UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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American Vantage Companies
(Name of Registrant as Specified In Its Charter)
Not Applicable
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Date Filed:
American Vantage Companies
Notice of Annual Meeting of Stockholders
December 8, 2005
To the Stockholders of
American Vantage Companies:
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Annual Meeting") of
Stockholders of American Vantage Companies (the "Company") will be held at The
Orleans Las Vegas Hotel & Casino, located at 4500 West Tropicana Avenue, Las
Vegas, Nevada, on Thursday, December 8, 2005, commencing at 10:00 a.m. (local
time), for the following purposes:
1. To elect two persons to the Board of Directors of the Company as Class C
directors, to serve until the third succeeding annual meeting of
stockholders of the Company following the Annual Meeting or until such
person shall resign, be removed or otherwise leave office; and
2. To consider and act upon any other proposal as may properly come before
the Annual Meeting.
The foregoing matters are more fully described in the Proxy Statement
accompanying this Notice, to which your attention is directed.
Only stockholders of record on the books of the Company at the close of business
on October 10, 2005 will be entitled to vote at the Annual Meeting. You are
requested to sign, date and return the enclosed proxy card at your earliest
convenience in order that your shares may be voted for you as specified.
By Order of the Board of Directors,
Jeanne Hood, Assistant Secretary
October 25, 2005
Las Vegas, Nevada
2
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American Vantage Companies
4735 South Durango Drive
Suite 105
Las Vegas, Nevada 89147
Proxy Statement
Annual Meeting of Stockholders
December 8, 2005
The 2005 Annual Meeting of Stockholders of American Vantage Companies, a Nevada
corporation, will be held on Thursday, December 8, 2005, at The Orleans Las
Vegas Hotel & Casino, located at 4500 West Tropicana Avenue, Las Vegas, Nevada,
commencing at 10:00 a.m., local time, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. This proxy statement is
being furnished in connection with the solicitation of proxies by and on behalf
of our board of directors for use at the annual meeting, and at any adjournments
and postponements of the annual meeting. We will bear the entire costs of such
solicitation. The approximate date on which this proxy statement and the
enclosed proxy card are being first mailed to our stockholders is October 25,
2005.
If the proxy card in the accompanying form is duly completed, executed, dated
and returned, the shares represented by such proxy card will be voted as
specified, subject to any applicable voting or irrevocable proxy agreements. Any
person executing a proxy card may revoke it prior to its use. You are directed
to the section entitled "Procedure for Voting by Proxy" for further information
concerning a stockholder's ability to vote by proxy and to revoke a proxy once
given.
Throughout this proxy statement, the terms "we," "us," "our" and "our company"
refers to American Vantage Companies and, unless the context indicates
otherwise, our subsidiaries on a consolidated basis; and "you" and "your" refers
to the stockholders of our company.
Record Date
We have established October 10, 2005 as the record date for the annual meeting.
Only holders of record of our voting securities at the close of business on such
date will be eligible to vote at the annual meeting. Our common stock currently
is the only class of our securities entitled to be voted at the annual meeting.
A list of stockholders entitled to vote at the annual meeting will be available
for examination by any stockholder, for any purpose relating to the annual
meeting, at our executive offices during ordinary business hours for the ten
days immediately prior to the annual meeting. The stockholder list also will be
available for examination at the annual meeting.
Proposals to be Considered at the Meeting
You will be asked to consider and vote at the annual meeting on the matters
listed in the accompanying Notice of Annual Meeting of Stockholders and
described in this proxy statement.
We do not expect that any other matter will be brought before the annual
meeting. If, however, other matters are properly presented, the individuals
named on your proxy card will vote on these other matters in accordance with
their judgment and to the extent permitted by applicable law.
Vote Required to Approve the Proposals
Holders of our common stock are entitled to one vote per share on each of the
proposals scheduled for vote at the annual meeting. We had issued and
outstanding shares of 5,729,107 of our common stock as of the record date.
Accordingly, there are 5,729,107 votes eligible to be cast at the annual
meeting.
The election of directors (proposal number 1) is by a plurality of votes cast.
Abstentions will not be included in the vote totals and, in instances where
brokers are prohibited from exercising discretionary authority for beneficial
owners who have not returned a proxy card to the brokers, so called "broker
non-votes," those votes will not be included in the vote totals for purposes of
determining whether proposals have received the requisite number of affirmative
votes cast. Therefore, abstentions and broker non-votes will have no effect on
the vote on all of the proposals scheduled for vote at the annual meeting.
Abstentions and broker non-votes, however, will be counted in the determination
of whether a quorum exists for the purposes of transacting business at the
annual meeting.
Our directors, director-nominees and executive officers control approximately
23.4% of the voting power entitled to be cast at the annual meeting. We
anticipate that these directors and executive officers will cast all of their
votes in favor of each of the director-nominees.
Quorum
We must have a quorum in order to carry on business at the annual meeting. Under
our bylaws, as amended through the record date, we must have present, in person
or by proxy, holders of at least a majority of the entire number of votes
entitled to be cast at the annual meeting in order for a quorum to exist.
Accordingly, we must have present, in person or by proxy, holders owning of
record at least 2,864,554 shares of our common stock in order for any business
to be conducted at the annual meeting. Abstentions and broker non-votes will
count for quorum purposes.
Procedure for Voting by Proxy
A form of proxy card is enclosed for your use. To vote without attending the
annual meeting in person, you should complete, sign, date and return the proxy
card in the accompanying envelope, which is postage-paid if mailed in the United
States.
If you properly fill in your proxy card in the accompanying form and send it to
us in time to be voted, your shares will be voted as you have directed on the
proxy card, subject to any applicable voting or irrevocable proxy agreements to
which you may be a party. If you sign the proxy card, but do not make specific
choices, the individuals named on your proxy card will vote your shares FOR
approval of each of the company proposals scheduled for vote at the annual
meeting.
You can still vote in person at the annual meeting, even if you have completed
and returned a proxy. You may revoke your proxy at any time before it is voted
by: o submitting a new proxy with a later date; o by voting in person at the
annual meeting; or o by filing with our corporate secretary a written revocation
of the proxy.
Attendance at the annual meeting will not of itself constitute revocation of a
proxy. You must note your appearance with the inspector(s) of election, tell the
inspector(s) that you previously granted a proxy with respect to the annual
meeting, which you are revoking and request a ballot in order to personally vote
at the annual meeting.
If you hold shares through a broker, you should contact your broker to determine
the procedures through which you can vote your shares in person.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Our common stock is the only class of our voting securities presently
outstanding.
The following table sets forth information with respect to the beneficial
ownership of shares of our common stock as of the record date for the annual
meeting by:
o each person known by us to beneficially own 5% or more of the outstanding
shares of such class of stock, based on filings with the Securities and
Exchange Commission and certain other information,
o each of our current "named executive officers" and directors, and
o all of our current executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the SEC and
includes voting and investment power. In addition, under SEC rules, a person is
deemed to be the beneficial owner of securities which may be acquired by such
person upon the exercise of options and warrants or the conversion of
convertible securities within 60 days from the date on which beneficial
ownership is to be determined.
The term "named executive officers" is defined in the SEC rules as those
executive officers who are required to be listed in the Summary Compensation
Table provided in the discussion in this proxy statement concerning proposal
number 1.
Except as otherwise indicated in the notes to the following table,
o we believe that all shares are beneficially owned, and investment and
voting power is held by, the persons named as owners, and
o the address for each beneficial owner listed in the table is American
Vantage Companies, 4735 South Durango Drive - Suite 105, Las Vegas, Nevada
89147.
