852923
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
11250 EL CAMINO REAL #100
SAN DIEGO, CA 92127
(Address of principal executive officers)
(858) 793-8840
(Issuer's telephone number)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
There were 18,799,175 shares outstanding of the registrant's Common Stock as of
August 12, 2003.
Transitional small business disclosure format (check one): Yes [ ] No [X]
================================================================================
GENIUS PRODUCTS, INC.
INDEX
PAGE
PART I Financial Information 3
Item 1 Financial Statements 3
Condensed Consolidated Balance Sheet at June 30, 2003
(unaudited) 3
Condensed Consolidated Statements of Operations
for the Three Months Ended June 30, 2003
and 2002 (unaudited) 4
Condensed Consolidated Statements of Operations
for the Six Months Ended June 30, 2003
and 2002 (unaudited) 5
Condensed Consolidated Statements of Cash Flow
for the Six Months Ended June 30, 2003
and 2002 (unaudited) 6
Notes to Condensed Consolidated Financial Statements (unaudited) 7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3 Controls and Procedures 10
PART II Other Information
Item 1 Legal Proceedings 11
Item 2 Changes in Securities and Use of Proceeds 11
Item 3 Defaults Upon Senior Securities 11
Item 4 Submission of Matters to a Vote of Security Holders 11
Item 5 Other Information 11
Item 6 Exhibits and Reports on Form 8-K 11
SIGNATURES 12
2
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENIUS PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED) JUNE 30,
- --------------------------------------------------------------------------------
2003
-------------
ASSETS
Current assets
Cash and equivalents $ 683,387
Accounts receivable, net of allowance for
doubtful accounts and sales returns of $41,811 244,288
Inventories 351,282
Prepaid royalties 242,666
Prepaid expenses 235,068
-------------
Total current assets 1,756,691
Property and equipment, net of accumulated
depreciation of $139,105 138,593
Production masters, net of accumulated amortization
of $180,484 714,240
Patents and trademarks, net of accumulated
amortization of $27,330 82,594
Deposits and other 36,138
-------------
$ 2,728,256
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 350,375
Accrued payroll and related expenses 58,306
Debentures payable 50,750
Accrued other expenses 64,496
Deferred Income - Advance royalties 409,320
-------------
Total current liabilities 933,247
Redeemable common stock 478,354
Commitments and contingencies --
Stockholders' equity:
Common stock, $.001 par value; 50,000,000 shares
authorized: 17,876,899 shares outstanding 17,877
Additional paid-in capital 18,060,354
Stock subscription receivable (2,721,050)
Accumulated deficit (14,040,526)
-------------
Total stockholders' equity 1,316,655
-------------
$ 2,728,256
=============
The accompanying notes are an integral part of these statements.
3
GENIUS PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) FOR THE THREE
MONTHS ENDED JUNE 30,
- --------------------------------------------------------------------------------
2003 2002
------------- -------------
REVENUES
Product sales $ 395,153 $ 517,710
Licensing 36,000 14,487
Video royalties 84,952 70,000
------------- -------------
Total revenues 516,105 602,197
Returns, discounts and allowances (49,271) (45,060)
------------- -------------
Net revenues 466,834 557,137
------------- -------------
COSTS AND EXPENSES
Cost of revenues 349,818 502,706
Sales and marketing 254,642 108,329
Product development 153,029 103,191
General and administrative 485,399 1,009,031
------------- -------------
Total costs and expenses 1,242,888 1,723,257
------------- -------------
Loss from operations (776,054) (1,166,120)
Interest income 762 66,183
Other income 10,392 --
Interest expense (7,523) (16,028)
------------- -------------
Loss before provision for income taxes (772,423) (1,115,965)
Provision for income taxes -- --
------------- -------------
Net loss $ (772,423) $ (1,115,965)
============= =============
Basic and diluted loss per common share:
Net loss per share $ (0.05) $ (0.07)
============= =============
Basic and diluted weighted average shares 16,474,524 15,016,620
============= =============
The accompanying notes are an integral part of these statements.
