Exhibit 99.1
genius products, inc.
NEWS RELEASE
CONTACT:
Trevor Drinkwater
Chief Executive Officer
Genius Products, Inc.
858-793-8840
Roger Pondel / Rosemary Moothart
PondelWilkinson Inc.
310-279-5980
GENIUS PRODUCTS REPORTS FIRST QUARTER RESULTS;
PROVIDES EARNINGS TARGETS FOR 2005, 2006
--NEW CEO OUTLINES STRATEGIC PLAN TO ACHIEVE PROFITABILITY--
SOLANA BEACH, CALIFORNIA - MAY 12, 2005 - GENIUS PRODUCTS, INC. (OTCBB:GNPI),
which produces and distributes a variety of branded entertainment products sold
in retail outlets nationwide, today reported operating results for the first
quarter ended March 31, 2005 and provided earnings per share targets for 2005 in
the range of $0.08 to $0.10 and approximately $0.20 for 2006.
"The pace of transformation at Genius Products is accelerating rapidly," said
Trevor Drinkwater, who was named chief executive officer of Genius Products in
February 2005. "The company is evolving from a supplier of value-priced, budget
products to a fully integrated entertainment company offering higher margin,
branded and proprietary content. The Wellspring library acquired in March 2005,
for example, allows us to offer differentiated proprietary content while
stimulating revenue and improved gross margin starting in the current second
quarter. It also strengthens many of our existing retail relationships and
affords us the capability to explore new forms of distribution, including
wireless, PPV and VOD.
(more)
GENIUS PRODUCTS, INC.
2-2-2
"As Genius Products continues its transformation, our immediate mandate is to
focus full attention on our path to profitability," Drinkwater said. "Namely, we
will leverage our infrastructure and overhead, and beginning with this quarter,
realize cost savings and economies of scale from the Wellspring library and from
the introductions of new branded content. We have refined our content strategy
and will continue to acquire, produce or distribute products that support it.
This, in turn, should help us execute our key initiatives, which include
improving gross margins, expanding our distribution footprint and leveraging our
infrastructure."
Net revenues for the first quarter of 2005, which did not include contributions
from the Wellspring library, amounted to $2.6 million, compared with $3.1
million for the corresponding period last year. Genius Products registered a net
loss for the 2005 period of $2.2 million, equal to a loss of $0.08 per share,
based on 28.0 million weighted average shares outstanding, versus a net loss of
$799,000, or a loss of $.04 per share, with 20.7 million shares outstanding for
the 2004 first quarter.
Genius Products said net revenues for the 2005 first quarter were impacted by
the transitioning of certain lower margin business to higher priced branded and
proprietary products, as well as the shifting of sales of certain products to
later quarters in order to take advantage of wider distribution opportunities.
Genius Products attributed the 2005 first quarter net loss primarily to the
deep-discounting of certain inventory and other costs associated with the
company's corporate repositioning strategy, including severance, audit and legal
fees.
(more)
GENIUS PRODUCTS, INC.
3-3-3
"My vision is to combine the strong retail relationships I developed during my
tenure at Warner Home Video with Genius Products' current strong line-up of
branded and proprietary content to fill underserved consumer demand," Drinkwater
said. "There is significant opportunity to compete effectively in four key
segments: classic content, with the TV Guide(R) and AMC(R) brands; independent
films, with the Wellspring, IFILM(R) and Sundance Channel Home Entertainment(TM)
brands; lifestyle, with our health and wellness titles in the Wellspring
library, as well as our expanding relationship with NBC; and family content,
with our own brand, Baby Genius(R), and licensed brands such as Bazooka(R), `My
Little Pony(R),' `Little Tikes(R)' and others."
ABOUT GENIUS PRODUCTS, INC.
- ---------------------------
Genius Products produces and distributes affordable entertainment
products including DVDs and CDs. Its products are sold in retail outlets
nationwide under well-known brands including AMC(R), TV Guide(R), Wellspring,
IFILM(R), Sundance Channel Home Entertainment(TM), Bazooka(R), Jay Jay The Jet
Plane(R), National Lampoon(R), The Twilight Zone(TM), Baby Genius(R), Tonka(R),
My Little Pony(R), Curious George(R) and Paddington Bear(TM). Genius Products
also licenses the Baby Genius brand to third-party companies for a variety of
products including books, apparel and infant care products. Promotional partners
include the world famous San Diego Zoo(R), Gerber(R), Fazoli's(R) and Child(R)
Magazine.