Amount and Nature of Percentage of
Name and Address of Stockholder Beneficial Ownership Outstanding Shares
- ------------------------------- -------------------- ------------------
Ronald J. Tassinari (1) 670,329 (2) (3) 11.3
Audrey K. Tassinari (4) 670,329 (2) (5) 11.3
Rosalind Davidowitz (6) 547,747 (7) 9.6
Engex, Inc. (8) 474,500 (9) 8.3
Jay H. and Sharyn Brown (10) 348,211 (11) 6.1
White Rock Partners, Krest LLC, ET Holdings, L.L.C.,
Hampstead Associates, L.L.C., Ridgeview Associates,
LLC, Michael R. Milken and Lowell J. Milken (12) 336,505 (2) 5.9
Blueridge Associates (2) 324,178 (2) 5.5
Anna M. Morrison (13) 88,300 (14) 1.5
Jeanne Hood (15) 77,501 (2) (16) 1.3
Steven G. Barringer (17) 45,000 (2) (18) 0.8
Randolph C. Read (19) 25,000 (2) (20) 0.4
All executive officers and directors as a group
(six persons) (21) 1,730,941 (2) (22) 28.3
- ----------
(1) Mr. Tassinari is our president and chief executive officer. Mr. Tassinari
also serves as chairman of our board of directors. Mr. Tassinari is the
husband of Audrey K. Tassinari, another director of our company.
(2) Does not include 824,811 shares of our common stock held by certain
stockholders who have granted our board of directors a limited power to
vote such shares. These stockholders acquired such 824,811 shares in
connection with the dissolution of YaYa, LLC ("YaYa"). We issued such
824,811 shares to YaYa as the consideration for our April 2003 acquisition
from YaYa of certain assets and the YaYa business. Such stockholders have
granted our board of directors a limited power to direct how they are to
vote their aggregate 824,811 shares of our common stock pursuant to a
voting agreement dated as of January 1, 2005. This power has been granted
to our board as a group, and not to any individual director. We believe
that such voting power is not held by any individual since our board is
required to act by plurality. As such, no individual director named in
this stockholder table is listed as the beneficial owner of the 824,811
shares owned by the former YaYa creditors as of the record date, although
such shares are included in the aggregate amount held by all executive
officers and directors as a group. The stockholders include White Rock
Partners ("White Rock"), which acquired 55,236 shares, Krest LLC
("Krest"), which acquired 281,269 shares, and Blueridge Associates LLC
("Blueridge"), which acquired 324,178 shares. See note (12) below for
further information regarding White Rock and Krest. The address for
Blueridge is c/o Maron & Sandler, 1250 Fourth Street - Suite 550, Santa
Monica, California, 90401.
(3) Includes (a) 3,698 shares of our common stock owned of record by Mr.
Tassinari, his wife and child, as joint tenants, (b) 443,293 shares owned
by the Tassinari Family Trust, a family trust in which Mr. Tassinari and
his wife are trustees and beneficiaries, (c) 5,000 shares owned of record
by his spouse, (d) 180,555 shares issuable upon exercise of options
granted to Mr. Tassinari, which shares are exercisable within the next 60
days, and (d) 27,778 shares issuable upon exercise of options granted to
Mr. Tassinari's spouse, which shares are exercisable within the next 60
days. Mr. Tassinari disclaims beneficial ownership to the (x) 27,778
shares underlying options granted his spouse, (y) 5,000 shares owned of
record by his spouse and (z) 221,646 shares held by the Tassinari Family
Trust in excess of his pecuniary interest in such trust. Does not include
150,000 shares of our common stock issuable upon exercise of an option
granted to Mr. Tassinari, which shares are not exercisable within the next
60 days.
(4) Ms. Tassinari resigned as our executive vice president, effective July 31,
2002. Ms. Tassinari continues to serve as one of our directors. Ms.
Tassinari is the wife of Ronald J. Tassinari.
(5) Includes (a) 3,698 shares of our common stock owned of record by Ms.
Tassinari, her spouse and child as joint tenants, (b) 443,293 shares owned
by the Tassinari Family Trust, a family trust in which Ms. Tassinari and
her husband are trustees and beneficiaries, (c) 27,778 shares issuable
upon exercise of options granted to Ms. Tassinari, which shares are
exercisable within the next 60 days, (d) 180,555 shares issuable upon
exercise of options granted to Ms. Tassinari's husband which are
exercisable within the next 60 days and (e) 10,005 shares held of record
by Ms. Tassinari's husband. Ms. Tassinari disclaims beneficial ownership
to the (x) 180,555 shares underlying options granted her husband, (y)
221,647 shares held by the Tassinari Family Trust in excess of her
pecuniary interest in such trust and (z) 10,005 shares held of record by
Ms. Tassinari's husband.
(6) The address of Rosalind Davidowitz is 7 Sutton Place South, Lawrence, New
York, 11563.
(7) According to the Schedule 13G/A of Rosalind Davidowitz filed with the SEC
on February 9, 2005, Ms. Davidowitz claims to have sole voting and
dispositive powers with respect to 547,747 shares of our common stock
owned directly by her and that she may be deemed the beneficial owner of
12,300 shares owned by J. Morton Davis, Mrs. Davidowitz's husband. Ms.
Davidowitz's Schedule 13G/A states that Mr. Davis has the sole power to
dispose or to direct the disposition of the 12,300 shares owned by him.
The shares listed in the principal stockholders table are limited to those
shares set forth in Ms. Davidowitz's Schedule 13G/A as being beneficially
owned by her. See Note (9) for further information concerning Ms.
Davidowitz's ownership interest in Engex, another of our stockholders, and
other related matters.
(8) The address for Engex, Inc. is 44 Wall Street, New York, New York 10005.
(9) According to the Schedule 13D of Engex, Inc. filed with the SEC on July
10, 2003, Engex claims to have sole voting and dispositive power with
respect to 474,500 shares of our common stock. Such amount does not
include 12,300 shares owned directly by the chairman of Engex, Inc., J.
Morton Davis, or 547,747 shares owned by Mr. Morton's wife, Rosalind
Davidowitz. According to the proxy statement of Engex filed with the SEC
on January 11, 2005, the principal stockholders of Engex are (a) Mr.
Davis, the reported beneficial owner of 6.2% of the outstanding common
stock of Engex, (b) Ms. Davidowitz, the reported beneficial owner of 28.2%
of the outstanding common stock of Engex, (c) Kinder Investments L.P., the
reported beneficial owner of 11.2% of the outstanding common stock of
Engex, and (d) Venturetek LP, the reported beneficial owner of 11.4% of
the outstanding common stock of Engex. The Engex proxy statement also
reports that Dov Perlysky, the managing member of the general partner of
Kinder Investments, is a member of the immediate family of Mr. Davis.
According to the Schedule 13G/A of Kinder Investments, Nesher, LLC and Dov
Perlysky filed with the SEC on July 24, 2003, Kinder Investments is the
owner of an additional 274,100 shares of our common stock and Mr.
Perlysky, the managing member of the general partner of Kinder
Investments, has sole voting and dispositive powers with respect to such
274,100 shares. The shares listed in the principal stockholders table are
limited to those shares set forth in Schedule 13D of Engex as being
beneficially owned by Engex. See Note (7) for further information with
respect to Mr. Davis' and Ms. Davidowitz's ownership interest in the our
outstanding common stock.
(10) These stockholders hold 260,711 shares of our common stock of record as
tenants-in-common. Mr. Brown provides legal services to us from time to
time and previously served as a member of the advisory group we formed to
assist our management in evaluating merger and acquisition candidates. Mr.
Brown received an option to purchase 87,500 shares of our common stock
upon his appointment to the advisory group, which shares became
exercisable in April 2003, as a result of our acquisition from YaYa of
certain assets and the YaYa business. The address for Mr. and Ms. Brown is
1801 Waldman Avenue, Las Vegas, Nevada 89102.
(11) Includes 87,500 shares that are issuable upon exercise of an option
granted to Mr. Brown, which shares are exercisable within the next 60
days.