4
GENIUS PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) FOR THE SIX
MONTHS ENDED JUNE 30,
- --------------------------------------------------------------------------------
2003 2002
------------- -------------
REVENUES
Product sales $ 936,665 $ 998,466
Licensing 56,990 14,487
Video royalties 144,952 75,600
------------- -------------
Total revenues 1,138,607 1,088,553
Returns, discounts and allowances (121,226) (78,026)
------------- -------------
Net revenues 1,017,381 1,010,527
------------- -------------
COSTS AND EXPENSES
Cost of revenues 615,737 717,645
Sales and marketing 458,249 195,230
Product development 264,834 184,014
General and administrative 926,560 1,508,036
------------- -------------
Total costs and expenses 2,265,380 2,604,925
------------- -------------
Loss from operations (1,247,999) (1,594,398)
Interest income 1,969 66,528
Other income 10,392 --
Interest expense (15,571) (23,153)
------------- -------------
Loss before provision for income taxes (1,251,209) (1,551,023)
Provision for income taxes 800 800
------------- -------------
Net loss $ (1,252,009) $ (1,551,823)
============= =============
Basic and diluted loss per common share:
Net loss per share $ (0.08) $ (0.13)
============= =============
Basic and diluted weighted average shares 16,182,542 12,016,087
============= =============
The accompanying notes are an integral part of these statements.
5
GENIUS PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) FOR THE SIX
MONTHS ENDED JUNE 30,
- ----------------------------------------------------------------------------------------
2003 2002
------------ ------------
Cash flows from operating activities
Net loss $(1,252,009) $(1,551,823)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization 99,257 86,366
Bad debt expense (28,189) 30,000
Common stock issued for services 143,000 350,050
Stock options granted to non-employees for services 134,884 376,575
Stock issued for compensation 7,500 180,000
Interest expense on redeemable common stock 12,577 15,848
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 70,626 (369,539)
Inventories (91,023) (188,180)
Prepaid royalties (76,142) (88,833)
Prepaid expenses and deposits (183,758) (28,636)
Increase (decrease) in:
Accounts payable 118,303 (402,848)
Deferred income 3,481 280,000
Accrued payroll & related items 14,147 (124,603)
Accrued expenses 43,424 --
------------ ------------
Net cash used by operating activities (983,922) (1,435,623)
------------ ------------
Cash flows from investing activities
Patents and trademarks (1,029) (35,640)
Development of production masters (280,939) (228,856)
Purchase of property and equipment (16,636) (104,731)
------------ ------------
Net cash used in investing activities (298,604) (369,227)
------------ ------------
Cash flows from financing activities
Borrowings on notes payable -- 62,506
Proceeds from issuance of convertible debt -- 60,000
Proceeds from issuance of common stock 1,219,920 2,876,700
------------ ------------
Net cash provided by financing activities 1,219,920 2,999,206
------------ ------------
Net increase (decrease) in cash and equivalents (62,606) 1,194,356
Cash at beginning of period 745,993 27,998
------------ ------------
Cash at end of period $ 683,387 $ 1,222,354
============ ============
Non-cash investing and financing activities:
Payment of loans by issuance of common stock -- 62,506
Acquisition of production masters through the
issuance of common stock -- 73,600
Common stock subscribed -- 764,010
Exercise of options with notes receivable -- 1,778,000
Conversion of debenture to common stock 10,000 --
The accompanying notes are an integral part of these statements.
6
GENIUS PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A: BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of Genius Products, Inc. have been prepared by the Company pursuant to the rules
and regulations of the Securities and Exchange Commission.
The information furnished herein reflects all adjustments, consisting
of only normal recurring accruals and adjustments which are, in the opinion of
management, necessary to fairly state the operating results for the respective
periods. Certain information and footnote disclosures normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations.
The notes to the condensed financial statements should be read in conjunction
with the notes to the consolidated financial statement contained in the
Company's Form 10-KSB for the year ended December 31, 2002. Company management
believes that the disclosures are sufficient for interim financial reporting
purposes. Certain items in the prior year financial statements have been
reclassified to conform to the current year presentation.
NOTE B: COMMON STOCK
During the three months ended June 30, 2003, we issued a total of
1,945,396 common shares. We issued (a) 1,747,320 unregistered shares at a price
of $.70 per share for net proceeds of $1,215,921 in private placements, (b)
10,000 unregistered shares at a price of $.75 per share to an employee as
compensation and (c) 188,706 shares at a price of $.70 per share for services.
Of the shares issued for services, 173,773 unregistered shares were issued under
Section 4(2) of the Securities Act and the balance were registered on Form S-8
Statement No. 333-97769. The 1,757,320 unregistered shares were issued under
Rule 506 of Regulation D of the Securities Act. Each private placement purchase
included a warrant to purchase one share at an exercise price of $1.40 for each
share purchased.
NOTE C: OFFICER'S COMPENSATION
On June 2, 2003, five officers agreed to accept 140,865 unregistered
shares as payment of $100,000 of 2003 salary to be paid pro rata over the
remainder of 2003. Each was also issued one five-year warrant to purchase 28,173
shares at an exercise price of $1.40. The shares and warrants will vest as the
salary is earned over the remainder of 2003. This payment was based upon the
price of common stock and warrants issued to third parties in our most recent
private placement.