SAFE HARBOR STATEMENT
- ---------------------
Except for historical matters contained herein, certain matters
discussed in this news release are forward-looking statements. Such
forward-looking statements, including, but not limited to, new revenue streams
and distribution channels afforded by the AVMC transaction, cost savings and
economies of scale to be realized in the second quarter of 2005, achieving
profitability this year, including its specific per share goals for 2005 and
2006, liquidity provided by financings to fund internal growth and future
acquisitions, reflect assumptions and involve risks and uncertainties, which may
affect Genius Products' business, forecasts, projections and prospects contained
herein, and may cause results to differ materially from these forward-looking
statements. Actual results could vary for many reasons, also including but not
limited to, the timely development and acceptance of new products, the market
demand for independent films and general market conditions. Other such risks and
uncertainties include Genius Products' ability to grow its business, to obtain
additional licenses, to meet anticipated release schedules and other matters,
which are described in its filings with the Securities and Exchange Commission.
###
(FINANCIAL TABLES FOLLOW)
GENIUS PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 31
---------------------------------
2005 2004
---------------------------------
Revenues:
Audio $1,320,810 $778,603
DVD and VHS 1,419,262 2,497,044
Royalties, licensing and other 25,118 49,050
---------------------------------
Gross revenues 2,765,190 3,324,697
Sales returns, discounts and allowances (209,304) (193,308)
---------------------------------
Net revenues 2,555,886 3,131,389
Costs and expenses:
Cost of revenues:
Audio 790,800 342,724
DVD and VHS 1,632,162 1,601,410
Other 21,396 45,032
Amortization of Production Masters 172,670 88,549
Warehouse expenses 49,772 51,458
---------------------------------
Total costs of revenues: 2,666,800 2,129,173
Operating expenses:
Product development 227,314 187,509
Sales and marketing 446,491 476,333
General and administrative 1,440,964 989,124
---------------------------------
Total costs and expenses 4,781,569 3,782,139
Loss from operations (2,225,683) (650,750)
Other income (expense) 0 0
Interest expense (5,840) (147,002)
---------------------------------
Loss before provision for income taxes (2,231,523) (797,752)
Provision for income taxes 800 800
---------------------------------
Net loss ($2,232,323) ($798,552)
=================================
Basic and diluted loss per common share:
Net loss per share ($0.08) ($0.04)
=================================
Basic and diluted weighted average shares 28,000,009 20,697,233
=================================
GENIUS PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 2005 December 31, 2004
-------------- -----------------
(unaudited) (audited)
ASSETS
Current assets:
Cash and equivalents $ 3,788,558 $ 1,223,881
Accounts receivable, net of allowance for doubtful accounts and
sales returns of $705,588 and $1,542,085 4,764,449 3,615,073
Inventories, net of obsolescence allowance $521,180 and $474,358 3,576,745 3,473,483
Prepaid royalties 1,649,930 1,042,120
Prepaid expenses 445,247 312,046
------------ ------------
Total current assets 14,224,929 9,666,603
Property and equipment, net of accumulated depreciation of
$248,704 and $215,194 448,336 264,989
Production masters, net of accumulated amortization of
$1,226,675 and $805,891 3,095,804 2,825,426
Film Library 14,800,000 --
Goodwill 11,375,612 --
Deposits and other 236,736 239,148
------------ ------------
$ 44,181,417 $ 12,996,166
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 6,730,419 $ 7,329,218
Notes payable 4,000,000 --
Accrued payroll and related expenses 274,131 259,366
Debentures payable 50,750 50,750
Accrued expenses 1,137,947 229,800
Redeemable common stock 399,997 395,172
Payable on terminated contract 300,000 300,000
------------ ------------
Total current liabilities 12,893,244 8,564,306
------------ ------------
Commitments and contingencies -- --
Stockholders' equity
Preferred stock, $.001 par value; 10,000,000 shares authorized;
0 shares outstanding -- --
Common stock, $.0001 and .001 par value; 50,000,000 shares
authorized; 40,084,437 and 25,208,512 shares outstanding 3,953 25,209
Committed Common Stock 1,249,183
Additional paid-in capital 53,844,722 25,984,012
Accumulated deficit (23,809,685) (21,577,361)
------------ ------------
Total stockholders' equity 31,288,173 4,431,860
------------ ------------
$ 44,181,417 $ 12,996,166
============ ============