(12) According to a Schedule 13D/A filed with the SEC on January 10, 2005 by
YaYa, White Rock, Krest, ET Holdings, L.L.C. ("ET"), Hampstead Associates,
L.L.C. ("Hampstead"), Ridgeview Associates, LLC ("Ridgeview", Michael R.
Milken ("M. Milken") and Lowell J. Milken ("L. Milken"), YaYa, the former
record holder of 824,811 shares of our common stock, was dissolved. In
connection with the dissolution of YaYa, the shares of our common stock
held by YaYa were distributed to the creditors of YaYa, including White
Rock and Krest. According to our stock records, 55,236 shares were
transferred to and are currently held of record by White Rock and 281,269
were transferred to and are currently held of record by Krest. We have no
knowledge of, nor do our stock records show, any shares of our common
stock being transferred to or held by ET, Hampstead, Ridgeview, M. Milken
or L. Milken. The Schedule 13D/A reports White Rock as having sole voting
and dispositive power with respect to 55,236 shares of our common stock
and Krest as having sole voting and dispositive power with respect to
281,269 shares of our common stock and shared voting and dispositive power
with respect to 55,236 shares of our common stock. The Schedule 13D/A
reports each of ET, Hampstead, Ridgeview, M. Milken and L. Milken as
having sole voting and dispositive power with respect to no shares of our
common stock and shared voting and dispositive power with respect to
336,505 shares of our common stock. The Schedule 13D/A does not provide
any information regarding the relationship or agreements by which these
persons and entities share any voting and dispositive power with each
other, except that (a) the secretary of YaYa is Stanley E. Maron, (b) the
general partner of White Rock is Mapleleaf Partners whose general manager
is Mr. Maron, (c) the secretary of Krest is Mr. Maron, (d) the assistant
secretary of ET holdings is Mr. Maron and (e) the manager of Hampstead is
Ridgeview whose manager is M. Milken. In the original schedule 13D filed
with the SEC on April 28, 2003 by YaYa, White Rock, ET, Hampstead,
Ridgeview, M. Milken, L. Milken and others, (x) Hampstead is the manager
of an entity, ET Consolidated, L.L.C. ("ET Consolidated"), which is the
manager of ET, (y) Mr. Milken and L. Milken are each managers of
Ridgeview, directors of ET, ET Consolidated and Hampstead and may be
deemed a controlling person of Ridgeview. The address for each of White
Rock, Krest, ET, Hampstead, Ridgeview, M. Milken and L. Milken, according
to the original Schedule 13D, is 1250 Fourth Street - Suite 580, Santa
Monica, California, 90401.
(13) Ms. Morrison became the our chief accounting officer on April 16, 2003.
(14) Includes 54,000 shares of our common stock issuable upon exercise of an
option granted to Ms. Morrison, which shares are exercisable within the
next 60 days. Does not include 6,000 shares of our common stock issuable
upon exercise of options granted to Ms. Morrison, which shares are not
exercisable within the next 60 days.
(15) Ms. Hood is a director of our company.
(16) Includes 60,834 shares of our common stock issuable upon exercise of
options granted to Ms. Hood that are exercisable within the next 60 days.
(17) Mr. Barringer is a director of our company.
(18) Represents 45,000 shares of our common stock issuable upon exercise of
options granted to Mr. Barringer, which shares are exercisable within the
next 60 days.
(19) Mr. Read became a director of our company on May 20, 2003.
(20) Includes 25,000 shares of our common stock issuable upon exercise of an
option granted to Mr. Read, which shares are exercisable within the next
60 days.
(21) Includes only current executive officers and directors.
(22) Includes those shares of our common stock beneficially owned by our
current executive officers and directors, as set forth in notes (1), (3),
(5), (14), (16), (18) and (20), and the 824,811 shares which our board of
directors has the limited power to direct how the shares are voted, as
discussed in notes (2) and (12).
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
Our board of directors currently is divided into three classes. Under our bylaws
as currently in effect, each class of directors is to be as nearly equal in
number as possible, with no class having fewer than 25% of the total number of
our directors. Each director, no matter what class, is elected to serve for a
three-year term, unless the director shall resign, become disqualified, disabled
or shall otherwise be removed from office. Only a plurality of votes cast is
necessary for the election of directors.
Set forth below are the members of each class of our directors and the year in
which the term of each director class expires.
Class A Class B Class C
(To Serve Until (To Serve Until (To Serve Until
the Annual Meeting the Annual Meeting the Annual Meeting
of Stockholders in 2007) of Stockholders in 2006) of Stockholders in 2005)
------------------------ ------------------------ ------------------------
Audrey K. Tassinari Randolph C. Read Steven G. Barringer
Ronald J. Tassinari Jeanne Hood
Director-Nominees for the 2005 Annual Meeting
The independent directors, as such term is defined in the Marketplace Rules of
The Nasdaq Stock Market, of our board of directors have nominated Steven G.
Barringer and Jeanne Hood for election at the annual meeting as our sole Class C
directors.
Shares represented by executed proxy cards in the form accompanying this proxy
statement will be voted, if authority to do so is not withheld, for the election
of Steven G. Barringer and Jeanne Hood as the Class C directors of our company,
unless such nominee shall be unavailable, in which case such shares will be
voted for the substitute nominees designated by our board of directors. Our
board of directors has no reason to believe that Mr. Barringer or Ms. Hood will
be unavailable or, if elected, will decline to serve.
Our board of directors has not established a nominating committee, nor did it
adopt a nominating committee charter. Our board believes that its size negates
the need for establishing a separate nominating committee. However, all of our
board's nominees for election as directors of our company are approved by our
directors who meet the definition of "independent" under the Marketplace Rules
of The Nasdaq Stock Market. Those independent directors consist of Steven G.
Barringer, Jeanne Hood and Randolph C. Read.
Our independent directors will consider recommendations for election as
directors submitted by our stockholders. These recommendations will be discussed
at board meetings and appropriate candidates will be invited to meet with our
independent directors and entire board to discuss their qualifications for
serving on our board. Our board has not established minimum qualifications for
candidates recommended by our stockholders. Any determination to include a
stockholder-recommended candidate as a board nominee remains a subjective
determination to be made by our independent directors.
Information Concerning Our Directors and Executive Officers
Set forth below is a brief description of the background of each of our current
directors and executive officers, based on information provided to us by them.
Principal Positions and Director
Name Age Offices with our Company Since
- ---- --- ------------------------ -----
Ronald J. Tassinari 61 Chief Executive Officer, President, Chairman of the Board of 1979
Directors
Steven G. Barringer 49 Director (Corporate Governance Liaison) 1998
Jeanne Hood 76 Director (Chairwoman of the Audit Committee) 1994
Randolph C. Read 52 Director (Chairman of the Compensation and Acquisition Committees) 2003
Audrey K. Tassinari 64 Director 1985
Anna M. Morrison 49 Chief Accounting Officer n/a
Ronald J. Tassinari, an original founder of our company, has served as our chief
executive officer, president and chairman of our board of directors since our
company's inception in August 1979. Mr. Tassinari also is a member of our
advisory group formed to evaluate mergers and acquisitions candidates. Mr.
Tassinari is the husband of Audrey K. Tassinari, another director of our
company.
Steven G. Barringer has served as a director of our company since February 1998
and our corporate governance liaison since July 2003. Mr. Barringer has been a
member of the government relations firm of MGN, Inc. in Washington, D.C. since
November 2000. Mr. Barringer also has maintained his own law practice, Steven G.