NOTE D: STOCK BASED COMPENSATION
Stock options issued under stock-based compensation plans are accounted
for under the recognition and measurement principles of APB Opinion No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related Interpretations. No
stock-based employee compensation cost is reflected in the net loss, as all
options granted under these plans had an exercise price equal to the market
value of the underlying common stock on the date of grant. In accordance with
Financial Accounting Standards Board ("FASB") No. 148, ACCOUNTING FOR
STOCK-BASED COMPENSATION-TRANSITION AND DISCLOSURE, AN AMENDMENT OF FASB NO.
123, the following table illustrates the effect on net loss and loss per share
if we had applied the fair value recognition provisions of FASB Statement No.
123, ACCOUNTING FOR STOCK-BASED COMPENSATION, to stock-based employee
compensation.
Pro forma adjustments to our consolidated net loss and loss per share are as
follows:
For the Quarter Ended
June 30,
2003 2002
------------ ------------
Net Loss as reported $ (772,423) $(1,115,965)
Deduct: Total stock-based compensation expense determined
under the fair value based method for all awards (26,461) (349,384)
------------ ------------
Pro forma net loss $ (798,884) $(1,465,349)
============ ============
Basic and diluted net loss per common share $ (.05) $ (.10)
============ ============
7
GENIUS PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE D: Continued
For the Six Months Ended
June 30,
2003 2002
------------ ------------
Net Loss as reported $(1,252,009) $(1,551,823)
Deduct: Total stock-based compensation expense determined
under the fair value based method for all awards (48,109) (616,000)
------------ ------------
Pro forma net loss $(1,300,118) $(2,167,823)
============ ============
Basic and diluted net loss per common share $ (.08) $ (.18)
============ ============
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 NOTE
A TO THE FINANCIAL STATEMENTS INCLUDED ABOVE. THIS DISCUSSION CONTAINS
FORWARD-LOOKING STATEMENTS THAT RELATE TO FUTURE EVENTS OR THE COMPANY'S FUTURE
FINANCIAL PERFORMANCE AND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS THAT MAY CAUSE THE COMPANY'S ACTUAL RESULTS, LEVELS OF ACTIVITY,
PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE
FORWARD-LOOKING STATEMENTS.
THE THREE MONTHS ENDED JUNE 30, 2003.
Product sales are primarily "Baby Genius" and "Kid Genius" music sales
direct to mass retailers, distributors and independent retailers. Product sales
also include the sales of jewelry to retailers. We also recognize licensing
revenue related to licensing the Baby Genius trademark and royalties related to
the distribution of our line of videos. Sales returns, discounts and allowances
are product sales related and are primarily on music.
Total revenues decreased 14% ($86,092) to $516,105 for the three months
ended June 30, 2003, as compared to the same period in 2002, primarily due to
decreased sales of music products, which was partially offset by increases in
licensing revenue and royalties recognized on our videos. The decline in product
sales occurred as we focused our selling effort on new products such as "Kid
Genius" and "Baby Genius" products in revised packaging, that began selling in
June 2003, and on our new "BOZO the Clown" videos and DVD's and "Guess How Much
I Love You(TM)" audio products that will be introduced in the third quarter of
2003. Sales returns, discounts and allowances increased slightly in the current
three month period, as compared to the same period in 2002, because we are
reserving at a higher rate for returns this year, based on our experience in
2002 with our current customers. Net revenues declined 16% ($90,303) as compared
to the second quarter of 2002, due to the lower music product sales and the
higher reserve rate for returns.
Costs of revenues consist primarily of the costs of products sold to
customers and packaging and shipping costs. Cost of revenues also include
commissions paid on licensing and expenses related to the video royalty
agreement. The cost of revenues for the three months ended June 30, 2003 were
75% of net revenues as compared to 90% in the same quarter in 2002. The cost of
revenues in the current quarter reflect the low level of revenues in relation to
fixed operating costs and the liquidation of music product inventory in previous
packaging. The cost of revenues for the quarter ended June 30, 2002 includes
clearance and write off of old music and jewelry inventory and the charge to
operations for promotional products that occurred in that quarter.
Sales and marketing expenses consist primarily of costs for personnel
and promotional activities. Sales and marketing expenses increased by 135% to
$254,642 for the three months ended June 30, 2003 as compared to $108,329 for
the same quarter in 2002 as the result of increased sales personnel expenses due
to increased headcount and increased advertising and consulting expenses.