Barringer, P.L.L.C., in Washington, D.C. since November 2000. From April 1999 to
October 2000, Mr. Barringer was a member of the law firm of Dickstein Shapiro
Morin & Oshinsky, LLP, in Washington, D.C., practicing natural resources and
environmental law.
Jeanne Hood has been a director of our company since February 1994 and chairman
of our audit committee since March 2002. Ms. Hood was a gaming consultant to our
company from February 1994 to April 2000. Ms. Hood served as a director of
Pioneer Citizens Bank (a Nevada statewide bank) until its merger during 2000
with Zions, a large regional bank with offices in seven states. Since January
2000, she has served on the board of Southwest USA Bank.
Randolph C. Read was elected to our board of directors in May 2003. He has been
president and chief executive officer of American Strategic Investments, L.P.,
an investment fund that focuses on established commercial business operations
and investing in both debt and/or equity of those entities, since 2002. Mr. Read
served as president of Knowledge Universe Business Group and president of
Knowledge Universe Capital Co. from 1999 to 2002.
Audrey K. Tassinari has been a director of our since March 1985. Ms. Tassinari
served as our executive vice president from April 1986 until July 2002, when she
resigned such position in connection with our corporate restructuring. During
her tenure as an officer of our company, she was responsible for our management
and employee training programs at Table Mountain Casino that grew from
approximately 45 employees in 1989 to 850 employees in 1999. From 1973 to 1985,
Ms. Tassinari held key management positions in the hotel/casino industry. Ms.
Tassinari is the wife of Ronald J. Tassinari, our Chief Executive Officer and
President.
Anna M. Morrison was appointed our chief accounting officer in April 2003. From
August 2002 to April 2003, she provided financial and accounting services to us
as an outside consultant. She was president of Morrison Business Resources, Inc.
and an associate with Resources Connection, Inc. and Robert Half International,
Inc. from 1997 to August 2002. Ms. Morrison served as a manager and an associate
for Price Waterhouse LLP, a predecessor of PricewaterhouseCoopers LLP from 1987
to 1992 and from 1993 to 1996. Ms. Morrison is a certified public accountant and
received her B.S. degrees in business administration - accounting and speech
communications from Southern Oregon State University in 1987.
Director Compensation
Non-employee directors receive $15,000 per annum for serving on our board of
directors.
Jeanne Hood and Randolph C. Read each received an annual payment of $10,000 for
serving as the chairpersons for the audit and compensation committees. Steven G.
Barringer also received an annual payment of $10,000 for serving as our
stockholder corporate governance liaison. In June 2005, our board created an
acquisition committee consisting of Randolph C. Read and Ronald J. Tassinari to
identify and investigate possible acquisition targets. Mr. Read receives a
monthly fee of $10,000 for serving as chairman of the acquisition committee.
We also reimburse our directors for their reasonable expenses incurred in
attending meetings of our board of directors.
We also refer you to the subsection entitled "Certain Relationships and
Transactions" for additional information concerning other compensation we have
paid, or have agreed to pay, to certain of our directors in consideration for
other services performed, or to be performed, on our behalf.
Committees of Our Board of Directors
Our board of directors has established two standing committees to assist it in
the discharge of the board's duties; an audit committee and a compensation
committee. In June 2005, our board created a third committee, an acquisition
committee, consisting of Randolph C. Read and Ronald J. Tassinari, to identify
and investigate possible acquisition targets.
Our audit committee currently is composed of Jeanne Hood, Randolph C. Read and
Steven G. Barringer, with Ms. Hood serving as its chairwoman. We believe that
each of these committee members are "independent," within the meaning of such
term under Rule 4200(a)(15) of the Marketplace Rules of The Nasdaq Stock Market,
Inc. and that Ms. Hood is an "audit committee financial expert" as defined in
Item 401(e) of Regulation S-B promulgated by the SEC. The duties of our audit
committee include recommending the engagement of independent auditors, reviewing
and considering actions of management in matters relating to audit functions,
reviewing with independent auditors the scope and results of its audit
engagement, reviewing reports from various regulatory authorities, reviewing our
system of internal controls and procedures and reviewing the effectiveness of
our procedures intended to prevent violations of law and regulations. A copy of
the charter for our audit committee was attached as appendix A to the proxy
statement for our 2004 annual meeting of stockholders.
Our compensation committee currently is composed of Randolph C. Read, Steven G.
Barringer and Jeanne Hood, with Mr. Read serving as its chairman. The duties of
our compensation committee include recommending to the full board of directors
remuneration to be paid our executive officers, determining the number and
conditions to awards/options granted pursuant to our various stock plans and
recommending the establishment of and monitoring a compensation and incentive
program for all of our executive officers. Our compensation committee also
administers our 2004 Employee Stock Purchase Plan.
Stockholder Communications
Stockholders wishing to communicate with our board, other than to submit
proposals for action at meetings of our stockholders pursuant to SEC Rule 14a-8,
should do so in writing, addressed to "Steven G. Barringer, Independent Director
and Corporate Governance Liaison, American Vantage Companies, P.O. Box 81920,
Las Vegas, Nevada 89180." The envelope delivering such written communications
should be marked "Stockholder Communication."
Meetings of the Board of Directors and its Committees
Our board of directors held eight formal meetings and took action by written
consent in lieu of a meeting on one occasion during our fiscal year ended
December 31, 2004. Our audit committee held four formal meetings and our
compensation committee held two formal meetings during our 2004 fiscal year.
Each member of our board of directors attended, in person or telephonically, at
least 75% of the total number of meetings of our board and each committee of the
board on which the director serves.
Our board has not established any procedure with respect to director attendance
at our annual meetings of stockholders. All of our directors were present at our
annual meeting of stockholders held on June 10, 2004.
Audit Committee Report
This report of the audit committee of our board of directors does not constitute
soliciting material and shall not be deemed filed or incorporated by reference
into any of our other filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that we specifically incorporate this
report by reference in such other filings.
The audit committee of our board of directors consists of three members, all of
whom we believe meet the definition of "independent" under the listing standards
of The Nasdaq Stock Market, Inc. as currently in effect. None of the audit
committee members is a current officer or employee of our company. We further
believe that each member of the audit committee has the expertise and experience
to adequately serve our stockholders' interests while serving on the audit
committee.
Our board of directors has adopted a written charter for the audit committee.
The charter is reviewed and reassessed annually by our board and the audit
committee. The charter sets forth the responsibilities, authority and specific
duties of the audit committee. The charter also specifies, among other things,
the structure and membership requirements of the audit committee, as well as the
relationship of the audit committee to our independent accountants and
management. A copy of the audit committee charter was included as appendix A to
the proxy statement for our 2004 annual meeting of stockholders.
The audit committee charter notes that management is responsible for the
preparation and integrity of our financial statements, as well as establishing
appropriate internal controls and the financial reporting processes. Deloitte &
Touche LLP is responsible for performing an independent audit of our financial
statements and issuing a report on such financial statements. The audit
committee's responsibility is to monitor and oversee these processes.
The audit committee reviewed our audited financial statements for the year ended
December 31, 2004 and met with both management and the independent auditors,
separately and together, to discuss such financial statements. Management and
the auditors have represented to the audit committee that the financial
statements were prepared in accordance with accounting principles generally
accepted in the United States. The audit committee also received written
disclosures and a letter from our auditors regarding their independence from us,
as required by Independence Standards Board Standard No. 1 and discussed with
the auditors such auditors' independence with respect to all services that it
rendered to us. The audit committee also discussed with the auditors any matters
required to be discussed by Statement on Statement on Auditing Standards No. 61,
as amended by Statement on Auditing Standards No. 90. Based upon these reviews
and discussions, the audit committee recommended to our board of directors that
the audited financial statements be included in our Annual Report on Form 10-KSB
for the year ended December 31, 2004.
The Audit Committee of the Board of Directors
of American Vantage Companies
Jeanne Hood, Chairwoman
Steven G. Barringer
Randolph C. Read
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of Forms 3, 4 and 5 and amendments to these forms
furnished to us, together with written representations received by us from
applicable parties that no Form 5 was required to be filed by such parties, all
parties subject to the reporting requirements of Section 16(a) of the Exchange
Act filed all such required reports during and with respect to our fiscal year
ended December 31, 2004.
Executive Compensation
We recently changed our fiscal year to end on December 31 from July 31 of each
calendar year. The following table sets forth, with respect to our fiscal year
ended December 31, 2004, the twelve months ended December 31, 2003 and our
fiscal years ended July 31, 2003 and 2002, all compensation earned by our chief
executive officer and our other officers who were serving as executive officers
of our company as of the close of business on December 31, 2004 and whose total
annual salary and bonus earned during the fiscal year ended December 31, 2004
exceeded $100,000. Due to the overlap of periods constituting the twelve months
ended December 31, 2003 and our fiscal year ended July 31, 2003, information
included in the twelve month period ended December 31, 2003 may be duplicative
of information included in the fiscal year ended July 31, 2003.
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
---------------------------------------- Securities
Name and Principal Other Annual Underlying
Position Period Salary Bonus Compensation Options
- -------------------- ------------------------------ ----------- ------- ------------------- -----------
Options
Ronald J. Tassinari, Fiscal year ended 12/31/04 $ 300,923 $ 0 $ 41,000 (1) 0
Chairman, Chief Twelve months ended 12/31/03 287,857 100,000 40,000 (1) 275,000 (2)
Executive Officer Fiscal year ended 7/31/03 272,473 0 40,000 (1) 25,000 (3)
and President Fiscal year ended 7/31/02 408,140 0 40,000 (1) 28,470 (4)
Anna M. Morrison, Fiscal year ended 12/31/04 160,308 0 41,000 (1) 0
Chief Accounting Twelve months ended 12/31/03 92,349 15,000 25,539 (1) (5) 60,000 (6)
Officer Fiscal year ended 7/31/03 33,798 0 8,808 (1) (5) 50,000 (7)
Fiscal year ended 7/31/02 -- -- -- --
Stephen K. Bannon, Fiscal year ended 12/31/04 0 0 297,083 (9) 0
AVMC Chief Twelve months ended 12/31/03 0 0 60,000 (9) 175,000 (10)
Executive Officer Fiscal year ended 7/31/03 0 0 60,000 (9) 200,000 (11)
(8) Fiscal year ended 7/31/02 0 0 20,000 (9) 0
Matthew K. Smith, Fiscal year ended 12/31/04 166,154 0 0 0
AVMC Chief Twelve months ended 12/31/03 -- -- -- --
Financial Officer Fiscal year ended 7/31/03 -- -- -- --
(8) Fiscal year ended 7/31/02 -- -- -- --
- ----------
(1) Represents SARSEP retirement plan contributions we made on the named
executive officer's behalf.
(2) Represents options to purchase 25,000 shares of our common stock at an
exercise price of $1.41 per share and 250,000 shares at an exercise price
of $2.87 per share.
(3) Represents an option to purchase 25,000 shares of our common stock at an
exercise price of $1.41 per share.
(4) Represents an option to purchase 28,470 shares of our common stock at an
exercise price of $2.49 per share. This option was voluntarily canceled by
Mr. Tassinari, effective as of July 31, 2002.
(5) Prior to joining our company, Ms. Morrison was employed by an entity which
provided internal accounting and financial reporting services for us. We
paid this entity $21,162 during the twelve months ended December 31, 2003
and $61,290 during our fiscal year ended July 31, 2003 for providing such
services. Such amounts are not included in Ms. Morrison's annual
compensation for these two periods.
(6) Represents options to purchase 50,000 shares of our common stock at an
exercise price of $1.41 per share and 10,000 shares at an exercise price
of $2.87 per share.
(7) Represents an option to purchase 50,000 shares of our common stock at an
exercise price of $1.41 per share.
(8) We disposed of our American Vantage Media Corporation subsidiary ("AVMC")
on March 21, 2005.
(9) Represents compensation received as a consultant by the former
vice-chairman of our board of directors and chief executive officer of
AVMC. Immediately preceding the effectiveness of our disposition of AVMC
to Genius Products, Inc., Mr. Bannon resigned as a director, vice-chairman
of our board of directors and all other offices with our company. See
further discussion in "Employment and Severance Agreements."
(10) Represents an option to purchase 175,000 of our common stock at an
exercise price of $1.41 per share.
(11) Represents options to purchase 25,000 shares of our common stock at an
exercise price of $1.26 per share and 175,000 shares of our common stock
at an exercise price of $1.41 per share.
Option Grants in Last Fiscal Year
We did not grant any options to any of our named executive officers listed in
the Summary Compensation Table contained in the "Executive Compensation"
subsection of this proxy statement during our fiscal year ended December 31,
2004.
The following table sets forth:
o the number of shares underlying options we granted during the twelve
months ended December 31, 2003 and our fiscal year ended July 31, 2003 to
each of the named executive officers listed in the Summary Compensation
Table contained in the "Executive Compensation" subsection of this proxy
statement,
o the percentage that the option grant represents of the total options
granted to all of our employees during such twelve month period and our
2003 fiscal year,
o the per share exercise price of each option, and
o the expiration date of each option.
We recently changed our fiscal year to end on December 31 from July 31 of each
calendar year. Due to the overlap of periods constituting the twelve months
ended December 31, 2003 and our fiscal year ended July 31, 2003, information
included in the twelve month period ended December 31, 2003 may be duplicative
of information included in the fiscal year ended July 31, 2003.
Number
of Shares Percentage of
Underlying Total Options
Options Granted to Exercise Expiration
Name Period Granted All Employees Price Date
- -------------------- ------------------------------- -------------- ----------------- ------------- --------------
Ronald J. Tassinari Twelve months ended 12/31/03 25,000 4.9% $ 1.41 4/15/13
250,000 49.0 2.87 12/10/13
Fiscal year ended 7/31/03 25,000 9.1 1.41 4/15/13
Anna M. Morrison Twelve months ended 12/31/03 50,000 9.8 1.41 4/15/13
10,000 2.0 2.87 12/10/13
Fiscal year ended 7/31/03 50,000 18.2 1.41 4/15/13
Stephen K. Bannon Twelve months ended 12/31/03 175,000 34.3 1.41 4/15/13
Fiscal year ended 7/31/03 (1) 175,000 63.6 1.41 4/15/13
25,000 9.1 1.26 10/24/12
Matthew P. Smith Twelve months ended 12/31/03 0 n/a n/a n/a
Fiscal year ended 7/31/03 0 n/a n/a n/a
- ----------
(1) Mr. Bannon received his options as consideration for services rendered in
his capacity as a consultant to our company during the fiscal year ended
July 31, 2003.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
None of the named executive officers listed in the Summary Compensation Table
contained in the "Executive Compensation" subsection of this proxy statement
exercised any of their options during our fiscal year ended December 31, 2004.
The following tables set forth:
o the total number of unexercised options held, as of December 31, 2004, by
each of the named executive officers listed in the Summary Compensation
Table contained in the "Executive Compensation" subsection of this proxy
statement, separately identified between those exercisable and those not
exercisable, and
o the aggregate value of in-the-money, unexercised options held, as of
December 31, 2004, by each of the named executive officers, separately
identified between those exercisable and those not exercisable.