8
Product development expenses consist primarily of costs for the
personnel involved in the development of our products. As a result of increased
personnel and related costs, product development expenses increased by 48% to
$153,029 in the second quarter of 2003, as compared to $103,191 in the quarter
ended June 30, 2002. We are continuing to develop new products as evidenced by
expenditures for product development that are reflected in the $190,723 that was
capitalized in the quarter ending June 30, 2003. We currently anticipate that
product development expenses will be incurred at this higher level for the
remainder of 2003 as we develop new audio products under license from others.
General and administrative expenses consist of payroll and related
costs for executive and administrative personnel, professional services and
consulting fees, and other general corporate expenses. General and
administrative expenses decreased by 52%, to $485,399 for the three months ended
June 30, 2003, as compared to $1,009,031 for the year earlier period. This
decrease was primarily due to higher costs associated with the issuance of
options and warrants to non-employees in the prior year second quarter, as well
as higher consulting costs in the prior year quarter. The year earlier period
reflected our use of options and share issuances to obtain services in the
second quarter of 2002.
Interest expense is primarily incurred on debentures and redeemable
common stock. Interest income in the quarter ended June 30, 2002 was higher due
to the funds received from the private placement. The net loss for the quarter
ended June 30, 2003 of $772,423 was less than the net loss of $1,115,965 for the
quarter ended March 31, 2002, as the result of the higher cost of sales and
general and administrative expenses incurred in the year earlier quarter.
THE SIX MONTHS ENDED JUNE 30, 2003.
Total revenues increased 5% ($50,054) to $1,138,607 for the six months
ended June 30, 2003, as a 7% increase in sales of music products and increases
in licensing revenue and royalties recognized on our videos were partially
offset by a decrease in jewelry sales. Jewelry sales in the six months ended
June 30, 2003 were 14% of product sales as compared to 25% of product sales in
the year earlier period. It should be noted that there were no royalties on
videos in the first quarter of 2002. Sales returns, discounts and allowances
increased slightly in the current six month period due to the higher reserve
rate. Net revenues increased 1% as compared to the second quarter of 2002, as
the higher reserve for returns offset the increase in licensing and royalties.
The cost of revenues for the six months ended June 30, 2003 were 61% of
net revenues as compared to 71% in the same period in 2002. The prior year six
month period reflects clearance and write off of old music and jewelry inventory
and the charge to operations for promotional products. Both periods reflect the
low level of revenues in relation to fixed operating costs.
Sales and marketing expenses increased 135% to $458,249 for the six
months ended June 30, 2003 as compared to $195,230 for the same period in 2002
as the result of personnel costs, and increased advertising and consulting
expenses.
Product development expenses increased by 44% to $264,834 in the first
six months of 2003, as compared to $184,014 in the first six months of 2002 due
to increased personnel costs and related expenses incurred in the development of
new products. Expenditures for product development that were capitalized in the
six months ending June 30, 2003 totaled $280,939.
General and administrative expenses decreased by 39%, to $926,560 for
the six months ended June 30, 2003, as compared to $1,508,036 for the year
earlier period. This decrease was primarily due to higher costs associated with
the issuance of options and warrants to non-employees in the prior year second
quarter, as well as higher consulting costs in the prior year six month period.
Interest income in the six months ended June 30, 2002 was higher due to
the funds received from the private placement. The net loss for the six months
ended June 30, 2003 of $1,252,009 was less than the net loss of $1,551,823 for
the first six months of 2002 due to the higher cost of sales and higher general
and administrative expenses of the prior year period.
9
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operations during the six months ended June 30, 2003
was $983,922, primarily due to the net loss and increases in prepaid expenses
and inventories. This was offset by an increase in accounts payable,
depreciation and amortization, and stock option costs. In the six months ended
June 30, 2002, net cash used in operations of $1,435,623 was primarily the
result of the net loss, the reduction in accounts payable, and the increase in
accounts receivable. These were offset by stock option costs, stock issued for
services and the increase in deferred income.
Net cash used in investing activities in the six months ended June 30,
2003 was $298,604, primarily as the result of the development of production
masters. In the six months ended June 30, 2002, net cash used in investing
activities was $369,227, as the result of the development of production masters
and expenditures for property and equipment.
Cash flows from financing activities of $1,219,920 and $2,999,206 in
the six month periods ending June 30, 2003 and 2002, respectively, were
primarily from the sale of our common stock.