Number of Value of Unexercised
Unexercised Options In-the-Money Options
as of December 31, 2004 as of December 31, 2004
----------------------------------- ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
Ronald J. Tassinari 130,555 200,000 $97,749 $ 0
Anna M. Morrison 52,000 8,000 70,500 0
Stephen K. Bannon 200,000 0 278,250 0
Matthew P. Smith 0 0 n/a n/a
The value of unexercised in-the-money options is calculated by subtracting the
aggregate exercise price of the options from the aggregate market price of the
shares underlying the options as of December 31, 2004 of $1.81 per share.
An option to purchase 25,000 shares of our common stock, granted to Stephen K.
Bannon and included in the table above, terminated upon Mr. Bannon's resignation
as an officer of our company in March 2005.
Employment and Severance Agreements
We entered into an employment agreement with Ronald J. Tassinari in March 1995.
This agreement was amended as of July 20, 1995 and on December 21, 2001. This
prior agreement, as amended, had a term expiring on March 31, 2002, subject to
extension for an unlimited number of additional one year terms, unless either
the executive or we provided 30 days' prior written notice to the other party
prior to the date of termination of the then current term. We entered into a
substantially similar new employment agreement with Mr. Tassinari, effective as
of April 1, 2002.
We entered into a new employment agreement with Ronald J. Tassinari effective
February 1, 2003. Mr. Tassinari's February 2003 employment agreement provides
for him to continue to serve as our chief executive officer and president. The
term of the February 2003 employment agreement expires on January 31, 2006. The
February 2003 agreement with Mr. Tassinari provides, among other matters, for
(a) an initial annual base salary of $300,000, subject to adjustments in the
event of increases we give to any of our other executives or increases in a
specified cost-of-living index, which has resulted in his base salary increasing
to $306,000 for our fiscal year ending December 31, 2004, (b) reimbursement for
his personal legal and financial consulting expenses to a maximum of 3% of his
prior calendar year's base salary, (c) his right to designate the beneficiary on
a $2 million term life policy on his life and (d) reimbursement of all normal
expenses relating to the use of his personal automobile. We also retained the
right in the February 2003 employment agreement to otherwise increase Mr.
Tassinari's base salary and grant Mr. Tassinari other incentive compensation,
such as stock options or bonuses. Mr. Tassinari's February 2003 agreement also
contains indemnification provisions relating to his performance of services on
our behalf, and confidentiality, non-disparagement, non-competition and
non-solicitation provisions.
Mr. Tassinari's February 2003 employment agreement further provides that, upon
his death during the agreement's term, we are obligated to pay his designee or
estate a lump sum death benefit equal to the sum of (a) the annualized average
of the base salary paid to him during the five calendar years immediately
preceding his death, plus (b) the annualized average of the incentive awards
granted to him during the five calendar years immediately preceding his death.
The February 2003 agreement also provides for disability coverage, including
continuing to pay him his base salary and keeping in effect any incentive awards
during an initial period and then to continuing to pay him for a one year period
at a rate equal to the annualized average of the base salary, plus the value of
any incentive compensation, paid to him during the prior five calendar years.
Mr. Tassinari's February 2003 employment agreement provides for payments in the
event of his termination "without cause" or if he terminates his employment for
"good reason," as such terms are used in the agreement. These payments include
(a) payment of a sum equal to 2.99 times the annualized average of the base
salary, plus the value of any incentive compensation, paid to him during the
prior five calendar years, (b) reimbursement of certain legal fees up to
$100,000, (c) continuation of, or the payment of an amount equal in value to,
all employee benefits which he was entitled to receive immediately prior to
termination for the remaining term of the employment agreement and (d)
continuation of, or the payment of an amount equal in value to, all medical
insurance coverage for him and his family for a twelve month period following
termination. The maximum amount of all of these payments may not exceed the
amount which would otherwise result in an "excess parachute payment" under
section 280G of the Internal Revenue Code, minus $1.00.
We entered into an employment agreement with Anna Morrison, our chief accounting
officer, as of April 16, 2003, the date on which she became a full-time employee
of our company. This agreement has a term expiring on July 31, 2004 (subject to
extension) and provides for a base salary of $135,000 per year, subject to
adjustments in the event of increases in a specified cost-of-living index, which
has resulted in her base salary increasing to $138,000 for our fiscal year
ending December 31, 2004. Ms. Morrison received an option to purchase 50,000
shares of our common stock, at $1.41 per share, upon entering into the agreement
and will be entitled to the health insurance and other benefits we have
traditionally afforded our executive officers. We have the right under this
agreement to increase Ms. Morrison's base salary and to grant her incentive
compensation, such as additional options or bonuses. On December 10, 2003, we
granted Ms. Morrison an additional option to purchase 10,000 shares of our
common stock, at $2.87 per share. Ms. Morrison's agreement contains severance or
"golden parachute" provisions providing for payments to her equal to 35% of her
base salary if she is terminated without cause or she terminates her employment
following a change in control of our company. Such payment percentage will
increase by 5% annually, commencing in August 2004.
We entered into a new employment agreement with Ms. Morrison effective August 1,
2004. This agreement has a term expiring on December 31, 2005 (subject to
extension) and provides for a base salary of $205,000 per year. We have the
right under this agreement to increase Ms. Morrison's base salary and to grant
her incentive compensation, such as additional options or bonuses. Ms.
Morrison's agreement contains severance or "golden parachute" provisions
providing for payments equal to 100% of Ms. Morrison's base salary as in effect
on the date of such termination, if she is terminated without cause or she
terminates her employment following a change in control of our company.
Stephen K. Bannon, the former vice-chairman of our board of directors and chief
executive officer of AVMC, received periodic consulting fees of $10,000 per
month during the months of July 2003 through December 2003, for his services as
Vice-Chairman of our board of directors and chairman of our special advisory
group to the board of directors. Mr. Bannon's consulting fees were increased to
$29,167 per month, effective March 1, 2004, in connection with his assumption of
the position of Chief Executive Officer of AVMC. We commenced negotiations with
Mr. Bannon and his representatives in early 2004 with the aim of entering into a
definitive employment agreement for Mr. Bannon. In June 2004, Mr. Bannon
tentatively agreed to certain of the terms to be included in his employment
agreement. These tentative terms included (i) an annual base salary of $350,000,
(ii) a performance-based option program contingent upon our future stock price,
(iii) an option grant subject to achieving future operating results as to be
determined by our compensation committee and (iv) the issuance of 120,000
restricted shares of our common stock with vesting terms to be based on
employment tenure to be determined. The issuance of such options and restricted
stock were to be subject to forfeiture related to Mr. Bannon continuing to
provide services to our company on a full-time basis under the contemplated
employment agreement. Although no definitive agreement had been reached on all
of the terms of Mr. Bannon's employment agreement and compensation under such an
employment agreement, commencing as of June 2, 2004, we accounted for the
options and restricted stock contemplated to be delivered to Mr. Bannon under
the yet-to-be completed employment agreement as outstanding. No definitive
employment agreement had been agreed to by us or executed with Mr. Bannon as of
December 31, 2004. Mr. Bannon resigned as a director and Vice-Chairman of, and
all other offices with, our company immediately preceding the effectiveness of
the sale of AVMC to Genius in March 2005. As a result of the failure to enter
into a definitive employment agreement with Mr. Bannon by December 31, 2004 and
Mr. Bannon's resignation as a director and officer of our company, we did not
treat the options and restricted stock contemplated to be delivered to Mr.
Bannon under the proposed terms of his non-executed employment agreement as
outstanding at December 31, 2004.
Our Stock Plans and Other Outstanding Options and Warrants
We currently have outstanding options granted under four stock plans, our 1991
Officers Stock Option Plan, 1992 Employee Stock Option Plan, 1996 Stock Option
Plan and 2003 Nonqualified Stock Option Plan. There were 11,696 shares of our
common stock issuable upon exercise of options granted under the 1991 plan,
83,970 shares issuable upon exercise of options granted under the 1992 plan,
743,335 shares issuable upon exercise of options granted under the 1996 plan,
and 250,000 shares issuable upon exercise of options granted under the 2003
plan, each as of the record date for the annual meeting. We are no longer able
to grant additional options under the 1991 and 1992 plans, in accordance with
the terms of such plans. The 1996 and 2003 plans have available for issuance
89,999 and 500,000, respectively, shares of our common stock, in addition to the
shares underlying options outstanding as of the record date for the annual
meeting.
The following tables set forth, as of December 31, 2004:
o the number of shares of our common stock issuable upon exercise of
outstanding options, warrants and rights, separately identified by those
granted under equity incentive plans approved by our stockholders and
those granted under plans, including individual compensation contracts,
not approved by our stockholders (column A),
o the weighted average exercise price of such options, warrants and rights,
also as separately identified (column B), and
o the number of shares remaining available for future issuance under such
plans, other than those shares issuable upon exercise of outstanding
options, warrants and rights (column C).
Column A Column B Column C
-------- -------- --------
Number of shares
Number of remaining available for
shares to be issued Weighted average future issuance under
upon exercise of exercise price of equity compensation
outstanding options, outstanding options plans (excluding shares
warrants and rights warrants and rights reflected in column A)
--------------------------- ----------------------- ---------------------------
Equity incentive plans
approved by stockholders 1,114,001 $ 2.16 564,999
Equity incentive plans not
approved by stockholders 25,000 1.65 Not applicable
Totals 1,139,001 2.15 564,999
The shares to be issued upon exercise of outstanding options, warrants and
rights granted under plans not approved by stockholders consist of:
o 25,000 warrants granted to Gerard, Klauer, Mattison, Inc. on May 3, 2002
in connection with such firm's rendering of investment banking services
to our company. Each of these warrants entitles its holder to purchase
one share of our common stock, at a purchase price of $1.65 per share and
expires on May 3, 2007.
Certain Relationships and Related Transactions
As compensation for serving on our board or as a board committee chair, on
October 25, 2002, we granted to Jeanne Hood, Steven G. Barringer and Stephen K.
Bannon, non-qualified stock options to purchase 20,000, 20,000 and 25,000
shares, respectively, of our common stock each at an exercise price of $1.26 per
share. The options became exercisable on the date of grant and expire upon the
earlier of (i) October 24, 2012 or (ii) upon the removal or resignation of such
person as a director of our company.
In connection with the execution of their employment agreements, we granted to
Ronald J. Tassinari and Anna M. Morrison, qualified stock options to purchase
25,000 and 50,000 shares, respectively, of our common stock each at an exercise
price of $1.41 per share. Mr. Tassinari's shares became exercisable on the date
of grant. One-half of Ms. Morrison's shares became exercisable on the date of
grant and the remaining one-half became exercisable on April 16, 2004. Both
option grants expire ten years from the date of grant.
On December 10, 2003 we granted to Mr. Tassinari and Ms. Morrison, qualified
stock options to purchase 250,000 and 10,000 shares, respectively, of our common
stock each at an exercise price of $2.87 per share. Beginning on December 10,
2004, and for each subsequent anniversary date, 20% of the options become
exercisable. Both option grants expire ten years from the date of grant.
The April 16, 2003 closing of the YaYa acquisition resulted in the options
previously granted to Stephen K. Bannon on July 12, 2002, to purchase up to
175,000 shares of our common stock at $1.41 per share and the option previously
granted to Jay H. Brown on July 12, 2002, to purchase up to 87,500 shares of our
common stock at $1.41 per share to each become fully exercisable. Mr. Bannon is
Vice-Chairman of our board and Mr. Brown is a beneficial owner of more than five
percent of our common stock. These options were granted as compensation for
future and past services while serving on a special advisory group to our board.
The special advisory group was established on July 12, 2002, to identify, review
and perform initial due diligence services of potential merger and acquisition
candidates on behalf of our company. The options have a ten-year exercise term
and an exercise price equal to the closing price of the common stock on July 12,
2002.
Jay H. Brown, a beneficial owner of more than five percent of our common stock,
received $56,000 in our fiscal year ended December 31, 2004, $90,000 in the
fiscal year ended July 31, 2003 and $60,000 in the twelve months ended December
31, 2003, in consideration for consulting and legal services he performed for
our benefit.
Stephen K. Bannon also received periodic consulting fees of $10,000 per month
during the months of July 2003 through December 2003, for his services as
Vice-Chairman of our board of directors and chairman of the special advisory
group to our board of directors. Mr. Bannon's consulting fees were increased to
$29,167 per month, effective March 1, 2004, in connection with his assumption of
the position of Chief Executive Officer of AVMC. We commenced negotiations with
Mr. Bannon and his representatives in early 2004 with the aim of entering into a
definitive employment agreement for Mr. Bannon. In June 2004, we tentatively
agreed with Mr. Bannon to certain of the terms to be included in his employment
agreement. These tentative terms included (i) an annual base salary of $350,000,
(ii) a performance-based option program contingent upon our future stock price,
(iii) an option grant subject to achieving future operating results as to be
determined by the compensation committee of our board of directors and (iv) the
issuance of 120,000 restricted shares of our common stock with vesting terms to
be based on employment tenure to be determined. The issuance of such options and
restricted stock were to be subject to forfeiture related to Mr. Bannon
continuing to provide services to us on a full-time basis under the contemplated
employment agreement. Although no definitive agreement had been reached on all
of the terms of Mr. Bannon's employment agreement and compensation under such an
employment agreement, commencing as of June 2, 2004, we accounted for the
options and restricted stock contemplated to be delivered to Mr. Bannon under
the yet-to-be completed employment agreement as outstanding. No definitive
employment agreement had been agreed to by us or executed with Mr. Bannon as of
December 31, 2004. Mr. Bannon resigned as a director, Vice-Chairman and all
other offices with our company immediately preceding the effectiveness of the
sale of AVMC to Genius in March 2005. As a result of the failure to enter into a
definitive employment agreement with Mr. Bannon by December 31, 2004 and Mr.
Bannon's resignation as a director and officer of our company, we did not treat
the options and restricted stock contemplated to be delivered to Mr. Bannon
under the proposed terms of his non-executed employment agreement as outstanding
at December 31, 2004.
In consideration for consulting and management services, we paid Mr. Bannon
$297,000, $50,000 and $60,000 during our fiscal year ended December 31, 2004,
five months ended December 31, 2003 and the twelve months ended July 31, 2003,
respectively.
Effective June 30, 2004, we arranged with SouthwestUSA Bank ("SouthwestUSA") a
$2,500,000 credit facility (the "SouthwestUSA Line of Credit"). Jeanne Hood, one
of our directors, is a director of SouthwestUSA. See the subsection entitled
"Employment and Severance Agreements" for a discussion of our employment
agreements with Ronald J. Tassinari. Also see the subsection entitled
"Employment and Severance Agreements" for discussion of the April 2003 and
August 2004 employment agreements we entered into with Anna M. Morrison and the
options granted to this executive pursuant to such employment agreements.
Recommendation of Our Board of Directors
Our board of directors recommends that stockholders vote FOR the election as the
Class C director of the board's nominees as listed above.
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP currently serves as our independent certified public
accountants and served in such position with respect to our fiscal year ended
December 31, 2004. Piercy Bowler Taylor & Kern served as our independent
certified public accountants for our fiscal year ended July 31, 2003.