At June 30, 2003, we had cash balances of $683,387. In July and August
2003, we received an additional $370,540 from investors for the purchase of our
common stock. We believe that these amounts will fund our operations through the
third quarter of 2003, except for significant inventory purchases that we may
have to pay for in advance. We purchase certain products occasionally in large
quantities at favorable prices for shipment directly to our customers from a
foreign manufacturer. These purchases require payment in advance. In order to
fund these purchases, we have obtained an offer from a third party to factor our
accounts receivable, which, if we are not able to find a similar offer at more
economical terms, we intend to accept in August 2003. We anticipate that we may
be operating profitably by September 2003 as the result of an increase in
revenues from our new "Kid Genius", "Guess How Much I Love You(TM)", "BOZO the
Clown", and other well known brand name products that we have obtained or expect
to obtain a license for the audio rights to in the third quarter of 2003. No
assurance can be made, however, that we will be operating profitably by
September 2003, or ever, as such performance is subject to numerous variables
and uncertainties, many of which are out of our control.
Our "Kid Genius" audio products began selling in the second quarter of
2003, and our "Guess How Much I Love You(TM)" audio products will begin selling
in the third quarter of 2003. We also intend to sell our "BOZO the Clown" videos
and DVD's in the third quarter of 2003. The development of these well known
brand name products has required significant funds in order to develop the music
and artwork, as well as prepayments relating to the licensing rights and to
purchase inventory. We intend to continue developing new audio products, and
additional "BOZO the Clown" videos and DVD's and expect our development costs to
be similar to the first six months of 2003 for the remainder of 2003. If we are
operating profitably by September 2003, we will be able to fund this development
from operations and the factoring of our receivables. No assurance can be made,
however, that we will be operating profitably by September 2003, or ever, as
such performance is subject to numerous variables and uncertainties, many of
which are out of our control. If we do not reach profitability in the third
quarter of 2003, it may be necessary to delay significant vendor payments or our
product development, or offer discounts to major customers for faster payment of
accounts receivable, or seek to obtain funds from additional investors through
the sale of our common stock in order to fund our operations through the end of
2003.
On June 12, 2003, we entered into a term sheet with Falcon Picture
Group, LLC, for the distribution of a majority of its audio and video products,
subject to the finalization of a definitive agreement. Under the intended
agreement structure, we have committed to have Falcon digitally remaster 200
hours of classic movies and television programs at a cost of $350,000 which is
payable in cash or stock. Additional hours will be billed at a reduced rate of
$500 per hour. We plan to distribute these remastered classic movies and TV
shows on DVD through our existing distribution network to major mass-market
retailers.
ITEM 3. CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this report, Genius Products,
Inc. carried out an evaluation, under the supervision and with the participation
of our management, including our Chief Executive Officer and our Chief Financial
Officer, of the effectiveness of the design and operation of Genius Products,
Inc.'s disclosure controls and procedures pursuant to Exchange Act Rule 13a-14.
Based upon that evaluation, the Chief Executive Officer and the Chief Financial
Officer concluded that Genius Products, Inc.'s disclosure controls and
procedures are effective in timely alerting him to material information relating
to Genius Products, Inc. required to be included in our periodic filings with
the Securities and Exchange Commission.
10
There were no significant changes in our internal controls or in other
factors that could significantly affect those controls subsequent to the date of
their most recent evaluation.
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the three months ended June 30, 2003, we issued a total of
1,945,396 common shares. We issued (a) 1,747,320 unregistered shares at a price
of $.70 per share for net proceeds of $1,215,921 in private placements, (b)
10,000 unregistered shares at a price of $.75 per share to an employee as
compensation and (c) 188,706 shares at a price of $.70 per share for services.
Of the shares issued for services, 173,773 unregistered shares were issued under
Section 4(2) of the Securities Act and the balance were registered on Form S-8
Statement No. 333-97769. The 1,757,320 unregistered shares were issued under
Rule 506 of Regulation D of the Securities Act. Each private placement purchase
included a warrant to purchase one share at an exercise price of $1.40 for each
share purchased.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-B
10.1 Form of Executive Stock Payment Agreement dated as of
June 2, 2003, with Klaus Moeller, Michael Meader, Larry
Balaban, Howard Balaban and Julie Ekelund for stock and
warrants paid in lieu of $20,000 each of 2003 salary
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
(b) REPORTS ON FORM 8-K
We filed a Form 8-K on April 4, 2003 to disclose the issuance of a
press release announcing our financial results for the year ended
December 31, 2002.
We filed a Form 8-K on May 20, 2003 to disclose the issuance of a
press release announcing our financial results for the first
quarter ended March 31, 2003.
We filed a Form 8-K on June 30, 2003 to disclose the issuance of a
press release announcing a licensing agreement with DK Publishing.
11
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 Nevada Corporation
August 14, 2003 By: /s/ Klaus Moeller
---------------------------------------
Klaus Moeller, Chief Executive Officer,
Chairman of the Board and Interim
Chief Financial Officer
12