Representatives of Deloitte & Touche are expected to be present at the annual
meeting, will have the opportunity to make a statement, if they desire to do so,
and are expected to be available to respond to appropriate questions.
On June 10, 2004, we appointed Deloitte & Touche as our new independent
auditors, effective August 1, 2003. Our audit committee approved the termination
of our previous auditors, Piercy Bowler Taylor & Kern, and the engagement of
Deloitte & Touche as our new independent auditors.
During our two most recent fiscal years, there were no disagreements between us
and either Deloitte & Touche or Piercy Bowler Taylor & Kern, whether or not
resolved, on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which, if not resolved to
either of such accountant firms' satisfaction would have caused such accounting
firms to make reference to the subject matter of the disagreement(s) in
connection with its reports.
Principal Accountant Fees and Services
The following table sets forth the fees billed by our independent accountants
for the years ended December 31, 2004 and 2003 for the categories of services
indicated.
Category 2004 2003
- -------- -------------- ----------------
Audit fees (1) $ 182,000 $ 34,000
Audit-related fees (2) 9,000 16,000
Tax fees (3) 22,000 9,000
All Other Fees (4) 0 0
- ----------
(1) Consists of fees billed for the audits of our financial statements for
the five months ended December 31, 2003 and twelve months ended December
31, 2004, review of financial statements included in our Quarterly
Reports on Form 10-QSB and services that are normally provided by the
accountant in connection with statutory and regulatory filings or
engagements.
(2) Consists of assurance and related services that are reasonably related to
the performance of the audit and reviews of our financial statements and
are not included in "audit fees" in this table.
(3) Consists of professional services rendered for tax compliance, tax advice
and tax planning. The nature of these tax services is tax preparation.
(4) The independent accountants did not provide any other services during the
two years ended December 31, 2004.
Audit Committee Pre-Approval Policy
In addition to retaining Deloitte & Touche to audit our consolidated financial
statements for our fiscal year ended December 31, 2004, we retained Deloitte &
Touche to provide other auditing and advisory services to us in 2004. We
understand the need for Deloitte & Touche to maintain objectivity and
independence in its audit of our financial statements. To minimize relationships
that could appear to impair the objectivity of Deloitte & Touche, our audit
committee has restricted the non-audit services that Deloitte & Touche may
provide to us primarily to tax services and merger and acquisition due diligence
and audit services, and has determined that we would obtain even these non-audit
services from Deloitte & Touche only when the services offered by Deloitte &
Touche are more effective or economical than services available from other
service providers.
Our audit committee also has adopted policies and procedures for pre-approving
all non-audit work performed by Deloitte & Touche and any other accounting firms
we may retain. Specifically, the audit committee has pre-approved the use of
Deloitte & Touche for detailed, specific types of services within the following
categories of non-audit services: merger and acquisition due diligence and audit
services; tax services; internal control reviews; and reviews and procedures
that we request to be undertaken to provide assurances of accuracy on matters
not required by laws or regulations. Our audit committee has designated its
chairperson, Jeanne Hood, to pre-approve permissible non-audit services provided
by the independent registered public accounting firm. Generally, the entire
audit committee pre-approves audit services to be performed on quarterly and
annual financial statements. The chairperson presents all pre-approved services
to the full audit committee for their review and ratification. The percentage of
services set forth above in the categories "Audit fees," "Audit-related fees,"
"Tax fees" and "All other fees" that were approved by our audit committee was
100%. The audit committee may also pre-approve particular services on a
case-by-case basis.
OTHER MATTERS
Our board of directors is not aware of any business to be presented at the
annual meeting, other than the matters set forth in the notice of annual meeting
and described in this proxy statement. If any other business does lawfully come
before the annual meeting, it is the intention of the persons named in the
enclosed proxy card to vote on such other business in accordance with their
judgment.
EXPENSES OF SOLICITATION
We will pay the cost of soliciting proxies for the annual meeting. In addition
to soliciting by mail, our directors, officers and other employees may solicit
proxies in person, or by telephone, facsimile transmission or other means of
electronic communication. We also will pay brokers, nominees, fiduciaries and
other custodians their reasonable fees and expenses for sending proxy materials
to beneficial owners and obtaining their voting instructions.
STOCKHOLDER PROPOSALS
Stockholder Proposals for Inclusion in Next Year's Proxy Statement
To be considered for inclusion in our next year's proxy statement, stockholder
proposals must be received at our principal executive offices no later than the
close of business on June 27, 2006. Proposals should be addressed to Ronald J.
Tassinari, President, American Vantage Companies, P.O. Box 89180, Las Vegas,
Nevada, 89128.
Other Stockholder Proposals for Presentation at Next Year's Annual Meeting
For any proposal that is not submitted for inclusion in our next year's proxy
statement, but is instead sought to be presented directly at next year's annual
meeting, SEC rules will permit management to vote proxies in its discretion if
we:
o receive notice of the proposal before the close of business on September
9, 2006 and advise our stockholders in our proxy statement for next
year's annual meeting about the nature of the matter and how management
intends to vote on such matter, or
o do not receive notice of the proposal prior to the close of business on
September 9, 2006.
Notices of intention to present proposals at next year's annual meeting should
be addressed to Ronald J. Tassinari, President, American Vantage Companies, P.O.
Box 89180, Las Vegas, Nevada, 89128.
AVAILABILITY OF OUR FORM 10-KSB
We will provide without charge to any stockholder as of the record date, copies
of our Annual Report on Form 10-KSB, upon written request delivered to Ronald J.
Tassinari, President, American Vantage Companies, P. O. Box 89180, Las Vegas,
Nevada 89128.
By order of the Board of Directors,
Jeanne Hood, Assistant Secretary
Las Vegas, Nevada
October 25, 2005
American Vantage Companies
The undersigned hereby appoints Ronald J. Tassinari and Anna M. Morrison, or
either of them, attorneys and proxies with full power of substitution in each of
them, in the name and stead of the undersigned, to vote as proxy all the shares
of the undersigned in American Vantage Companies, a Nevada corporation (the
"Corporation"), at the 2005 Annual Meeting of the Stockholders of the
Corporation, scheduled to be held on December 8, 2005, and any adjournments or
postponements thereof, as follows:
This proxy is being solicited on behalf of the Board of Directors of the
Corporation. The board recommends a vote FOR each of the listed
director-nominees.
1. Election of the following nominees to Class C of the Board of Directors of
the Corporation:
Steven G. Barringer Jeanne Hood
|_| FOR the nominees listed above |_| WITHHOLD authority to
vote for all the nominees
|_| WITHHOLD authority to vote for the following nominee:
--------------------------------------------------------
(Name of nominee for which authority to vote for is denied)
2. Upon such other business as may properly come before the Annual Meeting or
any adjournment thereof:
|_| GRANT AUTHORITY |_| WITHHOLD AUTHORITY
THE SHARES REPRESENTED HEREBY SHALL BE VOTED BY THE PROXIES, OR EITHER OF THEM,
AS SPECIFIED AND, IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED
FOR THE ABOVE-LISTED DIRECTOR-NOMINEES AS SET FORTH ON THE REVERSE HEREOF.
RECEIPT OF THE CORPORATION'S PROXY STATEMENT, DATED OCTOBER 25, 2005, IS HEREBY
ACKNOWLEDGED.
Dated: , 2005
----------------------------
[L.S.]
--------------------------------
[L.S.]
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(Note: Please sign exactly as your
name appears hereon. Executors,
administrators, trustees, etc. should
so indicate when signing, giving full
title as such. If signer is a
corporation, execute in full corporate
name by authorized officer. If shares
are held in the name of two or more
persons, all should sign.)
PLEASE MARK, DATE, SIGN AND RETURN
THIS PROXY IN THE ACCOMPANYING ENVELOPE